SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    -------

                                    FORM 10-K

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
                                     OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

                         Commission File Number 0-28840

                                 IMRGLOBAL CORP.
             (Exact name of Registrant as specified in its charter)

             FLORIDA                                      59-2911475
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or Organization)

        26750 U.S. HIGHWAY 19 NORTH, SUITE 500, CLEARWATER, FLORIDA 33761
              (Address of principal executive offices and zip code)

                                  727-797-7080
              (Registrant's telephone number, including area code)

                     INFORMATION MANAGEMENT RESOURCES, INC.
                   (Former name if changed since last report)

           Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

           Securities registered pursuant to Section 12(g) of the Act:

             TITLE OF CLASS                                  NAME OF EXCHANGE
             --------------                                  ----------------
Common Stock, par value $0.10 per share                  The Nasdaq Stock Market

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

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

         The aggregate market value of the Company's common stock, par value
$.10 per share (the "Common Stock") held by non-affiliates of the registrant as
of March 12, 1999, was approximately $222 million based upon the closing price
of $15.56 per share as reported on the Nasdaq National Market for that date. The
shares of Common Stock held by each current executive officer and director and
by each person who is known to the Company to own 5% or more of the outstanding
Common Stock have been excluded from this computation on the basis that such
persons may be deemed to be affiliates. This determination of affiliate status
is not a conclusive determination for other purposes.

         As of March 12, 1999, there were 30,552,914 shares of the registrant's
Common Stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Registrant's Proxy Statement for the 1999 Annual
Meeting of Shareholders to be held on or about June 4, 1999 are incorporated by
reference into Part III hereof.

<PAGE>

                                 IMRGLOBAL CORP.

                                    FORM 10-K
                        FOR YEAR ENDED DECEMBER 31, 1998

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I                                                                                          PAGE
                                                                                                ----
<S>     <C>    <C>                                                                              <C>
        Item   1. Business..............................................................          1
        Item   2. Properties............................................................         13
        Item   3. Legal Proceedings.....................................................         14
        Item   4. Submission of Matters to a Vote of Security Holders...................         14

PART II
        Item   5. Market for Registrant's Common Equity and Related
                     Shareholder Matters................................................         15
        Item   6. Selected Consolidated Financial Data..................................         16
        Item   7. Management's Discussion and Analysis of Financial Condition
                     and Results of Operations..........................................         17
        Item   8.  Financial Statements and Supplementary Data. ........................         34
        Item   9. Changes in and Disagreements with Independent Auditors on
                     Accounting and Financial Disclosure................................         66

PART III
        Item 10.  Directors and Executive Officers of the Registrant....................         66
        Item 11.  Executive Compensation................................................         66
        Item 12.  Security Ownership of Certain Beneficial Owners
                     and Management.....................................................         66
        Item 13.  Certain Relationships and Related Transactions........................         66

PART IV
        Item 14.  Exhibits, Financial Statement Schedules and
                     Reports on Form 8-K................................................         67
        Signatures.......................................................................        70
</TABLE>

                                        i

<PAGE>

                                     PART I

         THIS REPORT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION
21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, WHICH ARE INTENDED TO BE
COVERED BY THE SAFE HARBORS CREATED THEREUNDER. FORWARD-LOOKING STATEMENTS
INCLUDE STATEMENTS RELATING TO THE COMPANY'S ABILITY TO SELL TRANSITIONAL
OUTSOURCING SERVICES TO EXISTING YEAR 2000 CUSTOMERS, ANTICIPATED GROWTH IN THE
APPLICATION MAINTENANCE OUTSOURCING INDUSTRY, THE COMPANY'S ABILITY TO EXPAND
INTO VERTICAL INDUSTRIES AND TO IMPLEMENT ITS STRATEGIES FOR EXPANDING ITS
SERVICES AND DIFFERENTIATING ITSELF FROM COMPETITORS AND MANAGEMENTS' ESTIMATE
THAT YEAR 2000 REVENUE WILL DECREASE DURING 1999. OTHER FORWARD-LOOKING
STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS
"MAY," "WILL," "SHOULD," "EXPECT," "ANTICIPATE," "ESTIMATE," "CONTINUE,""PLANS,"
AND "INTENDS." ALTHOUGH THE COMPANY BELIEVES THAT THE ASSUMPTIONS UNDERLYING
 THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE REASONABLE, ANY OF THE
ASSUMPTIONS COULD BE INACCURATE AND THEREFORE THE COMPANY'S ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THE RESULTS ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS. A DISCUSSION OF CERTAIN FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS IS SET FORTH HEREIN IN
"MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS-RISK FACTORS THAT MAY AFFECT FUTURE RESULTS" AND ELSEWHERE IN THIS
REPORT.

ITEM 1. BUSINESS

GENERAL

       IMRglobal Corp. provides applications software outsourcing solutions for
the information technology departments of large businesses through an integrated
network of global resources. The Company's services, which generally are offered
on a fixed-price, fixed-time frame basis, include e-business solutions,
application development, application maintenance, legacy transformation and Year
2000 conversion, validation and verification services. In addition, the Company
offers programming and consulting services on a time-and-material basis in order
to optimize employee utilization and provide a potential source of future
outsourcing contracts. The Company's core group of services, which it terms
"transitional outsourcing," provides clients with three distinct solutions: (a)
Application Maintenance, maintaining aging software systems; (b) Legacy
Transformation, using proprietary tools to transform existing software assets to
modern technological environments; and (c) Application Development, developing
new, custom application software solutions. IMR delivers many of its
transitional outsourcing services using its proprietary Total Software Quality
Management ("TSQM") software engineering process and its offsite software
development facilities in Bangalore, Mumbai (formerly Bombay), India, and
Belfast, Northern Ireland. Underlying these methodologies are processes and
proprietary software tools that accelerate the delivery of complex IT projects.
The Company links its offsite software development facilities to the offices of
many of its clients by satellite communications. A global network of offices
allows IMR to offer its services on a 24-hour basis through an on-site and
off-site project team working multiple shifts made possible by the time
differences between a client's office and the Company's offsite software
development facilities. The Company believes that its proprietary TSQM process,
software engineering metholologies and toolsets, and its offsite software
development centers enable it to provide high quality, cost-effective IT
solutions.

                                        1

<PAGE>

       The Company's clients are primarily Fortune 500 or comparably sized
companies with significant IT budgets and recurring needs for application
development, application maintenance, legacy transformation, Year 2000
conversion, validation and verification services and IT programming and
consulting services. IMR primarily serves clients in the insurance, utilities,
financial services, healthcare, retail/wholesale and distribution and
manufacturing industries. The Company has provided transitional outsourcing
services for such companies as Commercial Union Insurance Companies, Dayton
Hudson Corporation, John Hancock Financial Services, Michelin North America,
Inc., SPS Payment Systems and Xerox Corporation. Through a staff of
approximately 2,300 software development professionals, the Company serves its
clients from its U.S. headquarters in Clearwater, Florida, its international
regional offices in London, Paris, Sydney and Toronto, its software development
centers in Bangalore, Mumbai and Belfast and its 19 branch sales offices located
in the U.S., Canada, Germany and Luxembourg. The Company is considering other
locations in Europe, Asia and South America to expand the Company's global
presence.

INDUSTRY OVERVIEW

       Intense competition, consolidation, deregulation, innovation and rapid
technological advancements are forcing companies to make fundamental changes in
their business processes. For example e-business is changing the way
organizations compete by redefining the way they interact with clients,
suppliers and consumers. Aging mainframe applications require updating to modern
technical environments to integrate with the Internet. At the same time
components are being harvested from those same applications to serve as a
foundation for component-based applications, delivered at a greatly accelerated
pace. While confronting these internal challenges, companies also face customer
demands to improve service levels, lower costs, reduce delivery time and
increase value.

       The Internet, e-business, component based architecture, n-tier
client/server and other emerging technologies have significantly impacted the
process of doing business. Designing, developing and deploying these new
processes require highly skilled individuals trained in many diverse
technologies and architectures. However, many companies do not have the staff
required to complete these large projects while maintaining existing systems.
Thus, many large companies are seeking ways to outsource these types of IT
projects.

       Outsourcing enables organizations to focus on core competencies, to
reduce costs by converting in-house fixed IT costs to variable costs and to
reduce the time-to-completion of significant IT projects. The Company employs a
systematic and disciplined approach to every outsourcing engagement. The three
critical components of the IMR solution are: (a) its TSQM software engineering
process; (b) its offsite software development capability; and (c) its
proprietary software toolsets. Together, these key elements of the Company's
service delivery model help ensure that clients receive high quality,
cost-effective solutions on time and within budget.

       THE TSQM SOFTWARE ENGINEERING PROCESS. TSQM is a set of defined software
development processes, techniques and tools that are implemented to maximize
quality in the Company's operations, deliverables and services, and to minimize
project risks. Continuously refined since the Company's inception, TSQM
represents the software engineering process through which the Company defines
and performs projects. For every project, the Company implements its two-phased
TSQM process that encompasses: (a) an extensive front-end assessment that
defines the scope and risks of the project; and (b) a fixed-price implementation
stage that is further subdivided into smaller phases with frequent deliverables
and feedback from its clients. Through the rigorous adherence to its TSQM
process, the Company identifies, monitors and manages the risks associated with
the cost, schedule, performance, support and delivery of projects on a
fixed-price, fixed-time frame basis. This process also allows the Company to
detect, correct and mitigate quality defects and to establish appropriate
contingencies for each project.

                                        2

<PAGE>

       OFFSITE SOFTWARE DEVELOPMENT. The Company's offsite software development
centers in Bangalore and Mumbai, India and Belfast, Northern Ireland provide IMR
with a significant cost advantage as well as the ability provide 24-hour service
to its clients. The Company's costs for offsite software development personnel
have historically been significantly lower than costs incurred for comparable
resources in the U.S. Through satellite communications, many of the Company's
clients are linked to an IMR offsite software development center where a
substantial portion of a project's work is performed. Due to the time difference
between the Company's sales offices and delivery centers, the Company can create
a virtual "second shift" for its North American, European and Asian clients
allowing for more rapid completion of projects and off-peak utilization of
clients' technology resources. In addition, for larger projects with critically
short time frames, the offsite facility allows the Company to parallel process
many of its development phases to accelerate delivery time.

       STRATEGIC TOOLS AND TECHNOLOGIES. During 1998, the Company significantly
advanced its development of component based architectures with its acquisition
of Lyon Consultants, S.A. (See Note 2 of the Consolidated Financial Statements).
Component based architectures have evolved from object oriented technologies.
Object oriented technologies facilitate multiple uses for the same software
code. Component based technologies take this idea one step further by
facilitating multiple uses for software code that has been grouped together
according to relationship and function. The Company is committed to spending a
significant portion of its R&D expenditures on the continued development of
these components for use in targeted vertical industries.

       In addition, the Company continues to make significant investments to
design, develop and acquire a set of proprietary software tools and
methodologies to support three key application transformation services: (a)
re-engineering; (b) migration; and (c) re-hosting of mainframe systems to
emerging technologies, such as client/server systems. These tools have been
developed utilizing object-oriented technologies to allow the Company to reduce
both the cost and time required to successfully complete large scale projects.
The Company's TRANSFORMIMS(R), TRANSFOrmVSAM(R) AND TRANSformDB2 toolsets
support the migration of mainframe-based systems and their related applications
to relational database management systems environments (e.g., Oracle, Sybase and
Informix). In addition, during 1998, the Company used its research and
development capability to develop a maintenance toolset. The maintenance toolset
provides IMR maintenance team members with application analysis capability for
use on maintenance outsourcing and application transformation projects. The
maintenance toolset employs a repository for collecting and centrally locating
large amounts of application information by identifying relationships between
application programs and their use of common data files. Access to this
information enables the efficient development of detailed system and program
level analysis (textually and graphically) depicting the interrelationships
among software applications, databases, data handling technologies and data. The
maintenance toolset improves maintenance productivity by reducing the time it
takes to diagnose maintenance problems and assess the impact of potential
changes.

STRATEGIES

       The Company's objective is to be the leading provider of comprehensive
transitional IT outsourcing services and solutions to the IT departments of
large businesses. The Company plans to pursue the following strategies to
achieve this objective:

                                        3

<PAGE>

     BUSINESS STRATEGIES

       DEVELOP EXPERTISE IN KEY VERTICAL MARKETS. A primary objective of IMR
over the next two years is to become a vertically focused company with a
comprehensive understanding of the business needs of selected vertical industry
groups.

       The Company's client base is primarily aligned around six major
industries: insurance, utilities, financial services, healthcare,
retail/wholesale and distribution and manufacturing. Each of these industries is
highly specialized and complex, and their business problems do not lend
themselves to standard packaged software solutions. IMR believes it can leverage
the relationships and industry-specific knowledge acquired from previous Year
2000 engagements in these industries into new transitional outsourcing projects.
Accordingly, while IMR will continue to perform the same service offerings, the
focus will be on the vertical industry rather than specific service offerings.

       The following table sets forth IMR's shift in focus from a
technology-related focus to an industry-based focus:

              Service Offering Focus                   Industry Focus
         ------------------------------     ------------------------------------

         -  Software Development            -  Insurance
         -  Application Transformation      -  Utilities
         -  Applicaiton Maintenance         -  Financial Services
         -  Year 2000 Compliance            -  Healthcare
         -  Electronic Commerce             -  Retail/Wholesale and Distribution
         -  Programming and Consulting      -  Manufacturing

         In January 1999, IMR acquired Atechsys, S.A. which has significant
expertise in the capital markets' business in the financial services industry.
IMR will continue to pursue as acquisition targets selected IT service firms
with domain knowledge in the targeted vertical industries.

         DEVELOP LONG-TERM STRATEGIC PARTNER RELATIONSHIPS WITH CLIENTS. The
Company strives to develop "strategic partner" relationships with its clients
whereby the Company shares both the risk and rewards associated with outsourcing
engagements. To establish and preserve existing relationships with clients, the
Company endeavors to integrate its on-site personnel into the operations and
employee culture of its clients' IT departments. In addition, the Company will
continue to make significant investments in technology to support the strategic
technical direction of its clients. These investments help the Company secure
the loyalty and trust of clients and provide it with the tools and knowledge to
perform similar projects for other clients. To ensure constant communication,
the Company uses several methods to obtain continuous client feed-back,
including client satisfaction surveys, consultant performance surveys and
regularly scheduled meetings with a client's senior management. A substantial
portion of the performance incentive for the Company's senior executives, sales
executives and senior project managers is directly linked to client satisfaction
and on-time within budget delivery of quality IT services.

                                        4

<PAGE>

         CONCENTRATE ON KEY TECHNOLOGIES. The Company continues to focus on
obtaining advanced software development technologies to support its transitional
outsourcing service model. The Company recently acquired electronic commerce
service capability with its acquisition of ECWerks(sm), Inc. in January 1999.
This acquisition provided IMR with enhanced capabilities to design, develop and
deliver enterprise scale solutions in the rapidly expanding e-business market.
In addition, by using software provided by companies such as Forte Software,
Inc. as well as internally developed toolsets, IMR offers a "best of breed"
technology solution to clients in several key areas. This broad-based technology
strategy reinforces the Company's focus on the successful transition of legacy
mainframe systems to new technical environments. The Company conducts continuous
personnel training to expand the knowledge base of its employees in these key
technological areas.

         ACQUIRE, DEVELOP AND ENHANCE PRODUCTIVITY-ENHANCING SOFTWARE TOOLS. The
Company is committed to improving and enhancing its proprietary software
engineering methodologies and toolsets. The Company intends to continue to
implement this strategy through a combination of strategic acquisitions of
technologies or businesses and investment in research and development.

         In May 1998, IMR acquired Lyon Consultants, S.A. This acquisition
provided IMR with developed core technologies and in-process research and
development in component based architectures. Management believes that component
technology will be the dominant development technology over the next several
years. The Company intends to develop component-based architectures for
companies in its six targeted vertical industries. The Company's development
efforts are currently focused on the insurance and utility industries. In
addition, the Company continues to enhance its family of transformation toolsets
through a combination of licensing agreements and continued investment in
research and development. Management believes that this strategy is critical in
differentiating the Company from its competitors.

         FOCUS ON FIXED-PRICE, FIXED-TIME FRAME PROJECTS. As a core element of
its business philosophy, the Company offers many of its IT services on a
fixed-price, fixed-time frame basis. Management believes that effectively
structured fixed-price, fixed-time frame projects provide clients with
significantly reduced risks while offering the Company the potential benefit of
enhanced margins. In order to reduce the risks to the Company, the fixed-time
frame component of a project is divided into several phases with frequent
deliverables. The Company believes that discrete project phases make it easier
for the Company to commit to a fixed price for a project, meet client
expectations, maintain high quality and control costs. The Company strives to
reduce risks and achieve greater potential profits through shorter development
cycles, the implementation of a rigorous change-order management process and the
use of global resources. Furthermore, timely reviews of projects and adherence
to strict financial management guidelines allow the Company to continually
monitor financial performance.

         ATTRACT, TRAIN AND RETAIN HIGHLY SKILLED EMPLOYEES. The future success
of the Company's growth strategy will depend to a significant extent on its
ability to attract, train, motivate and retain highly skilled IT professionals,
particularly project managers, software engineers and other senior technical
personnel. To achieve this objective, the Company maintains personnel and
programs to seek, hire and train the best available IT professionals and to
train these professionals in both current and emerging technologies. The Company
believes, that there is significant competition for IT professionals with the
advanced technological skills necessary to perform the services offered by the
Company. In order to attract, motivate and retain its employees, the Company
focuses on its corporate culture, incentive programs, compensation and benefits,
and provides a career and education management program to create an
individualized structured career growth plan for its employees.

                                        5

<PAGE>

     GROWTH STRATEGIES

         LEVERAGE EXISTING PROJECTS INTO ADDITIONAL OPPORTUNITIES WITH EACH
CLIENT. A key element of the Company's long-term growth strategy is the ability
to expand the scope of the IT services it provides to each client. By
continuously striving to exceed client expectations during the performance of
projects, the Company has historically converted projects into additional
engagements for the same client. With the addition of new service offerings
through acquisitions such as e-business and component-based development, the
Company believes it has expanded its opportunity to sell new services to
existing clients as well as to generate more opportunities to gain new clients.

         EXPAND GEOGRAPHIC PRESENCE. IMR's business model integrates on-site and
off-site resources to enable the on-time delivery of high quality,
cost-effective IT solutions. As the Company expands its customer base, it
intends to open additional small, regional offices to enable it to sell and
support existing and new clients in these geographic areas. In addition, the
Company intends to continue to grow geographically through the targeting and
acquisition of companies in selected countries in Europe, Asia and South
America, where IMR currently does not have a significant geographic presence. In
support of this strategy, since the beginning of 1998, IMR has acquired two
companies in France, and a company in Canada and Australia.

         PURSUE SELECTIVE STRATEGIC ACQUISITIONS. By strategically acquiring
companies with a well established client base fitting the IMR profile (Fortune
500 and comparably sized companies) and significant expertise in new
technologies, the Company believes it has created synergistic opportunities to
cross sell services to its client base. For example, component development
solutions obtained from Lyon Consultants, S.A. have been sold to existing IMR
clients in the U.S. and IMR core services have been sold to existing Lyon
clients in France.

         DEVELOP EURO CONVERSION SERVICES BUSINESS. On January 1, 1999 the
Economic and Monetary Union (EMU) took effect and the euro was introduced as the
official single currency of the eleven participating European countries. The
establishment of EMU will require organizations worldwide to modify existing
software applications in order to accommodate the euro. The Company believes
that many organizations will outsource euro conversion projects and that a
significant opportunity exists for the Company to increase revenue by offering
euro conversion services. The Company has begun to pursue this opportunity by
offering euro conversion services to several of its existing European customers
and it intends to continue to pursue new customers for its euro conversion
services.

THE IMR DELIVERY PROCESS

         IMR's proprietary TSQM process is based in part on software standards
published by the Institute of Electrical & Electronic Engineers and the Software
Engineering Institute ("SEI") software engineering process models and IS 9001
quality processes. To position itself for future business from companies in the
European Community, as well as from international affiliates of its North
American customers, IMR's facilities in Bangalore and Mumbai, India, Chesham,
England and Belfast, Northern Ireland have achieved IS 9001 certification. IMR
is pursuing company-wide IS 9001 and SEI certification.

         During each stage of a project, IMR utilizes TSQM to monitor progress
and quality, including deviations from project plans that could adversely affect
on-time delivery, compliance with project specifications and project financial
performance. The project team collects, analyzes and reports on key quality
metrics to verify compliance with quality standards used in project execution,
and the project team serves as

                                        6

<PAGE>

a custodian of information regarding the methods, techniques and tools that have
been utilized to perform specified tasks. Through this process of constant
re-evaluation of the Company's performance on each project, IMR continuously
refines and enhances the TSQM software engineering process as a means to
leverage the benefit of the Company's cumulative project experience.

         The responsibilities for completion of each TSQM phase are allocated
among an on-site and off-site team to optimize cost savings and accelerate
project delivery. The actual tasks allocated to each team member are determined
principally by the amount of client interaction required at the client site to
complete the project successfully. The front-end phase, which may include
business area analysis, development of a technical strategy, requirements
definition, requirements analysis, high level design and technical architecture,
is completed by the on-site project manager and the project team through
interaction with the client. The implementation phase, which may include
programming, unit testing and system testing, is largely performed off-site via
satellite link. The off-site teams at the Company's U.S., Canadian, European and
Australian offices coordinate the efforts of the on-site and off-site teams and
monitor and manage the quality of the overall project. Working regular business
hours, the on-site and off-site teams together use most hours of the clock to
deliver projects in fewer elapsed calendar days. Due to the time differences
between India, Australia, Europe and North America, the Company can create a
virtual "second shift" for its clients allowing for more rapid completion of
projects.

         The Company's off-site software development centers provide significant
opportunities to reduce costs and manage the risks of a project. The software
development center is often able to use the excess capacity of a client's
existing computing facilities during off-peak hours. This allows additional
projects to be undertaken without substantial client investment in new hardware
and software. The costs of satellite communications and infrastructure acquired
by the Company at an off-site center will be spread among multiple-clients and
projects. If the scope of a project is unexpectedly expanded, the Company
generally is able to draw upon its development centers' resources to increase
project personnel. In addition, for larger projects with critically short time
frames, the resource availability of an off-site facility allows the Company to
overlap various development phases to accelerate delivery time.

SERVICES

         IMR provides a broad range of IT services, including: (a) core
transitional outsourcing services which encompass software development,
application maintenance and legacy transformation services; (b) e-business
solutions and services; (c) Year 2000 conversion, validation and verification
services; and (d) programming and consulting services. The Company delivers each
of these services independently or as a comprehensive package.

     CORE TRANSITIONAL OUTSOURCING SERVICES

         IMR's core transitional outsourcing services assist clients in the
development and maintenance of mainframe-based applications and in the
transition from mainframe systems to open architecture, n-tier client/server and
other PC-based technologies. IMR's core transitional outsourcing services
include:

                                        7

<PAGE>

         SOFTWARE DEVELOPMENT SERVICES. The Company offers three alternatives to
assist clients in developing new applications for IBM mainframe platforms,
n-tier client/server platforms, Internet and other technologies. The Company's
component-based approach can be used to deliver functionality on an accelerated
basis for selected platforms:

     o   fixed-price software development in which the Company assumes total
         responsibility and accountability for delivery of systems on-time and
         within budget;

     o   cooperative development in which the Company's consultants work
         side-by-side and share responsibility for completion of a project with
         in-house IT personnel to complete full life cycle development projects,
         or

     o   system evolution services, in which mainframe systems are re-developed
         into new systems using component-based development techniques and
         technologies, components harvested from legacy applications using
         legacy transformation technologies and the Company's proprietary
         Information Systems Evolution Methodology (ISEM(sm)).

         In each case, the Company uses its TSQM software engineering process,
its on-site/off-site delivery model and satellite communications to deliver
these projects.

         APPLICATION MAINTENANCE SERVICES. The Company has four distinct
processes for its application maintenance services. Corrective, Adaptive,
Perfective and Preventive. CORRECTIVE MAINTENANCE requires software failures to
be diagnosed and fixed as they occur. These failures can directly affect
business operations and require the highest level of support. Quick fixes and
poor documentation result in increased code complexity and increased future
maintenance costs. ADAPTIVE MAINTENANCE requires modification of software to
support changing business requirements or to operate in changing technical
environments. This maintenance includes user enhancements, operating system
upgrades and other outside improvements to technical environments. Enhancement
backlogs are the biggest source of concern for IT management. PERFECTIVE
MAINTENANCE involves modifications to application systems to improve performance
or maintainability, without changing basic system functionality. PREVENTIVE
MAINTENANCE identifies and eliminates the maintenance problem that creates the
need for corrective maintenance and therefore reduces the need for future
corrective maintenance. Year 2000 compliance services are a form of preventive
maintenance.

         By assuming the responsibility for maintenance of selected application
systems, the Company is able to introduce process enhancements that improve
service levels to users requesting modifications and on-going support. By using
a variation of the on-site, off-site delivery model, the Company provides
24-hour, 7-day production and emergency support. On-site team members who
provide application maintenance services at the client's facility remain on call
after hours in the event of an emergency request. They are then able to deal
with after hours emergency issues themselves through a remote connection from
their home or direct the off-site team to resolve the issue using the satellite
links. The on-site team also interacts with business users to establish and
clarify requirements. Routine application maintenance services, including
modifications, enhancements and documentation, are completed utilizing satellite
telecommunications and the resources of the Company's off-site software
development centers.

                                        8

<PAGE>

         LEGACY TRANSFORMATION SERVICES. The Company has developed its
proprietary ISEM methodology, a broad-based strategy for deploying new
technologies and managing the successful integration of mainframe systems with
new technologies, including n-tier client/server and Internet/e-commerce
applications. Alternatives include: application systems re-development using
component-based technologies; "web enabling" mainframe applications using
Internet/intranet technologies; and tool-enabled re-engineering of mainframe
systems, in which the systems are migrated to open systems platforms and n-tier
client/server architectures. The Company's TRANSFORM series of re-engineering
tools automate many of the processes required to implement legacy transformation
solutions, thereby substantially reducing the time and cost to perform these
services. These "productivity tools" enable the Company to perform source code
analyses, redesign target databases and convert certain programming languages.

         E-BUSINESS SOLUTIONS SERVICES. IMR helps clients design and implement
business process improvements, workflow improvements, Internet strategies,
manage web content and provide new process training, both within the
organization and across their trading partners. Senior e-business consultants
from IMR assist clients in e-business orientation and education, opportunity
identification, business process assessment, assessment of technology
infrastructure, strategy formulation and often, channel alignment/realignment,
resulting in a competitive e-business model for the client. IMR's technical
consulting staff concurrently design, develop and implement the underlying
technologies supporting the e-business initiative, using state-of-the market
development technologies as defined by the client's integration requirements.
Integration of existing systems with new media applications provides the
necessary linkages to support the newly defined business process and workflows.
The scope of e-business projects include: web retailing, client extranets,
online service centers, supply chain optimization, EDI interface, corporate
intranets, back office integration, sales force extranets and knowledge base
management.

     YEAR 2000 SERVICES

         The Company uses its CC-PAC(R) methodology to provide cost-effective
services related to the Year 2000 problem. The CC-PAC methodology defines the
methods for performing Year 2000 conversion services through five separate
phases: analysis, planning, conversion, testing and implementation. The CC-PAC
methodology, together with the Company's proprietary Year 2000 toolset,
TRANSFORM2000(R), and a rigorous process approach form the Company's strategy to
resolving millennium problems. The Company also provides Year 2000 independent
verification and validation services to selected clients.

     PROGRAMMING AND CONSULTING SERVICES

         The Company also provides programming and consulting services at client
sites on an "as-needed" basis. The Company's programming consultants are
typically engaged on a time-and-materials basis to assist on-site with the
analysis, design and development of software applications and to augment the
client's internal IT staff. In contrast to its core transitional outsourcing
services, professional programming services typically involve the performance of
discrete tasks at the specific direction of the client. In addition to staffing
the client's short-term needs, the Company's objective is to leverage
professional staffing engagements to develop an understanding of the client's
business and IT systems needs and positioning itself to provide further
consulting and outsourcing services. The Company does not generally accept
professional staffing service engagements of less than six months.

                                        9

<PAGE>

CLIENTS AND REPRESENTATIVE PROJECTS

         The Company provides services to large businesses, primarily Fortune
500 and comparably sized companies with intensive information processing needs.
To date, the Company's marketing efforts have been directed to clients on the
basis of IT needs rather than industry group. Beginning in 1998, the Company
began to redirect its marketing efforts to key vertical markets including
insurance, utilities, financial services, healthcare, retail and manufacturing.
Companies and clients in these industries have historically provided the greater
source of business opportunities for the Company.

<TABLE>
<CAPTION>
SOFTWARE DEVELOPMENT SERVICES:                  COMPONENT BASED DEVELOPMENT SOLUTIONS:
------------------------------                  --------------------------------------
<S>                                             <C>
Dunn & Bradstreet, Inc.                         Reliastar Life Insurance Company
EBSCO Industries, Inc.                          New West Energy Corporation
Ford Motor Company                              Banque de France
NOVUS Services, Inc.                            Saur S.A.
Whitbread Plc                                   National Savings Bank Plc
Winn Dixie Stores, Inc.

APPLICATION MAINTENANCE SERVICES:               APPLICATION TRANSFORMATION SERVICES:
---------------------------------               ------------------------------------
Dayton Hudson Corporation                       Fingerhut
Michelin North America, Inc.                    General Reinsurance
Southern California Edison                      Michelin North America, Inc.
SPS Payment Systems, Inc.                       Reliastar Life Insurance Company
Whitbread Plc                                   SPS Payment Systems, Inc.

YEAR 2000 CONVERSION SERVICES:                  PROGRAMMING & CONSULTING SERVICES:
------------------------------                  ----------------------------------
American Greetings Corp.                        Dayton Hudson Corporation
AON/Combined Insurance                          NOVUS Services, Inc.
Commercial Union Insurance Companies            J.C. Penney
John Hancock Financial Services                 John Hancock Financial Services
Mutual of Omaha Insurance Company               Xerox Corporation
PACCAR, Inc.
</TABLE>

         During the year ended December 31, 1998, the Company's top five clients
accounted for approximately 30.6% of total revenue. Michelin North America, Inc.
represented approximately 10.4% of total revenue. During the year ended December
31, 1997, the Company's top five clients accounted for approximately 35.4% of
total revenue. NOVUS Services, Inc. (formerly known as Discover Card Services,
Inc.) and SPS Payment Systems, Inc., which were formerly affiliated companies,
together accounted for approximately 9.1% of total revenue. The volume of work
performed for specific clients is likely to vary from year to year, and a
significant client in one year may not use the Company's services in a
subsequent year.

                                       10

<PAGE>

SALES AND MARKETING

         The Company markets and sells its services directly through its
professional staff and senior management operating out of its U.S. headquarters
in Clearwater, Florida, its regional offices in Boston, Chicago, Dallas, London,
Paris, Sydney and Toronto and its sales branch offices located in Atlanta,
Minneapolis, Rochester, Los Angeles, New York, Detroit, Seattle, Washington,
D.C., Montreal, Quebec City, Winnipeg, Calgary, Vancouver, Luxembourg and
Frankfort (Germany). The Company focuses its marketing efforts on large
corporations, within targeted vertical industries, that have significant IT
budgets and recurring staffing or software development needs. Marketing
personnel identify prospects and opportunities and enter the prospects into a
prospect/client database, which is consistently maintained and updated. Direct
sales representatives utilize the database records to initiate the sales cycle
from prospect qualification to close. As a result of this marketing system, the
Company prequalifies sales opportunities, and direct sales representatives are
able to minimize the time spent on prospect qualification.

         Marketing programs include direct mail campaigns, advertising,
seminars, conferences and other activities intended to generate and maintain an
interest in the Company's services. The sales executive and technical support
team define the scope, deliverables, assumptions and execution strategies for a
proposed project, develop project estimates, prepare pricing, margin analyses,
cash flow and finalize sales proposals. Management reviews and approves the
proposal, and the sales staff presents the proposal to the client. Sales
personnel remain actively involved in the project through the execution phase.

         As IMR pursues expansion in Europe and Asia, the Company will consider
establishing branch sales offices to pursue business opportunities in those
regions, although no assurance can be given that the Company will ultimately
select these locations for future expansion or that it will be able to
successfully establish branch offices there.

INTELLECTUAL PROPERTY

         The Company's business includes the development of software
applications and other deliverables including written specifications and
documentation in connection with specific client engagements. Ownership of
software and associated deliverables created for clients is generally retained
by or assigned to the client, and the Company does not retain an interest in
such software or deliverables. The Company also develops object-oriented
software components and libraries that can be reused in application software
development, as well as certain software toolsets and proprietary methodologies.
Many of the Company's software components, libraries, toolsets and methodologies
are developed in India and France and used in the U.S., the U.K., France,
Canada, Australia and India. Under an agreement between the Company and its
majority-owned subsidiary, IMRglobal Ltd. ("IMR-India") the Company owns these
components, libraries, toolsets and methodologies. Finally, the Company
maintains trademarks and service marks to identify its various service
offerings. In order to protect its proprietary rights in these various
intellectual properties, the Company relies upon a combination of copyright and
trade secret laws, nondisclosure and other contractual arrangements, and
technical measures. The U.K., France, Canada, India and Australia are members of
the Berne Convention, an international treaty. As members of the Berne
Convention, the governments of the U.K., France, Canada, India and Australia
have agreed to extend copyright protection under their domestic laws to foreign
works, including works created or produced in the U.S. The Company believes that
laws, rules, regulations and treaties in effect in the U.S., the

                                       11

<PAGE>

U.K., France, Canada, Australia and India are adequate to protect it from
misappropriation or unauthorized use of its copyrights. However, there can be no
assurance that such laws will not change and, in particular, that the laws of
the U.K., France, Canada, Australia or India will not change in ways that may
prevent or restrict the transfer of software components, libraries and toolsets
among India, the U.S., the U.K., France, Canada and Australia. There can be no
assurance that the steps taken by the Company to protect its proprietary rights
will be adequate to deter misappropriation of its intellectual property rights
or that the Company will be able to detect unauthorized use and take appropriate
steps to enforce its rights. The Company presently holds no patents or
registered copyrights. The Company expects that the risk of infringement claims
against the Company will increase if more of the Company's competitors are able
to successfully obtain patents for software products and processes.

         As the number of competitors providing IT services increases, new and
overlapping processes and methodologies used in such services will become more
pervasive. Although the Company's intellectual property has never been the
subject of an infringement claim and the Company believes that its services and
products do not infringe on the intellectual property rights of others, there
can be no assurance that such a claim will not be asserted against the Company
in the future. Assertion of such claims against the Company could result in
litigation, and there is no assurance that the Company would prevail in such
litigation or be able to obtain a license for the use of any infringed
intellectual property from a third party on commercially reasonable terms.
Furthermore, litigation, regardless of its outcome, could result in substantial
cost to the Company and could divert management's attention from the Company's
operations. Any infringement claim or litigation against the Company could,
therefore have a material adverse effect on the Company's results of operations
and financial condition.

COMPETITION

         The IT services market is highly competitive and is served by numerous
national, regional and local firms. The Company's clients generally consist of
large corporations principally in the insurance, utilities, financial services,
healthcare, retail/wholesale and distribution and manufacturing industries, and
many of the Company's competitors are aggressively pursuing business from those
entities. In addition to in-house MIS departments, market participants include
systems consulting and integration firms, professional services companies,
applications software firms, temporary employment agencies, professional
services divisions of large integrated manufacturing and other companies (such
as IBM), facilities management and outsourcing companies, accounting and
business consulting firms and related entities.

         The Company believes that many of its principal competitors have
significantly greater financial, technical and market resources and generate
greater revenue than it has. The Company competes by offering a successful
services delivery model, excellent referral base and continued focus on
responsiveness to customer needs, quality of services, competitive prices,
project management capabilities and technical expertise.

HUMAN RESOURCES

         As of March 12, 1999, the Company had approximately 2,500 employees,
including approximately 1,300 persons in its U.S., U.K., France, Canada and
Australian headquarters and branch offices and approximately 1,200 in its
software development centers in India and Northern Ireland. Additionally, as of
March 12, 1999, the Company had approximately 200 independent contractors
performing various services. None of the Company's employees are subject to a
collective bargaining arrangement, except approximately 200 employees in France.

                                       12

<PAGE>

         As of March 12, 1999, approximately 400 of the Company's U.S. employees
were working under the H-1B, non-immigration work permitted visa classification,
which the Company processed for those employees through the U.S. Immigration and
Naturalization Service. The H-1B visa classification enables U.S. employers to
hire qualified foreign workers in positions which require an education at least
equal to a U.S. Baccalaureate Degree in specialty occupations such as software
systems engineering and systems analysis. The H-1B vias usually permits an
individual to work and live in the U.S. for a period of up to six years. There
is a limitation the number of H-1B petitions that the INS may approve in any
government fiscal year. During May 1998 this limit was reached and H-1B visas
were not approved through October 1998. Subsequently, the U.S. government
increased the annual limitation of H-1B visas. In years in which the limit is
reached, the Company may be unable to obtain H-1B visas necessary to bring
critical foreign employees to the U.S. The Company also processes immigrant
visas for lawful permanent residency (evidenced by a card commonly referred to
as the "green card") for employees to fill positions for which there are no
able, willing and qualified U.S. workers available to fill the position.
Compliance with existing U.S. immigration laws, or changes in such laws making
it more difficult to hire foreign nationals or limiting the ability of the
Company to retain H-1B employees in the U.S. could require the Company to incur
additional unexpected labor costs and expenses.

         The Company believes that there is a shortage of, and significant
competition for, IT professionals and that its future success will depend in
large part upon its ability to attract, train, motivate and retain highly
skilled employees with the advanced technical skills necessary to perform the
services offered by the Company. The Company has active recruitment programs in
North America, Europe, Australia, India and certain other countries and has
developed a recruiting system and database that facilitates the rapid
identification of skilled candidates. The Company also has adopted a career and
education management program working with employees to define their objectives
and career plans. Through an intensive orientation and training program, the
Company introduces new employees for the TSQM software engineering process and
the Company's services.

ITEM 2. PROPERTIES

         The following table sets forth a description of the Company's principal
facilities:

<TABLE>
<CAPTION>
           Location               Square Feet (Approx.)        Lease Expiration Date                    Function
------------------------------    -------------------------    --------------------------    -----------------------------
<S>                               <C>                          <C>                           <C>
Clearwater, Florida               22,500 sq. ft.               July 1999                     Corporate headquarters
Chesham, England                  12,500 sq. ft.               March 2013                    U.K. headquarters
Bangalore, India                  66,000 sq. ft.               June 2000(1)                  Software development facility
Belfast, Northern Ireland         14,500 sq. ft.               September 2002(1)             Software development facility
Mumbai, India                     28,000 sq. ft.               (2)                           Software development facility
New Delhi, India                  28,000 sq. ft.               (3)                           Software development facility
Paris, France                     18,900 sq. ft.               May 2005(1)                   France headquarters
Sidney, Australia                  6,800 sq. ft.               April 1999(1)                 Australia headquarters
Toronto, Ontario                   6,300 sq. ft.               October 2002(1)               Canada headquarters
Tampa, Florida                    20,000 sq. ft.               January 2004                  EC headquarters
<FN>
------------
(1) These leases contain options to extend for an additional five years.
(2) The building at the Company's software development facility in Mumbai is
    owned by the Company and the land is leased through March 2096.
(3) The land and building in New Delhi are owned by the Company. Significant
    renovations are required to occupy this building.
</FN>
</TABLE>

                                       13

<PAGE>

         In addition, the Company leases branch offices in Boston, Chicago,
Dallas, Atlanta, Minneapolis, Washington, D.C., Rochester, Los Angeles, Detroit,
Seattle, New York, Montreal, Quebec City, Calgary, Vancouver, Luxembourg and
Frankfort, which are used primarily for sales and marketing purposes.

         The Company believes that its facilities are near full utilization with
the exception of the New Delhi facility described above.

         In 1998, the Company purchased approximately 15 acres in Clearwater,
Florida for the purpose of constructing a headquarters complex. Construction
commenced on a 50,000 square foot Headquarters Building that is scheduled for
completion in July 1999. A second 80,000 square foot building is scheduled for
completion in January 2000. The headquarters complex will house personnel
currently occupying leased space in Clearwater and Tampa. In addition, the
second building will house the entire research and development team that is
currently housed in Clearwater, France, Australia and India. The property has
room for two additional buildings and a parking garage if further development is
needed.

ITEM 3. LEGAL PROCEEDINGS

         The Company is not a party to any pending material litigation.

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

         No matters were submitted to a vote of the Company's shareholders
during the fourth quarter of the year ended December 31, 1998.

                                       14

<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

         The common stock of the Company is traded on the Nasdaq Stock
Market(sm) under the symbol "IMRS." The common stock commenced trading on Nasdaq
on November 8, 1996 in connection with the underwritten initial public offering
of shares of common stock at an initial price to the public of $6.22 per share.

         Set forth below are the high and low sales prices for shares of the
common stock for the periods indicated. Share prices have been adjusted to
reflect three-for-two stock splits in the form of a stock dividend in July 1997
and April 1998.

            Fiscal Period Ended                  High                      Low
         ------------------------               ------                   ------
         1997:
            March 31, 1997                      $12.00                    $5.00
            June 30, 1997                       $20.39                    $6.78
            September 30, 1997                  $25.25                   $17.95
            December 31, 1997                   $25.33                   $13.00

         1998:
            March 31, 1998                      $39.50                   $19.08
            June 30, 1998                       $42.17                   $20.00
            September 30, 1998                  $35.38                   $18.63
            December 31, 1998                   $30.38                   $16.63

         The number of shareholders of record of the common stock as of March
12, 1999, was 146 based on transfer agent reports.

         The Company did not declare any cash dividends in 1998 or 1997 and does
not intend to declare or pay cash dividends in the foreseeable future.
Management anticipates that all earnings and other cash resources of the
Company, if any, will be retained by the Company for investment in its business.

   RECENT SALES OF UNREGISTERED SECURITIES

         On January 8, 1999, IMR issued to the former shareholders of Atechsys,
S.A. 720,000 shares of common stock based on a price of $28.75 per share, in
connection with IMR's acquisition of Atechsys. The issuance was exempt from
registration under the Securities Act of 1933, as amended, (the "Securities
Act") pursuant to Regulations promulgated thereunder.

         On January 15, 1999, IMR issued to the former shareholders of ECWerks,
Inc. 163,054 shares of common stock based on a price of $29.50 per share, in
connection with IMR's acquisition of ECWerks. The issuance was exempt from
registration under the Securities Act pursuant to [Regulation D] promulgated
thereunder.

                                       15

<PAGE>

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

         The following selected consolidated financial data has been derived
from the Company's consolidated financial statements. The information below
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and the Company's Consolidated
Financial Statements and related notes.

<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                  ------------------------------------------------------------------------------
                                                     1998(1)         1997(2)           1996            1995             1994
                                                  -------------    ------------    -------------   -------------    ------------
                                                                      (In thousands, except per share data)
<S>                                               <C>              <C>             <C>             <C>              <C>
CONSOLIDATED BALANCE SHEET DATA:
Working Capital ................................. $     120,896    $     95,982    $      30,728   $       2,355    $      (340)
Total assets ....................................       217,689         135,353           48,953           8,666           7,099
Long-term debt, net of current portion ..........           653             885                -           1,184           2,153
Shareholders' equity ............................       173,099         113,207           40,356           2,708             264
Shares outstanding at year-end ..................        29,672          25,651           21,710          20,377          20,377

CONSOLIDATED STATEMENT OF INCOME DATA:
Revenue .........................................       158,252          83,550           27,948          22,700          14,102
Gross profit ....................................        75,913          37,591           12,290           9,229           5,439
Income from operations ..........................        26,958          15,603            4,684           3,508             829
Net income ......................................        18,909          11,895            2,588           2,517             814
Pro forma net income (3).........................             -               -            2,545           1,612               -
Diluted earnings per share ......................          0.50            0.35             0.10               -               -
Pro forma net income per share(3)................             -               -             0.10            0.05               -
Cash dividends (4)...............................             -               -            1,623               -               -
Cash dividends per share (3).....................             -               -             0.06               -               -

Weighted average common stock and
   common stock equivalent
   outstanding (3)...............................        37,573          34,467           26,371          30,831               -
<FN>
(1) Consolidated Balance Sheet Data at, and Consolidated Statement of Income
    Data for the year ended, December 31, 1998 give effect to the Company's
    acquisition of Lyon Consultants, S.A., RHO Transformational Technologies
    Pty. Limited and Visual Systems Development Corporation. Revenue for the
    year ended December 31, 1998 attributable to these acquisitions was $18.4
    million.

(2) Consolidated Balance Sheet Data at, and Consolidated Statement of Income
    Data for the year ended, December 31, 1997 give effect to the Company's
    acquisition of Link Group Holdings Limited in January 1997. Revenue for the
    year ended December 31, 1997 attributable to this acquisition was $18.0
    million.

(3) Pro forma net income and net income per share give effect to the Company's
    conversion from an S corporation to a C corporation for U.S. federal and
    state income tax purposes. As an S corporation, the Company was not subject
    to income taxes but instead passed its tax attributes through to its
    shareholders. As a C corporation, the Company is subject to income taxes at
    corporate income tax rates. The pro forma data above presents net income and
    net income per share as if the Company had been subject to C corporation
    income taxes for the years ended December 31, 1996 and 1995. Pro forma data
    has not been calculated for years prior to 1995.

(4) All cash dividends were Subchapter S distributions. Cash dividends are not
    anticipated in the foreseeable future.
</FN>
</TABLE>

                                       16

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

OVERVIEW

        IMR provides application software outsourcing solutions for the IT
departments of large businesses with intensive information processing needs. The
Company's services, which generally are offered on a fixed-price, fixed
time-frame basis, include core transitional outsourcing services (software
development, legacy maintenance and legacy transformation) and Year 2000
conversion services. In addition, the Company offers programming and consulting
services on a time-and-materials basis.

        Revenue from services provided on a fixed-price basis are recognized
using the percentage of completion method. Revenue from services provided on a
time-and-materials basis is recognized in the period that the services are
provided. The Company bears the risk of cost over-runs and inflation with
respect to its fixed-price projects. In order to mitigate these risks, the
Company subdivides its projects into smaller phases, and the Company generally
reserves the right to renegotiate fixed-price and fixed-time frame commitments
in the event of any change in scope. Under the percentage of completion method,
the Company must estimate the percentage of completion of each project at the
end of each financial reporting period. Estimates are subject to adjustment as a
project progresses to reflect changes in projected completion costs or dates.
The cumulative impact of any revision in estimates of the percentage of work
completed is reflected in the financial reporting period in which the change in
the estimate becomes known. Since the Company bears the risk of cost over-runs
and inflation associated with fixed-price, fixed-time frame projects, the
Company's operating results may be adversely affected by inaccurate estimates of
contract completion costs and dates and by inflationary increases in such costs.
Although from time to time the Company has been required to make revisions to
its work completion estimates, to date none of such revisions, in the aggregate,
have had a material adverse effect on the Company's operating results or
financial condition in any reporting period.

RECENT TRANSACTIONS

        LYON CONSULTANTS, S.A.

        On May 15, 1998, the Company acquired 100% of the outstanding stock of
Lyon Consultants, S.A., a privately held software engineering company
headquartered in Paris, France. Lyon specializes in rapid software application
development, utilizing reusable business and technical software objects, and
information technology consulting. In exchange for Lyon's common stock, Lyon's
shareholders received $16.0 million in cash and 499,353 shares of the Company's
common stock. In addition, $700,000 in cash and 32,503 shares of the Company's
common stock are payable to Lyon's former shareholders one year from closing.
The Lyon acquisition is accounted for as a purchase pursuant to the provisions
of APB Opinion No. 16. The purchase price was allocated to the assets acquired
and liabilities assumed based on their estimated fair values. The excess of the
purchase price over the net assets acquired (goodwill) is being amortized over
20 years.

        The purchased assets and assumed liabilities in connection with the
acquisition of Lyon were recorded at their estimated fair values at the
acquisition date. In connection with the Lyon acquisition, the Company retained
an independent appraiser to complete a valuation of the assets of Lyon,
including valuation of certain in-process research and development (IPRD). The
Company recorded a $15.4 million charge for IPRD in the second quarter of 1998.
Subsequent to this charge, the staff of the Securities and Exchange Commission
(the

                                       17

<PAGE>

"Staff") issued a letter to the American Institute of Certified Public
Accountants dated September 1998 ("AICPA letter") providing interpretive
guidance relating to IPRD. After consideration of the guidance provided in the
AICPA letter, the Company reduced the amount charged to IPRD in the second
quarter by $7.2 million to $8.2 million. The $7.2 million reduction has been
allocated to goodwill and will be amortized over 20 years.

        The Company identified five project categories for which technological
feasibility had not been achieved as of the acquisition date and for which there
was no alternative future use. Lyon's base of technology at the date of
acquisition consisted of components based architecture. The project categories
are: (a) LC Ready-Banking; (b) LC Ready-Insurance; (c) LC Ready-Manufacturing;
(d) LC Ready-Utilities and (e) Other European modules.

        The value associated with these projects was determined using a
discounted cashflow model with a risk adjusted discount rate of 25%. The model
reflects revenue to be generated beginning in 1999 and continuing through 2006
for all projects. The appraisal assumed no significant changes from the
Company's historical pricing, margins and expense levels. The valuation also
incorporated a stage of completion methodology where the value was adjusted
based on the technology's percentage of completion.

        As of the acquisition date, the general design of the core component
modules was completed. This design identified the primary core component modules
required for four targeted industries which was further subdivided between the
European and North American markets. As of the acquisition date 30% of the North
American component modules and 60% of the European component modules had been
coded. Testing has not been completed for these modules.

        The schedule below details the status of each project as of the
acquisition date and its appraised in-process research and development value
(dollar amounts in thousands):

<TABLE>
<CAPTION>
                                                                         Percentage Complete
                                                    --------------------------------------------------------------------------------
                          Pre        Estimated
                      Acquisition    Completion      Time         Labor         Cost      Complexity      Overall         IPRD
      Project            Costs          Date         Based        Based        Based         Based      Conclusion        Value
--------------------  ------------   ----------     -------     --------     --------     ----------    ----------    -------------
<S>                   <C>            <C>            <C>          <C>         <C>          <C>           <C>           <C>
LC Ready-
Banking.............  $        952    Sep 1999        51%          48%          46%           65%           50%       $       1,600

LC Ready-
Insurance...........  $      1,223    Sep 1999        58%          55%          52%           60%           55%               3,400

LC Ready-
Manufacturing.......  $        629    Dec 1999        48%          31%          28%           55%           40%               1,300

LC Ready-
Utilities...........  $        419    Dec 1999        19%          20%          20%           50%           20%               1,100

Other
European ...........  $      1,471    Mar 1999         -           57%          53%           70%           55%                 800
                                                                                                                      -------------
   Total                                                                                                              $       8,200
                                                                                                                      =============
</TABLE>

        As of the date of the valuation, the expected cost of the development
project was approximately $7.0 million. The above estimates are continually
modified as each of the projects approach completion.

                                       18

<PAGE>

        If the projects discussed above are not successfully developed, the
sales and profitability of the Company may be adversely affected in future
periods. Additionally, the value of other intangible assets acquired may become
impaired. Management believes that the restated in-process research and
development charge of $8.2 million is valued consistently with the Staff's
current views regarding valuation methodologies. There can be no assurances,
however, that the Staff will not take issue with any assumptions used in the
Company's valuation model and require the Company to further revise the amount
allocated to in-process research and development.

     RHO TRANSFORMATIONAL TECHNOLOGIES PTY. LIMITED

        On June 30, 1998, the Company acquired 100% of the outstanding stock of
RHO Transformational Technologies Pty. Limited, a privately held software
services and engineering company headquartered in Sydney, Australia. RHO
specializes in software application conversion and maintenance services, using
proprietary tools. In exchange for RHO's common stock, RHO's shareholders
received 285,000 shares of the Company's common stock. The RHO acquisition is
accounted for as a pooling-of-interests combination pursuant to the provisions
of APB Opinion No. 16. Current year financial statements have been restated to
give affect to the business combination. Prior year financial statements have
not been restated to give affect to the business combination as the financial
position and results of operations are not material to the Company's financial
statements. Costs of approximately $145,000 related to the acquisition have been
charged to acquisition costs and included in the statements of operations.

     VISUAL SYSTEMS DEVELOPMENT CORPORATION

        On October 2, 1998, the Company acquired 100% of the outstanding stock
of Visual Systems Development Corporation, an information technology company
based in Toronto, Canada which specializes in client/server and Internet
application development. In exchange for Visual's common stock, Visual's
shareholders received $5.5 million in cash and 400,000 shares of the Company's
common stock. Additional payments of up to $3.5 million in the form of the
Company's common stock are payable if Visual achieves certain specified
financial and business objectives. The acquisition is accounted for as a
purchase pursuant to the provisions of APB Opinion No. 16. The purchase price
was allocated to the assets acquired and liabilities assumed based on their
estimated fair values. The excess of the purchase price over the net assets
acquired (goodwill) is being amortized over 20 years.

INCOME TAX MATTERS

        IMR-India is eligible for certain favorable tax provisions provided
under the Indian Income-Tax Act, 1961 including: (a) an exemption from payment
of corporate income taxes for a period of five consecutive years in the first
eight years of operation (the "Tax Holiday"); or (b) an exemption from income
taxes on the profits derived from exporting computer software or transmitting
software from India (the "Export Exemption"). The Export Exemption remains
available after expiration of the Tax Holiday. The Company considers these
earnings to be permanently invested in India and does not anticipate
repatriating any of these earnings to the U.S. If the Company determines to
repatriate any earnings of IMR-India, it will be required to record a provision
for income taxes on such amounts and, upon repatriation of the funds, pay U.S.
taxes thereon. See Note 11 of Notes to Consolidated Financial Statements.

        As a result of the favorable tax positions, the effective tax rate for
the Company's India operations has been less than 5% for 1998, 1997 and 1996.
Recent legislation in India indicate that these favorable tax positions will
continue in the near future. However, there can be no assurance that the Indian
government will not significantly modify or eliminate these favorable tax
provisions.

                                       19

<PAGE>

     RESULTS OF OPERATIONS

        The following table summarizes for the years indicated, certain items
from the Company's statements of income expressed as a percentage of revenue and
percentage change in the dollar amount of such items compared to the prior year.

<TABLE>
<CAPTION>
                                                    Percentage of Revenue                        Percentage Increase
                                                   Year ended December 31,                           Year to Year
                                        ---------------------------------------------    ------------------------------------
                                            1998            1997            1996            1997-1998           1996-1997
                                        ------------    ------------    -------------    ---------------    -----------------
<S>                                     <C>             <C>             <C>              <C>                <C>
Revenue.............................       100.0%          100.0%           100.0%              89.4%               198.9%
Cost of revenue.....................        52.0            55.0             56.0               79.2                193.5
                                           -----           -----            -----

Gross profit........................        48.0            45.0             44.0              101.9                205.9
Selling, general and
   administrative expenses.........         20.4            23.9             26.9               61.9                178.0
Research and development............         4.0             1.1                -              579.8                    -
Acquired in-process research
   and development and
   acquisition costs................         5.3               -                -              100.0                    -
Goodwill amortization..............          1.3             1.3              0.3               84.7              1,023.0
                                           -----           -----            -----

Income from operations..............        17.0            18.7             16.8               72.8                233.1
Other income, net...................         2.8             2.1              0.1              147.1              4,962.9
                                           -----           -----            -----
Income before provision for
   income taxes and minority
   interest.........................        19.8%           20.8%            16.9%              80.4%               268.2%
                                           =====           =====            =====
</TABLE>

         During the years ended December 31, 1998 and 1997, the Company
experienced a high level of revenue growth which is summarized as follows:

<TABLE>
<CAPTION>
                                                                            1997-1998         1996-1997
                                                                            ---------         ---------
<S>                                                                         <C>               <C>
Percentage increase of revenue
   Acquisitions.........................................................       22.1%              65.2%
   Year 2000 revenue....................................................       37.0%             108.7%
   Transitional outsourcing revenue and other service offerings.........       30.3%              25.0%
                                                                               ----              -----

                                                                               89.4%             198.9%
                                                                               ====              =====
</TABLE>

         IMR expects Year 2000 revenue to decrease during 1999 as many Year 2000
compliance solutions are implemented and tested.

                                       20

<PAGE>

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

         REVENUE. Revenue increased to $158.3 million in 1998, representing an
89.4% increase over revenue of $83.6 million in 1997. Of this increase,
approximately $18.4 million was attributable to the acquisition of Lyon
Consultants, S.A., RHO Transformational Technologies Pty. Limited and Visual
Systems Development Corporation. The remaining $56.3 million was primarily the
result of increases in the Company's transitional outsourcing and Year 2000
service offerings. Revenue from the Company's Year 2000 conversion services
increased to $77.2 million during 1998 (including $1.8 million of revenue
realized from acquisitions) as compared to revenue of $44.5 million in 1997.
Revenue from the Company's core transitional outsourcing services (software
development, legacy maintenance and legacy transformation services) increased to
$66.9 million during 1998 (including $16.9 million of revenue realized from
acquisitions) compared to $29.4 million in 1997. Revenue from professional
services was $14.1 for 1998 (including $906,000 of revenue realized from
acquisitions) as compared to revenue of $9.6 million in 1997. Management
believes that future revenue growth will be more dependent on acquisitions.

         COST OF REVENUE. Cost of revenue was $82.3 million, or 52.0% of revenue
for 1998, as compared to $46.0 million, or 55.0% of revenue, for 1997. Cost of
revenue consists primarily of salaries and employee benefits for personnel
dedicated to client projects as well as facility costs at the India and Northern
Ireland software development facilities. The decrease in cost of revenue as a
percentage of revenue reflects: (a) productivity gains from the Company's Year
2000 and other transformational toolsets; (b) a 17.8% devaluation of the Indian
Rupee since September 1997 which resulted in reduced costs at the Company's
Indian software development centers; and (c) improved utilization of software
development personnel in India and Northern Ireland. Wage costs continue to
increase at a greater rate than general inflation in each of the countries in
which IMR has operations (excluding foreign exchange fluctuations), and the
Company anticipates that this trend will continue in the near term. The Company
has been able to pass these wage increases on to its customers in the form of
increased prices for its service offerings. However, there can be no assurance
that the Company will be able to continue to increase prices to its customers to
offset future wage increases.

         GROSS PROFIT. Gross profit increased to $75.9 million in 1998 compared
to $37.6 in the prior comparable period. The Company's gross profit margin, as a
percentage of revenue, increased to 48.0% in 1998 compared to 45.0% in 1997.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased to $32.3 million in 1998, as compared to $19.9
million in 1997. SG&A expenses consist primarily of salaries, employee benefits,
travel, promotion, telecommunications and occupancy costs. As a percentage of
revenue, SG&A expenses decreased to 20.4% in 1998 as compared to 23.9% for 1997.
The decrease as a percentage of revenue occurred due to the rapid increase in
revenue in 1998 compared to a lesser rate of increase in SG&A expense during the
same period. The dollar increase in SG&A expenses is attributable to the Lyon,
RHO and Visual acquisitions, the addition of sales offices, expansion of sales
personnel, expansion of the Company's delivery capacity, regionalization of
operations and increases in costs related to expanding the Company's general
support staff. The Company is aggressively expanding its sales force and
marketing efforts which will generate higher SG&A in the near term. Management
does not anticipate SG&A decreasing further as a percentage of revenue.

         RESEARCH AND DEVELOPMENT. Research and development costs increased to
$6.2 million in 1998 compared to $919,000 in 1997. The increase in dollars is
attributable to: (a) the acquisition of Lyon and the continued development of
Lyon's component technology; (b) the modification of component technology for
certain targeted industries; and (c) the expansion of efforts to develop and
enhance IMR's transformation toolsets.

                                       21

<PAGE>

         GOODWILL AMORTIZATION. Goodwill amortization increased to approximately
$2.1 million for 1998 from approximately $1.1 million for 1997. This increase
primarily reflects the amortization of goodwill resulting from the Company's
acquisitions of Lyon and Visual.

         ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT AND ACQUISITION COSTS. The
purchased assets and assumed liabilities in connection with the acquisition of
Lyon were recorded at their estimated fair values at the acquisition date. The
Company received an appraisal of the intangible assets which indicated that
approximately $8.2 million of the acquired intangible assets was acquired IPRD
that had not yet reached technological feasibility and had no alternative future
use (See Note 2 of Notes to the Consolidated Financial Statements). To determine
the value of the IPRD, the Company's appraisal considered, among other factors,
the state of development of each project, the time and cost needed to complete
each project, expected income, discounted cash flow and associated risks which
included the inherent difficulties and uncertainties in completing each project
and thereby achieving technological feasibility and risks related to the
viability of and potential changes to future target markets. These analyses
result in amounts assigned to the cost of in-process research and development
for projects that had not yet reached technological feasibility and had no
alternative future uses. Accordingly, the acquired IPRD was charged to expense
by the Company in its quarter ended June 30, 1998. In addition, the Company
recorded a one-time charge of approximately $145,000 for costs related to the
RHO acquisition. There was no acquired IPRD or acquisition costs in 1997.

         INCOME FROM OPERATIONS. Operating income for 1998 was $27.0 million
compared to $15.6 million in 1997, representing a 72.8% increase. As a
percentage of revenue, income from operations was 17.0% in 1998 compared to
18.7% in 1997. The percentage decrease is the result of one-time charges
totaling $8.3 million related to acquired IPRD and RHO acquisition costs.

         OTHER INCOME (EXPENSE). The Company realized net other income of
approximately $4.4 million in 1998 compared to net other income of approximately
$1.8 million in 1997. In 1998 the Company recognized approximately $4.6 million
in investment income primarily from the investment of the remaining net proceeds
from its public offering in August 1997 and incurred approximately $212,000 of
interest expense related to credit facilities in India and Australia. During
1997, the Company recognized approximately $2.0 million in investment income
primarily from the investment of remaining net proceeds from its public
offerings in November 1996 and August 1997, and incurred approximately $175,000
of interest expense primarily for credit facilities in place in India and the
U.K.

         PROVISION FOR INCOME TAXES. The provision for income taxes increased to
approximately $12.4 million for 1998 from approximately $5.4 million in 1997.
This increase is primarily due to increased earnings. The effective tax rate
excluding one-time charges for IPRD and acquisition costs is 31.2% in 1998
compared to 31.3% for 1997. IMR has not recorded deferred income taxes
applicable to undistributed earnings of IMR-India. Those earnings are considered
to be indefinitely reinvested and, accordingly, no provision for U.S.
federal and state income tax has been provided thereon.

         NET INCOME. Net income increased 59.0% to $18.9 million in 1998 from
$11.9 million in 1997. As a percentage of revenue, net income was 11.9% and
14.2% for 1998 and 1997, respectively. This decrease as a percentage of revenue
was attributable to one-time charges for IPRD and acquisition costs.

                                       22

<PAGE>

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

         REVENUE. Revenue increased to $83.6 million in 1997, representing a
198.9 % increase over revenue of $27.9 million in 1996. Of this increase,
approximately $18.0 million is attributable to the acquisition of IMR-U.K. The
remaining $37.4 million of this increase in revenue was primarily attributable
to the continued expansion of Year 2000 conversion services. Revenue from the
Company's Year 2000 conversion services increased to $44.5 million during 1997
as compared to revenue of $7.5 million for 1996. Revenue from the Company's core
transitional outsourcing services was $29.4 million in 1997 as compared to $16.3
million for 1996. Revenue from professional services was $9.6 million for 1997
as compared to revenue of $4.1 million for 1996.

         COST OF REVENUE. Cost of revenue was $46.0 million, or 55.0% of revenue
for 1997, as compared to $15.7 million, or 56.0% of revenue, for 1996. Cost of
revenue consists primarily of salaries and employee benefits for personnel
dedicated to client projects as well as amortization of capitalized software
costs and facility costs at the India and Northern Ireland software development
facilities. The decrease in cost of revenue as a percentage of revenue reflects:
(a) the Company's implementation of better controls over project pricing and
margins; (b) a lower percentage of application maintenance service projects in
1997, as compared to 1996, which carry slightly lower margins than contracts for
the Company's other core transitional outsourcing services and Year 2000
services; and (c) improved utilization of software development personnel in
India. This improved utilization reflected the benefits associated with
expansion and training of the Company's India-based personnel. Wage costs
continue to increase at a greater rate than inflation in each of the countries
in which IMR has operations, and the Company anticipates that this trend will
continue in the near term. The Company generally has been able to offset these
wage increases to date through increases in prices for its service offerings.
However, there can be no assurance that in the future the Company will be able
to increase its prices in amounts adequate to offset future wage increases.

         GROSS PROFIT. Gross profit increased to $37.6 million in 1997 compared
to $12.3 million in the prior comparable period. As a percentage of revenue,
gross profit increased to 45.0% in 1997 as compared to 44.0% in 1996. The
Company's gross profit margin increased for both its U.S. and its India
operations. However, reduced gross profit margins for IMR-U.K. and IMR-Northern
Ireland partially offset this increase. IMR-U.K. derives a substantial portion
of its revenue from professional services which generally result in lower profit
margins. IMR-Northern Ireland experienced lower gross profit during the start-up
phase of its operations (which began in July 1997) as the Company hired and
trained its workforce at that location.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased to $19.9 million in 1997, as compared to $7.5
million for 1996. Selling, general and administrative expenses consist primarily
of salaries, employee benefits, travel, promotion, telecommunications and
occupancy costs. As a percentage of revenue, selling, general and administrative
expenses decreased to 23.9% in 1997 as compared to 26.9% for 1996. While
selling, general and administrative expenses decreased as a percentage of
revenue, the dollar volume increase was attributable primarily to selling,
general and administrative expenses incurred by IMR-U.K., expansion of domestic
offices, additional costs associated with reporting and accounting
responsibilities as a public company, and increases in costs related to
expanding the Company's administrative support staff.

                                       23

<PAGE>

         GOODWILL AMORTIZATION. Goodwill amortization increased to approximately
$1.1 million for 1997 from approximately $100,000 for the year 1996. This
increase reflects the goodwill resulting from the Company's acquisition of 64.0%
of IMR-India in the second half of 1996 and the 1997 acquisitions of IMR-U.K.
and IMR-Northern Ireland.

         INCOME FROM OPERATIONS. Operating income for 1997 was $15.6 million
compared to $4.7 million in 1996, representing a 233.1% increase. As a
percentage of revenue, income from operations increased to 18.7% in 1997
compared to 16.8% in 1996, primarily due to revenue increasing more rapidly than
operating expenses.

         OTHER INCOME (EXPENSE). The Company realized net other income of
approximately $1.8 million in 1997 as compared to net other income of
approximately $35,000 in 1996. Other income in 1996 included income related to
the Company's equity investment in IMR-U.K. of approximately $83,000; interest
and other income of approximately $253,000 offset by approximately $301,000 of
interest expense. During 1997, the Company recognized approximately $2.0 million
in investment income primarily from the investment of remaining net proceeds
from its public offerings in November 1996 and August 1997, and incurred
approximately $175,000 of interest expense primarily for credit facilities in
place in India and the U.K.

         PROVISION FOR INCOME TAXES. The provision for income taxes increased to
approximately $5.4 million for 1997 from approximately $1.4 million for 1996.
This represents an effective tax rate of 31.3% and 29.7% for 1997 and 1996,
respectively. IMR has not recorded deferred income taxes applicable to
undistributed earnings of IMR-India. Those earnings are considered to be
indefinitely reinvested and, accordingly, no provision for U.S. federal and
state income tax has been provided thereon.

         MINORITY INTEREST IN NET INCOME. Minority interest in net income
decreased to approximately $48,000 for 1997 from approximately $730,000 in the
comparable period in 1996. This represents the portion of IMR-India's net income
which is allocated to IMR-India minority shareholders. This decrease was a
result of the acquisition of 64.0% of IMR-India by the Company during late 1996,
and the Company's acquisition of an additional 1.7% of IMR-India in 1997. At
December 31, 1997, approximately 99.9% of IMR-India was owned by the Company and
only 0.1% was owned by the three other individual shareholders.

         NET INCOME. Net income increased 359.6% to $11.9 million in 1997 from
$2.6 million in 1996. This expansion was attributable to the 198.9% revenue
growth rate and increases in profitability.

QUARTERLY RESULTS OF OPERATIONS

         The following table presents certain unaudited quarterly statements of
operations data for each of the eight quarters beginning January 1, 1997 and
ending December 31, 1998. The information relating to the quarters beginning
January 1, 1997 and ending on December 31, 1998 is derived from and is qualified
by reference to the audited Consolidated Financial Statements appearing
elsewhere in this document and, in the opinion of management, includes all
adjustments, consisting only of normal recurring adjustments necessary for a
fair presentation of that information. The results of operations for any quarter
are not necessarily indicative of the results to be expected for any future
period.

                                       24

<PAGE>
<TABLE>
<CAPTION>
                                                                  Quarter Ended
                    ----------------------------------------------------------------------------------------------------------
                                            1998                                                  1997
                    ----------------------------------------------------  ----------------------------------------------------
                      Dec. 31      Sept. 30      June 30      March 31      Dec. 31       Sept 30       June 30     March 31
                    -----------  ------------  -----------  ------------  -----------  ------------  ------------  -----------
                                                      (In thousands, except per share data)
<S>                 <C>          <C>           <C>          <C>           <C>          <C>           <C>           <C>
Revenue...........    $46,655      $42,013       $37,257      $32,327       $27,392       $23,044       $18,767      $14,347
Gross profit......     22,970       20,768        17,269       14,906        12,459        10,431         8,396        6,305
Income (loss) from
   operations.....     10,470        9,821           (65)(1)    6,732         5,641         4,480         3,369        2,113
Basic earnings
(loss) per share..      $0.27        $0.25        $(0.07)(1)    $0.21         $0.18         $0.14         $0.11        $0.06
Diluted earnings
(loss) per share..      $0.21        $0.19        $(0.07)(1)    $0.15         $0.13         $0.10         $0.08        $0.04
</TABLE>

<TABLE>
<CAPTION>
                                                                  Quarter Ended
                    ----------------------------------------------------------------------------------------------------------
                                            1998                                                  1997
                    ---------------------------------------------------  -----------------------------------------------------
                      Dec. 31      Sept. 30      June 30      March 31      Dec. 31      Sept. 30       June 30     March 31
                    -----------  ------------  -----------  -----------  ------------  ------------  -----------  ------------
<S>                 <C>          <C>           <C>          <C>           <C>           <C>            <C>        <C>   
Revenue...........     100.0%       100.0%        100.0%       100.0%        100.0%        100.0%         100.0%     100.0%
Gross profit......      49.2         49.4          46.4         46.1          45.5          45.3           44.7       43.9

Income (loss) from
   operations.....      22.4         23.4          (0.2)(1)     20.8          20.6          19.4           18.0       14.7
<FN>
(1) Includes effect of one-time charges of $8.3 million attributable to acquired
    IPRD and acquisition costs.
</FN>
</TABLE>

         The Company's operations and related revenue and operating results
historically have varied substantially from quarter to quarter, and the Company
expects these variations to continue. Among the factors causing these variations
have been the number, timing and scope of IT projects in which the Company is
engaged, the contractual terms of such projects, delays incurred in the
performance of such projects, the accuracy of estimates of resources and time
frames required to complete ongoing projects, and general economic conditions. A
high percentage of the Company's operating expenses, particularly personnel and
rent, are relatively fixed in advance of any particular quarter. As a result,
unanticipated variations in the number and timing of the Company's projects or
in employee utilization rates may cause significant variations in operating
results in any particular quarter. An unanticipated termination of a major
project, a client's decision not to pursue a new project or proceed to
succeeding stages of a current project, or the completion during a quarter of
several major client projects could require the Company to pay underutilized
employees and therefore have a material adverse effect on the Company's results
of operations and financial condition.

                                       25

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 1998, the Company had $120.9 million of working capital
as compared to working capital of $96.0 million at December 31, 1997. This
increase primarily resulted from the continued rapid growth of net income and
the reduction in income tax liabilities related to the exercise of stock
options. At December 31, 1998 and 1997, the Company held $108.6 and $90.3
million, respectively, in cash and cash equivalents and marketable securities.

         Net cash provided by operations in 1998, 1997 and 1996 was $39.1
million, $17.8 million and $5.2 million, respectively. This increase in cash
provided by operations reflects primarily increases in profitability,
improvements in contract management and the tax benefit of stock options
exercised.

         Net cash used in investing activities in 1998, 1997 and 1996 was $47.2
million, $8.7 million and $19.1 million, respectively. In 1998, the Company
expended $8.9 million on acquisitions, $26.2 million on marketable securities
and $13.5 million for capital expenditures including $4.8 million for real
property. In 1997, the Company acquired certain subsidiaries for $3.3 million in
cash and purchased property and equipment for $6.9 million. In 1996, the Company
acquired a majority interest in IMR-India for $10.0 million, invested in
marketable securities of $5.5 million and purchased property and equipment for
$2.6 million.

         The Company maintains an unsecured $10.0 million line of credit with
NationsBank which allows the Company to borrow up to 80% of the book value of
the Company's U.S. accounts receivable. Interest is at 30-day LIBOR plus 1.0%
(6.3% as of December 31, 1998). At December 31, 1998, there was no amount
outstanding under this line of credit and $10.0 million was available for
borrowing. Provisions of this line of credit and certain notes payable contain
financial covenants, including covenants which require the Company to maintain
certain financial ratios. At December 31, 1998, the Company was in compliance
with these covenants.

         IMR-India maintains an export sales account receivable discounting
facility. The loans are denominated in Indian rupees. Principal payments on
amounts borrowed under this facility are due within 90 days of the loan.
Interest is payable at a rate set by the Reserve Bank of India (currently 9.0%).
At December 31, 1998 and 1997, no amounts were due under this facility. The
maximum amount available under this facility at December 31, 1998 was
approximately $703,000. The facility is collateralized by IMR-India's total
export accounts receivable and property and equipment.

         The Company believes that its current cash levels, accessible funds
under its credit facilities and cash flows from future operations, will be
adequate to meet its continued expansion objectives, anticipated levels of
capital expenditures and debt repayment requirements, including those that may
be required pursuant to the integration of its acquisitions, for the foreseeable
future.

COSTS ASSOCIATED WITH THE YEAR 2000

         INTRODUCTION. Many existing computer systems run software programs
permitting only two-digit entries to reference the year in the date field (e.g.,
1998 is read as "98") and therefore cannot properly process dates in the next
century. Software programs that use the two-digit year date field to perform
computations or decision-making functions may fail due to an inability to
correctly interpret dates in the 21st century. For example, many software
systems will misinterpret "00" to mean the year 1900 rather than 2000.

                                       26

<PAGE>

         THE COMPANY'S STATE OF READINESS. The Company is in the process of
assessing the impact the Year 2000 will have on its information technology and
non-information technology systems, relationships with its third-party vendors
and relationships with its clients. As a result of the initial assessment, the
Company believes that the Year 2000 will not give rise to any event that will
have a material adverse effect on the Company's results of operations and
financial condition.

         Although the Company continues to review its IT systems, as well as its
non-IT systems, for Year 2000 compliance, to date, the Company has discovered
that only its internal accounting system is not Year 2000 compliant. The Company
expected to replace this accounting system in fiscal year 1999 for reasons other
than the fact that the system is not Year 2000 compliant and it has not
accelerated replacement plans for such system in light of its non-compliance. To
date, the Company has incurred expenses approximating $20,000 related to Year
2000 compliance and anticipates that the total cost should not exceed
approximately $100,000. These costs estimates primarily reflect the costs
related to Company personnel. The Company does not believe that the costs
associated with the replacement of the accounting system will have a material
impact on the Company's results of operations and financial condition. The
Company has not identified any other IT or non-IT system that is subject to a
material risk of disruption due to the Year 2000. The Company does not believe a
formal contingency plan is required for internal systems.

         The Company has assessed whether a system failure experienced by any of
the Company's third-party vendors would negatively impact the Company's
operations or financial condition. The Company has determined that a Year 2000
system failure experienced by the Company's satellite and communication vendors
could potentially interrupt communications between client sites and the
Company's software development centers. This interruption could result in loss
of revenue, increased costs and project delays. Management has contacted its
satellite and communications vendors in order to assess whether they anticipate
any communications failures or interruptions, as a result of the Year 2000. No
such failures or interruptions are presently anticipated, and the Company does
not expect to experience any adverse effects on its results of operations and
financial condition. If, however, further analysis determines that one or more
of the Company's satellite or communications vendors may encounter Year 2000
related failures or interruptions, the Company will be required to develop a
contingency plan. It is anticipated that a contingency plan, if necessary, will
be developed by the third quarter of 1999. The Company has determined that a
system failure experienced by the satellite and communication vendors could have
a material effect on the Company's results of operations and financial
condition. System failure by any other third party vendor would not have a
material affect on the Company's results of operations and financial condition.

         RISKS PRESENTED BY THE YEAR 2000. Many of the Company's client
engagements include Year 2000 conversion services that are critical to the
operations of its clients' businesses. Any failure in a client's system could
result in a claim for substantial damages against the Company, regardless of the
Company's responsibility for such failure. Although the Company attempts to
limit contractually its liability for damages arising from negligent acts,
errors, mistakes or omissions in rendering its IT services, there can be no
assurance the limitations of liability set forth in its service contracts will
be enforceable in all instances or would otherwise protect the Company from
liability for damages. Although the Company maintains general liability
insurance coverage, including coverage for errors or omissions, there can be no
assurance that such coverage will continue to be available on reasonable terms
or will be available in sufficient amounts to cover one or more large claims, or
that the insurer will not disclaim coverage as to any future claim. 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 adversely affect the Company's results of
operations and financial condition.

                                       27

<PAGE>

         THE COMPANY'S CONTINGENCY PLANS. The Company is a high quality provider
of Year 2000 compliance services. Accordingly, if the Company experiences a
failure in its Year 2000 preparedness, experienced staff will be redeployed to
address any potential Year 2000 compliance issue. Otherwise, the Company has no
material contingency plan identified for Year 2000 readiness issues.

ASSET MANAGEMENT

         The Company's accounts receivable increased $13.2 million to $24.4
million at December 31, 1998 from $11.2 million at December 31, 1997.
Approximately 55.8% of this increase is attributable to the 1998 acquisitions. A
significant portion of the Company's business is executed on a fixed-price,
fixed-time frame basis. Revenue on fixed-price contracts does not necessarily
correlate to actual billings. Accordingly, accounts receivable may increase
significantly in periods where there is a significant increase in deferred
revenue (i.e., billings issued in advance of revenue recognition).

         A common financial measure is the calculation of days sales outstanding
(DSO) in accounts receivable. Management believes that the calculation of DSO at
December 31, 1998 should factor in rapidly increasing revenue at year-end
(revenue was $46.7 million for the fourth quarter of 1998 compared to $27.4
million for the fourth quarter of 1997). Based on the above, DSO was 47 days and
37 days at December 31, 1998 and 1997, respectively. The increase from 37 days
to 47 days is primarily the result of the acquisition of Lyon Consultants, S.A.
Collection practices of accounts receivable in France historically have been
slower than collections in other geographical areas. In addition, accounts
receivable in France, U.K. and Canada include value added taxes which are not
included in revenue. Without value added taxes, DSO would have been 45 days at
December 31, 1998.

         The Company has invested excess funds received from its initial public
offering in investment-grade securities and money market instruments.

EFFECTS OF INFLATION

         The Company's most significant costs are the salaries and related
benefits for its consultants and other professionals. Competition for IT
professionals with the advanced technological skills necessary to perform the
services offered by the Company have caused wages to increase at a rate greater
than the general rate of inflation. As with other IT service providers, the
Company must adequately anticipate wage increases, particularly on its
fixed-price contracts. Further, India has in the past experienced significant
inflation. During 1998, India inflation was primarily offset by the devaluation
of the Indian Rupee to the U.S. dollar. Historically, the Company's wage costs
in India have been significantly lower than its wage costs in North America and
Europe for comparably-skilled employees, although wage costs in India are
presently increasing at a faster rate than other locations. There can be no
assurance that the Company will be able to recover cost increases through
increases in the prices that it charges for its services.

                                       28

<PAGE>

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

         CONVERSION OF YEAR 2000 PROJECTS INTO TRANSITIONAL OUTSOURCING
BUSINESS. The Company realized 48.8% and 53.2% of total revenue from Year 2000
conversion services in 1998 and 1997, respectively. The Company believes that
demand for Year 2000 conversion services will diminish throughout 1999 as many
Year 2000 compliance solutions are implemented and tested. A core element of the
Company's growth strategy is to use the business relationships and the knowledge
of its clients' computer systems obtained in providing its Year 2000 services to
generate additional IT projects for these clients. There can be no assurance
that the Company will be successful in generating additional business from its
Year 2000 clients for other services. The Company's inability to implement this
growth strategy would have a material adverse affect on the Company's results of
operations and financial condition.

         INCREASED COMPETITION WITH THE REDUCTION IN THE YEAR 2000 MARKET. With
the completion of Year 2000 projects in 1999, the Company and many of its
competitors will seek revenue growth from other service offerings. This may
result in increased competition for these other service offerings. There can be
no assurance that anticipated growth of the IT market will be sufficient to
replace the industry-wide revenue reduction from Year 2000 services.

         MANAGEMENT OF GROWTH. An important element of the Company's strategy is
to pursue continued rapid growth of its business. The Company's revenue
increased approximately 89.4% in the year ended December 31, 1998, from $83.6
million in 1997 to $158.3 million in 1998. As of March 12, 1999, the Company
employed approximately 2,300 software development professionals. The Company's
growth will continue to place significant demands on its management and other
resources. In particular, the Company will have to continue to increase the
number of its personnel, particularly skilled technical, marketing and
management personnel, and continue to develop and improve its operational,
financial, communications and other internal systems, both in the U.S. and
offshore. The Company's inability to manage its growth effectively could have a
material adverse effect on the quality of the Company's services and projects,
its ability to attract and retain key personnel, its business prospects and its
results of operations and financial condition. Any unexpected shortfall in
revenue without a corresponding and timely reduction in staffing and other
expenses, or a staffing increase that is unaccompanied by a corresponding
increase in revenue, could also have a material adverse effect on the Company's
results of operations and its financial condition.

         COMPETITIVE MARKET FOR TECHNICAL PERSONNEL. The future success of the
Company's growth strategy will depend to a significant extent on its ability to
attract, train, motivate and retain highly skilled software development
professionals, particularly project managers, software engineers and other
senior technical personnel. The Company believes that there is a shortage of,
and significant competition for, software development professionals with the
advanced technological skills necessary to perform the services offered by the
Company. The Company's ability to maintain and renew existing engagements and
obtain new business depends, in large part, on its ability to hire and retain
technical personnel with the IT skills to keep pace with continuing changes in
information processing technology, evolving industry standards and changing
client preferences. An inability to hire such additional qualified personnel
will impair the Company's ability to manage and complete its existing projects
and to bid for or obtain new projects. Further, the Company must train and
manage its growing employee base, requiring an increase in the level of
responsibility for both existing and new management personnel to retain
personnel. There can be no assurance that the management skills and systems
currently in place will be adequate or that the Company will be able to retain
its existing or

                                       29

<PAGE>

new employees. Accordingly, there can be no assurance that the Company will be
successful in retaining current or future employees. In addition, a majority of
the Company's present employees reside in India. Historically, the Company's
wage costs in India have been significantly lower than its wage costs in the
U.S. for comparably skilled employees, although wage costs in India are
presently increasing at a faster rate than in the U.S.

         DEPENDENCE ON OFFSITE SOFTWARE DEVELOPMENT CENTERS. A significant
element of the Company's business strategy is to continue to leverage its
offsite software development centers in Bangalore and Mumbai, India and Belfast,
Northern Ireland as well as a new offshore center planned for New Delhi, India.
The Company believes that the use of a strategically located network of offshore
software development centers will provide IMR with potential cost advantages as
well as the ability to provide 24-hour service to its clients. In order to
provide its service delivery model, the Company must maintain active satellite
communications between its offices, the offices of its clients in the U.S. and
elsewhere and its offshore software development facilities. Any loss of the
Company's ability to transmit voice and data through satellite communications
could have a material adverse effect on the Company's results of operations and
financial condition. In the past, India has experienced significant inflation,
low growth in gross domestic product and shortage of foreign exchange.
Furthermore, both India and Northern Ireland have experienced civil unrest and
terrorism and, from time to time, have been involved in regional conflicts. No
assurance can be given that the Company will not be adversely affected by future
changes in inflation, interest rates, taxation, social stability or other
political, economic or diplomatic developments in or affecting countries in
which the Company establishes software development facilities. The Indian
government has exercised and continues to exercise significant influence over
many aspects of the Indian economy, and Indian government actions concerning the
economy could have a material adverse effect on private sector entities,
including the Company. During the past five years, India's government has
provided significant tax incentives and relaxed certain regulatory restrictions
in order to encourage foreign investment in specified sectors of the economy,
including the software development industry. Certain of those benefits which
have directly affected the Company include, among others, tax holidays,
liberalized import and export duties and preferential rules concerning foreign
investment and repatriation. Notwithstanding these benefits, however, India's
central and state governments remain significantly involved in the Indian
economy as regulators. Provided that the Company meets specified requirements,
including investments in facilities and the employment and training of a minimum
number of personnel, the government of Northern Ireland has committed to provide
monetary grants to the Company to encourage employment in its offshore
development center in Belfast, Northern Ireland. The elimination of any of these
benefits could have a material adverse effect on the Company's results of
operations and financial condition.

         RISKS OF DOING BUSINESS IN INTERNATIONAL MARKETS. During 1998,
international revenue accounted for approximately 28% of total revenue. The
Company expects that international revenues will account for an increasingly
significant percentage of the Company's revenues. As a result, the Company is
subject to a number of risks, including, but not limited to, difficulties
relating to administering its business globally, managing foreign operations,
currency fluctuations, restrictions against the repatriation of earnings, export
requirements and restrictions, and multiple and possibly overlapping tax
structures. These risks could have a material adverse effect on the Company's
results of operations and financial condition. Any earnings generated in
countries other than the United States may be permanently invested or may be
subject to considerable taxation if repatriated to the United States. The
Company presently incurs a significant amount of its costs in local currency in
India and expects to establish additional offshore centers in other countries.
In contrast, the Company presently generates most of its revenue in U.S.
dollars. Accordingly, the Company is subject to risks that, as a result of
currency fluctuations, the translation of foreign currencies into U.S. dollars
for accounting purposes will adversely affect its result of operations.
Historically, the Company has not hedged any material portion of its foreign
exchange transactions.

                                       30

<PAGE>

         POTENTIAL LIABILITY TO CLIENTS. Many of the Company's contracted
engagements involve projects that are critical to the operations of its clients'
businesses and provide benefits that may be difficult to quantify. Any failure
in a client's system could result in a claim for substantial damages against the
Company, regardless of the Company's responsibility for such failure. Although
the Company attempts to limit contractually its liability for damages arising
from negligent acts, errors, mistakes, or omissions in rendering its IT
services, there can be no assurance the limitations of liability set forth in
its service contracts will be enforceable in all instances or would otherwise
protect the Company from liability for damages. Although the Company maintains
general liability insurance coverage, including coverage for errors or
omissions, there can be no assurance that such coverage will continue to be
available on reasonable terms or will be available in sufficient amounts to
cover one or more large claims, or that the insurer will not disclaim coverage
as to any future claim. 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 adversely affect the
Company's results of operations and financial condition.

         POSSIBLE ACQUISITIONS. The Company expects to continue to make
selective acquisitions of IT services firms with established customers. There
can be no assurance that the Company will be able to identify suitable
acquisition candidates available for sale at reasonable prices, consummate any
acquisition or successfully integrate any acquired business into the Company's
operation. Acquisitions may involve difficulties related to the integration of
acquired businesses, some of which may have different cultures, operating
methodologies, margins or business risks. The failure to timely integrate the
Company's business with that of an acquired entity may result in a material
adverse effect on the Company's results of operations and financial condition.
Further, acquisitions may involve a number of special risks, including diversion
of management's attention, failure to retain key acquired personnel and clients,
unanticipated events or circumstances, legal liabilities and amortization of
acquired intangible assets, some or all of which could have a material adverse
effect on the Company's results of operations and financial condition. Client
satisfaction or performance problems at a single acquired firm could have a
material adverse impact on the reputation of the Company as a whole.

         FIXED-PRICE, FIXED-TIME FRAME CONTRACTS. As a core element of its
business philosophy, the Company's strategy is to offer many of its IT services
on fixed-price, fixed-time frame contracts, rather than contracts in which
payment to the Company is determined solely on a time-and-materials basis.
Although the Company uses its TSQM software engineering process and its past
project experience to reduce the risks associated with estimating, planning and
performing fixed-price, fixed-time frame projects, the Company bears the risk of
cost over-runs and inflation in connection with these projects. The Company's
failure to estimate accurately the resources and time required for a project,
future rates of inflation and currency translations, or its failure to complete
its contractual obligations within the time frame committed could have a
material adverse effect on the Company's results of operation and financial
condition.

         RELIANCE ON SIGNIFICANT CLIENTS. The Company has derived and believes
that it will continue to derive a significant portion of its revenue from a
limited number of large corporate clients. During 1998, the Company's five
largest clients accounted for approximately 30.6% of revenue. Michelin North
America, Inc. accounted for approximately 10.4% of the revenue of the Company.
The volume of work performed for specific clients is likely to vary from year to
year, and a major client in one year may not provide the same level

                                       31

<PAGE>

of revenue in any subsequent year. The loss of any large client could have a
material adverse effect on the Company's results of operations and financial
condition. Because many of its contracted engagements involve projects that are
critical to the operations of its clients' businesses, IMR's failure to meet a
client's expectations could result in a cancellation or nonrenewal of the
contract and could damage the Company's reputation and adversely affect its
ability to attract new business. Furthermore, the Company generally is not the
exclusive outside source of IT services to the client. Accordingly, a client's
dissatisfaction with IMR's performance could lead the client to purchase these
services from another competitor.

         VARIABILITY OF QUARTERLY OPERATIONS AND FINANCIAL RESULTS. The
Company's operations and related revenue and operating results historically have
varied substantially from quarter to quarter, and the Company expects these
variations to continue. Among the factors causing these variations have been the
number, timing and scope of IT projects in which the Company is engaged, the
contractual terms of such projects, delays incurred in the performance of such
projects, the accuracy of estimates of resources and time frames required to
complete ongoing projects, and general economic conditions. A high percentage of
the Company's operating expenses, particularly personnel and rent, are
relatively fixed in advance of any particular quarter. As a result,
unanticipated variations in the number and timing of the Company's projects or
in employee utilization rates may cause significant variations in operating
results in any particular quarter. An unanticipated termination of a major
project, a client's decisions not to pursue a new project or proceed to
succeeding stages of a current project, or the completion during a quarter of
several major client projects could require the Company to continue to pay
underutilized employees and therefore have a material adverse effect on the
Company's results of operations and financial condition. As a result of the
foregoing factors, the Company's operating results for a future quarter may be
below the expectations of public market analysts and investors. In such event,
the price of the Company's Common Stock likely will be adversely affected.

         DEPENDENCE ON KEY EXECUTIVE. The Company's continued success will
depend in large part upon the continued availability of the services of Satish
K. Sanan, the Company's Chairman of the Board, Chief Executive Officer and
principal shareholder. The loss of the services of Mr. Sanan would have a
material adverse effect on the Company. The Company does not intend to maintain
key man insurance on the life of Mr. Sanan.

         COMPETITION. The IT services market is highly competitive and served by
numerous national, regional and local firms, all of which are either existing or
potential competitors of the Company. Many of the Company's competitors have
significantly greater financial, technical and marketing resources and generate
greater revenue than the Company, and there can be no assurance that the Company
will not lose existing clients to such competitors. The Company believes that
its ability to compete also depends in part on a number of factors outside its
control, including the ability of its competitors to hire and retain
professional and technical employees, the price at which others offer comparable
services and the extent of its competitors' responsiveness to client needs.

         IMMIGRATION ISSUES. The Company believes that its success has resulted
in part from its ability to attract and retain persons with technical and
project management skills from other countries, especially India. As of March
12, 1999, approximately 400 of the Company's U.S. employees were working for the
Company in the, non-immigrant work permitted visa classification. There is a
limit on the number of new H-1B petitions that the U.S. Immigration and
Naturalization Services may approve in any government fiscal year.

                                       32

<PAGE>

In years in which this limit is reached, the Company may not be able to obtain
the H-1B visas necessary to bring critical foreign employees to the U.S..
Compliance with existing U.S. immigration laws, or changes in such laws, making
it more difficult to hire foreign nationals or limiting the ability of the
Company to retain H- 1B employees in the U.S., could require the Company to
incur additional unexpected labor costs and expenses. Any such restrictions or
limitations on the Company's hiring practices could have a material adverse
effect on the Company's results of operations and financial condition.

         INTELLECTUAL PROPERTY RIGHTS. In order to protect its proprietary
rights in its various intellectual properties, the Company relies upon a
combination of copyright and trade secret laws, nondisclosure and other
contractual arrangements, and technical measures. The U.S., India, the U.K.,
France, Canada and Australia are members of the Berne Convention, an
international treaty. As a member of the Berne Convention, the governments of
India, the U.K., France, Canada and Australia have agreed to extend copyright
protection under their domestic laws to foreign works, including works created
or produced in the U.S. The Company believes that laws, rules, regulations and
treaties in effect in the U.S., India, the U.K., France, Canada and Australia
are adequate to protect it from misappropriation or unauthorized use of its
copyrights. However, there can be no assurance that such laws will not change
and, in particular, that the laws of India, the U.K., France, Canada or
Australia will not change in ways that may prevent or restrict the transfer of
software components, libraries and toolsets among India, the U.S., the U.K.,
France, Canada and Australia. There can be no assurance that the steps taken by
the Company to protect its proprietary rights will be adequate to deter
misappropriation of its Year 2000 proprietary rights or any of its other
intellectual property, or that the Company will be able to detect unauthorized
use and take appropriate steps to enforce its rights. The Company presently
holds no patents or registered copyrights. Although the Company believes that
its intellectual property rights do not infringe on the intellectual property
rights of others, there can be no assurance that such a claim will not be
asserted against the Company in the future, that assertion of such claims will
not result in litigation or that the Company would prevail in such litigation or
be able to obtain a license for the use of any infringed intellectual property
from a third party on commercially reasonable terms. Additionally, the Company
anticipates that in the future it will license certain technologies to its
customers. There can be no assurance that the Company will be able to
successfully license these technologies, protect them from infringement or
misuse, or prevent infringement claims against the Company in connection with
its licensing efforts. The Company expects that the risk of infringement claims
against the Company will increase if more of the Company's competitors are able
to successfully obtain patents for software products and processes. Any such
claims, regardless of their outcome, could result in substantial cost to the
Company and divert management's attention from the Company's operations. Any
infringement claim or litigation against the Company could, therefore, have a
material adverse effect on the Company's result of operations and financial
condition.

         FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS. This Report on Form
10-K contains certain forward-looking statements, including, among others:

      o  the ability of the Company to sell transitional outsourcing services to
         existing Year 2000 customers;
      o  anticipated growth in the application maintenance outsourcing industry;
      o  presently anticipated trends in the Company's results of operations and
         financial condition;
      o  the ability of the Company to rely on cash generated from operations to
         finance its working capital requirements;
      o  the Company's business strategy for expanding its services, including
         plans to develop EMU conversion services business;
      o  the ability of the Company to continue acquiring companies,
         successfully integrate them and to continue to enjoy synergistic sales
         and cross-selling opportunities from them.

                                       33

<PAGE>

         These forward-looking statements are based largely on the Company's
current expectations and are subject to a number of risks and uncertainties.
Actual results could differ materially from these forward-looking statements. In
addition to the other risks described elsewhere in this "Risk Factors"
discussion, important factors to consider in evaluating such forward-looking
statements include:

      o  the shortage of reliable market data regarding the Year 2000 conversion
         services and other application maintenance services, markets;
      o  changes in external competitive market factors or in the Company's
         internal budgeting process which might impact trends in the Company's
         results of operations;
      o  unanticipated working capital or other cash requirements;
      o  changes in the Company's business strategy or an inability to execute
         its strategy due to unanticipated changes in transitional outsourcing
         services market;
      o  the Company's failure to perform Year 2000 conversion projects to a
         client's satisfaction; and
      o  various competitive factors that may prevent the Company from competing
         successfully in the marketplace.

         In light of these risks and uncertainties, many of which are described
in greater detail elsewhere in this "Risk Factors that May Effect Future
Results" discussion, there can be no assurance that the forward-looking
statements contained in this Report on Form 10-K will in fact transpire.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         Financial Statements:
              Report of Independent Auditors
              Report of Independent Accountants
              Consolidated Balance Sheets - December 31, 1998 and 1997
              Consolidated Statements of Income - Years Ended December 31, 1998,
                 1997 and 1996
              Consolidated Statements of Changes in Shareholders' Equity -
                 Year Ended December 31, 1998, 1997 and 1996
              Consolidated Statements of Cash Flows - Years Ended
                 December 31, 1998, 1997 and 1996
              Notes to Consolidated Financial Statements

         Selected quarterly financial data is included in Item 7 under the
heading "Management's Discussion and Analysis of Financial Condition and Results
of Operations--Quarterly Results of Operations".

         The financial statements begin on the following page.

                                       34

<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders
IMRglobal Corp.

We have audited the consolidated balance sheet of IMRglobal Corp. as of December
31, 1998, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the year ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We 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 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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
IMRglobal Corp. at December 31, 1998, and the consolidated results of its
operations and its cash flows for the year ended December 31, 1998, in
conformity with generally accepted accounting principles.

                                         ERNST & YOUNG L.L.P.

Tampa, Florida
February 15, 1999

                                       35

<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
  Shareholders of IMRglobal Corp.

         We have audited the accompanying consolidated balance sheet of
IMRglobal Corp. and subsidiaries (the Company) (formerly Information Management
Resources, Inc.) as of December 31, 1997, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for the
years ended December 31, 1997 and 1996. 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, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
IMRglobal, Inc. and subsidiaries as of December 31, 1997, and the consolidated
results of their operations and their cash flows for the years ended December
31, 1997 and 1996, in conformity with generally accepted accounting principles.

                                 PricewaterhouseCoopers LLP

Tampa, Florida
February 13, 1998, except for certain information
  in Note 13, for which the date is March 9, 1998.

                                       36

<PAGE>

<TABLE>
<CAPTION>
                                 IMRGLOBAL CORP.

                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)
                                                                                                 December 31,
                                                                                          -------------------------
                                                                                            1998             1997
                                                                                          --------        ---------
<S>                                                                                       <C>             <C>
                                       ASSETS
Current assets:
   Cash and cash equivalents .....................................................        $ 76,964        $  85,819
   Marketable securities .........................................................          31,609            4,453
   Accounts receivable ...........................................................          24,387           11,156
   Unbilled work in process ......................................................           5,145            6,390
   Deferred income taxes .........................................................          14,051            1,889
   Prepaid expenses and other current assets .....................................           3,512            4,664
                                                                                          --------        ---------

         Total current assets ....................................................         155,668          114,371

Property and equipment, net of accumulated depreciation ..........................          21,261            9,818
Deposits and other assets ........................................................           3,931            1,007
Intangible assets, net of accumulated amortization ...............................          36,829           10,157
                                                                                          --------        ---------

         Total assets ............................................................        $217,689        $ 135,353
                                                                                          ========        =========

                        LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable ..............................................................        $  7,389        $   3,136
   Accrued compensation ..........................................................           7,819            6,241
   Deferred revenue ..............................................................           3,395            4,413
   Other current liabilities .....................................................          16,169            4,599
                                                                                          --------        ---------

         Total current liabilities ...............................................          34,772           18,389

Long-term debt ...................................................................             653              885
Deferred tax liability ...........................................................           1,040              546
Accrued compensation .............................................................           8,046            2,322
                                                                                          --------        ---------

         Total liabilities .......................................................          44,511           22,142
                                                                                          --------        ---------

Minority interest ................................................................              79                4
                                                                                          --------        ---------
Shareholders' equity:
   Preferred stock, $.10 par value, 10,000,000 shares authorized,
      no shares issued and outstanding ...........................................            --               --
   Common stock, $.10 par value per share, 100,000,000 shares
      authorized, 29,672,350 and 25,650,615 issued and outstanding ...............           2,967            2,565
   Additional paid-in capital ....................................................         139,835           98,735
   Retained earnings .............................................................          31,404           12,564
   Accumulated other comprehensive expense .......................................          (1,107)            (657)
                                                                                          --------        ---------

         Total shareholders' equity ..............................................         173,099          113,207
                                                                                          --------        ---------

         Total liabilities and shareholders' equity ..............................        $217,689        $ 135,353
                                                                                          ========        =========
</TABLE>

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

                                       37

<PAGE>

<TABLE>
<CAPTION>
                                 IMRGLOBAL CORP.

                        CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                                                            Year Ended December 31,
                                                                              -----------------------------------------------------
                                                                                1998                  1997                   1996
                                                                              ---------             ---------             ---------
<S>                                                                           <C>                   <C>                   <C>
Revenue ..........................................................            $ 158,252             $  83,550             $  27,948
Cost of revenue ..................................................               82,339                45,959                15,658
                                                                              ---------             ---------             ---------

         Gross profit ............................................               75,913                37,591                12,290

Selling, general and administrative expenses .....................               32,289                19,946                 7,506
Research and development .........................................                6,247                   919                  --
Purchased technology and acquisition costs .......................                8,345                  --                    --
Goodwill amortization ............................................                2,074                 1,123                   100
                                                                              ---------             ---------             ---------

         Income from operations ..................................               26,958                15,603                 4,684
                                                                              ---------             ---------             ---------

Other income (expense):
   Interest expense ..............................................                 (212)                 (175)                 (301)
   Other income ..................................................                4,591                 1,947                   336
                                                                              ---------             ---------             ---------

         Total other income ......................................                4,379                 1,772                    35
                                                                              ---------             ---------             ---------

Income before provision
   for income taxes and minority interest ........................               31,337                17,375                 4,719
Provision for income taxes .......................................               12,395                 5,432                 1,401
                                                                              ---------             ---------             ---------

         Income before minority interest .........................               18,942                11,943                 3,318

Minority interest in net income ..................................                  (33)                  (48)                 (730)
                                                                              ---------             ---------             ---------

         Net income ..............................................            $  18,909             $  11,895             $   2,588
                                                                              =========             =========             =========

Basic earnings per share .........................................            $    0.67             $    0.49             $    0.17
                                                                              =========             =========             =========

Diluted earnings per share .......................................            $    0.50             $    0.35             $    0.10
                                                                              =========             =========             =========

Shares outstanding:
   Basic .........................................................               28,033                24,129                15,458
                                                                              =========             =========             =========

   Diluted .......................................................               37,573                34,467                26,371
                                                                              =========             =========             =========
</TABLE>

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

                                       38

<PAGE>

<TABLE>
<CAPTION>
                                 IMRGLOBAL CORP.

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                 (IN THOUSANDS)

                                                                                               Accumulated
                                        Compre-                        Additional                 Other
                                        hensive       Common Stock      Paid-In     Retained  Comprehensive   Treasury
                                        Income    Shares      Amount    Capital     Earnings     Expense        Stock       Total
                                       --------   ------      -------  ----------   --------  -------------   --------    ---------
<S>                                    <C>        <C>         <C>      <C>          <C>       <C>             <C>         <C>
Balance, January 1, 1996............          -   20,377      $ 2,037   $     35    $    706    $     (62)     $    (9)   $   2,707
Common stock issued for
    for options exercised...........          -      306           31        (18)          -            -            -           13
Repurchase of common stock..........          -        -            -          -           -            -       (1,489)      (1,489)
Retirement of treasury stock........          -   (6,200)        (620)      (822)        (56)           -        1,498            -
Dividends paid......................          -        -            -          -      (1,623)           -            -       (1,623)
Termination of S Corporation
    tax status......................          -        -            -        946        (946)           -            -            -
Common stock issued in connection
    with initial public offering....          -    7,228          723     39,994           -            -            -       40,717
Acquisition of majority
    shareholder's interest in
    subsidiary......................          -        -            -     (2,500)          -            -            -       (2,500)
Net income                             $  2,588        -            -          -       2,588            -            -        2,588
Foreign currency translation
    adjustment......................        (57)       -            -          -           -          (57)           -          (57)
                                       --------   ------      -------   --------    --------    ---------      -------    ---------
         Comprehensive income.......   $  2,531
                                       ========
Balance, December 31, 1996..........          -   21,711        2,171     37,635         669         (119)           -       40,356

Common stock issued in connection...
    with public offering............          -    2,587          259     52,289           -            -            -       52,548
Common stock issued in connection...
    with business combinations......          -      173           17      1,784           -            -            -        1,801
Acquisition of majority
    shareholder's interest in
    subsidiary......................          -        -            -       (552)          -            -            -         (552)
Common stock issued in connection
    with employee stock purchase
    plan............................          -      108           11        658           -            -            -          669
Common stock issued for
    options exercised...............          -    1,072          107        152           -            -            -          259
Tax benefit of stock options
    exercised.......................          -        -            -      6,769           -            -            -        6,769
Net income..........................   $ 11,895        -            -          -      11,895            -            -       11,895
Foreign currency translation
    adjustment......................       (538)       -            -          -           -         (538)           -         (538)
                                       --------   ------      -------   --------    --------    ---------      -------    ---------
         Comprehensive income.......   $ 11,357
                                       ========
Balance, December 31, 1997..........          -   25,651        2,565     98,735      12,564         (657)           -      113,207

Common stock issued in connection
    with business combinations......          -    1,184          118     19,068         (69)         (59)           -       19,058
Acquisition of minority
    shareholder's interest in
    subsidiary......................          -        -            -       (135)          -            -            -         (135)
Common stock issued in connection
     with employee stock purchase
     plan...........................          -       31            3        602           -            -            -          605
Common stock issued for options
    exercised.......................          -    2,806          281        676           -            -            -          957
Tax benefit of stock options
    exercised.......................          -        -            -     20,889           -            -            -       20,889
Net income..........................   $ 18,909        -            -          -      18,909            -            -       18,909
Foreign currency translation
    adjustment......................       (391)       -            -          -           -         (391)           -         (391)
                                       --------   ------      -------   --------    --------    ---------      -------    ---------
         Comprehensive income.......   $ 18,518
                                       ========
Balance, December 31, 1998                        29,672      $ 2,967   $139,835    $ 31,404    $  (1,107)     $     -    $ 173,099
                                                  ======      =======   ========    ========    =========      =======    =========
</TABLE>

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

                                       39

<PAGE>

<TABLE>
<CAPTION>
                                 IMRGLOBAL CORP.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

                                                                         Year Ended December 31,
                                                                    --------------------------------
                                                                      1998        1997        1996
                                                                    --------    --------    --------
<S>                                                                 <C>         <C>         <C>
Cash flows from operating activities:
   Net income ...................................................   $ 18,909    $ 11,895    $  2,588
   Adjustment to reconcile net income to cash provided by
      operating activities:
      Depreciation and amortization .............................      5,395       4,280         778
      Deferred income taxes .....................................    (11,572)     (2,195)        855
      Tax benefit of stock options ..............................     20,889       6,769        --
      Unrealized exchange losses ................................        (14)         80           9
      Gain in equity investment .................................       --          --           (83)
      Minority interest in net income ...........................         33          48         730
      Changes in operating assets and liabilities:
         Accounts receivable and unbilled work-in-process .......     (5,450)     (7,455)     (3,130)
         Other current assets ...................................      1,331      (2,295)     (1,220)
         Deposits and other assets ..............................     (2,776)       (522)        (91)
         Accounts payable and other liabilities .................      5,139      (1,118)      2,029
         Accrued compensation ...................................      7,418       7,313         254
         Income tax .............................................      1,092      (1,043)        487
         Deferred revenue .......................................     (1,271)      2,070       1,947
                                                                    --------    --------    --------

         Total adjustments ......................................     20,214       5,932       2,565
                                                                    --------    --------    --------

         Net cash provided by operating activities ..............     39,123      17,827       5,153
                                                                    --------    --------    --------

Cash flows from investing activities:
   Acquisition of interest in consolidated subsidiary,
      net of cash received ......................................     (8,941)     (3,315)     (9,968)
   Investment in marketable securities, net .....................    (26,192)      1,191      (5,511)
   Additions to capitalized software costs ......................       --        (1,258)       (302)
   Additions to property and equipment ..........................    (13,540)     (6,913)     (2,605)
   Increase in equity investment and loans to affiliate .........       --          --          (693)
   Related party loans ..........................................      1,478       1,608        --
                                                                    --------    --------    --------

         Net cash used in investing activities ..................    (47,195)     (8,687)    (19,079)
                                                                    --------    --------    --------
Cash flows from financing activities:
   Net repayments from revolving credit line ....................       --          (935)       (655)
   Proceeds from long-term debt and notes .......................        384       1,181         900
   Payments on notes and capital leases .........................     (2,616)       (909)     (2,258)
   Proceeds from issuance of common stock .......................      1,562      54,076      41,840
   Payment of costs in connection with issuance of common stock .       --          (600)     (1,110)
   Purchase of treasury stock at cost ...........................       --          --        (1,489)
   Payment of dividends .........................................       --          --          (822)
                                                                    --------    --------    --------

         Net cash provided by (used in) financing activities ....       (670)     52,813      36,406
                                                                    --------    --------    --------

Effect of exchange rate changes .................................       (113)       (216)        (19)
                                                                    --------    --------    --------

Net increase (decrease) in cash and cash equivalents ............     (8,855)     61,737      22,461
Cash and cash equivalents at beginning of year ..................     85,819      24,082       1,621
                                                                    --------    --------    --------

Cash and cash equivalents at end of year ........................   $ 76,964    $ 85,819    $ 24,082
                                                                    ========    ========    ========
</TABLE>

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

                                       40

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Summary of Significant Accounting Policies:

        NAME CHANGE - On November 17, 1998, the Company changed its name from
Information Management Resources, Inc. to IMRglobal Corp.

        BASIS OF REPORTING--IMRglobal Corp. and subsidiaries ("IMR" or the
"Company") provide transitional software outsourcing solutions to the
information technology departments of large businesses. The Company's services
are provided to a variety of industries and customers located primarily in North
America, Europe and Australia. The consolidated financial statements include the
accounts of IMRglobal Corp., its wholly owned subsidiaries and its controlled
foreign subsidiary. All significant intercompany balances and transactions have
been eliminated.

        CASH AND CASH EQUIVALENTS--The Company considers all highly liquid
investments with original maturity dates of three months or less to be cash
equivalents. The Company maintains its investments at high quality financial
institutions.

        MARKETABLE SECURITIES--All marketable securities are classified as
available-for-sale and are available to support current operations or to take
advantage of other investment opportunities. These securities are stated at
estimated fair value based upon market quotations.

        REVENUE RECOGNITION--Fixed-price contract revenue is recognized using
the percentage of completion method of accounting, under which the sales value
of performance, including earnings thereon, is recognized on the basis of the
percentage that each contract's cost to date bears to the total estimated cost.
Any anticipated losses upon contract completion are accrued currently. Service
revenue from time-and-materials services is recognized as the services are
provided.

        Unbilled work-in-progress represents revenue on contracts to be billed
in subsequent periods in accordance with the terms of the contract. Deferred
revenue represents amounts billed in excess of revenue earned in accordance with
the terms of the contracts.

        GOODWILL--Goodwill originated from the acquisition of certain
subsidiaries, and is being amortized on a straight-line basis over a 10 to 20
year period. The Company periodically reviews the value of its goodwill to
determine if an impairment has occurred. The Company measures the potential
impairment of recorded goodwill by the undiscounted value of expected future
operating cash flow in relation to the assets to which this goodwill applies.

                                       41

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

        PROPERTY AND EQUIPMENT--Property and equipment is stated at cost less
accumulated depreciation. Depreciation is computed using the straight-line
method and is charged to income over the estimated useful lives of the
respective assets.

        CAPITALIZED SOFTWARE COSTS--Capitalized software costs are recorded at
cost less accumulated amortization. Production costs for computer software that
is to be utilized as an integral part of a product or process is capitalized
when both (a) technological feasibility is established for the software and (b)
all research and development activities for the other components of the product
or process have been completed.

        Amortization is included in cost of revenue and is charged to income
based upon a revenue formula over the shorter of the remaining estimated
economic life of the product or estimated lifetime revenue of the product.
Amortization of capitalized software costs was approximately $47,000, $1.9
million and $131,000 for the years ended December 31, 1998, 1997 and 1996,
respectively.

        INCOME TAXES--Prior to November 1996, the Company elected to be taxed as
an S Corporation under the provisions of the Internal Revenue Code whereby
taxable income is generally reported by the shareholders on their individual
income tax returns. In connection with the initial public offering (See Note
11), the S Corporation election was terminated on November 11, 1996 and
subsequently the Company became subject to U.S. federal and state income taxes
as a C Corporation. The $1.1 million one-time federal income tax expense
resulting from the termination of the S Corporation status approximates the 1996
provision for federal income taxes if the Company had been subject to income tax
prior to the S Corporation termination. Accordingly, pro forma provision for
income taxes and pro forma net income is not presented for 1996.

        The Company uses the asset and liability method of accounting for income
taxes. Under this method, deferred income taxes are recorded to reflect the tax
consequences on future years differences between the tax basis of assets and
liabilities and their financial reporting amounts at each year-end based on
enacted tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. A valuation allowance is
provided against the future benefit of deferred tax assets if it is determined
that it is more likely than not that the future tax benefits associated with the
deferred tax asset will not be realized. (See Note 11.)

        FOREIGN CURRENCY TRANSLATION--The financial statements of the Company's
foreign subsidiaries use a functional currency which is other than the U.S.
dollar and are translated into U.S. dollars in accordance with SFAS No. 52,
"Foreign Currency Translation." Assets and liabilities are translated at
exchange rates in effect on the reporting date. Income and expense items are
translated at the average exchange rates in effect during the year. The
resulting translation adjustments are not included in determining net income but
are included in accumulated other comprehensive income. Foreign currency
transaction gains and losses are reported in net income but were not material to
any period presented.

                                       42

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

        COMPUTATION OF EARNINGS PER SHARE--Basic earnings per share is computed
using the weighted average of common stock outstanding. Diluted earnings per
share is computed using the treasury stock method which is summarized as follows
(in thousands):

                                                     1998       1997       1996
                                                    ------     ------     ------
         Weighted average
            common stock outstanding ..........     28,033     24,129     15,458

         Weighted average
            common stock equivalents ..........      9,540     10,338     10,913
                                                    ------     ------     ------

         Shares used in diluted earnings
            per share calculation .............     37,573     34,467     26,371
                                                    ======     ======     ======

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

        COMPREHENSIVE INCOME--During 1998, the Company adopted Statement of
Financial Accounting Standard No. 130 "Reporting Comprehensive Income." Foreign
currency translation adjustments have not been tax effected as the Company
considers foreign earnings to be indefinitely reinvested. The balance of
accumulated comprehensive expense relates to foreign currency translation
adjustments.

        NEW ACCOUNTING PRONOUNCEMENTS--During June, 1998, the Financial
Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which is effective for the
Company on January 1, 2000. This statement establishes measurement and
disclosure criteria for certain derivative and hedging instruments including
foreign exchange forward contracts. Management is currently assessing the future
impact of SFAS No. 133 on the Company's financial statements.

        RECLASSIFICATIONS-- Certain prior year financial statement balances have
been reclassified to conform to the 1998 presentation.

                                       43

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. BUSINESS COMBINATIONS:

        For all business combinations accounted for as a purchase pursuant to
APB Opinion No. 16, "Business Combinations", the Company's financial statements
include the results of operations for all acquired businesses since the date of
acquisition.

        IMRGLOBAL LTD. (IMR-INDIA)--At December 31, 1995, IMR owned 34.2% of
IMR-India, an Indian Limited Liability Company. During 1996, 1997 and 1998, IMR
purchased an additional 46.9% of IMR-India's outstanding common shares for
approximately $7.6 million in cash in several transactions. These acquisitions
are accounted for as purchases pursuant to the provisions of APB Opinion No. 16
and resulting goodwill is being amortized over a 10-year period. In addition,
during November 1996, IMR acquired an additional 18.4% of IMR-India from the
Company's majority shareholder for approximately $3.1 million in cash. The
acquisition from IMR's majority shareholder is accounted for as a reduction of
equity. As a result of the acquisitions noted above, IMR owns 99.5% of the
outstanding common shares of IMR-India at December 31, 1998.

        IMR accounts for its investment in IMR-India utilizing the consolidation
method for all periods presented, because effective control had been maintained
through the continued direct financial interest in IMR-India held by IMR's
majority shareholder.

        LINK GROUP HOLDINGS LIMITED AND INFORMATION MANAGEMENT RESOURCES (U.K.)
LIMITED--On February 10, 1997 (effective January 8, 1997), the Company acquired
100% of the outstanding stock of Link Group Holdings Limited ("Link"), a United
Kingdom Limited Liability Company. Link provided transitional software
outsourcing solutions to the information technology departments of large
businesses located in the U.K. Prior to the acquisition, Link was owned by a
Board member of IMR and his spouse. In exchange for Link's common stock, Link's
shareholders received $2.1 million in cash and 161,343 shares (valued at $1.6
million) of the Company's common stock. In addition, a $1.6 million cash
deferred payment was made to Link's former shareholders during February, 1998.
The Link acquisition is accounted for as a purchase pursuant to the provisions
of APB Opinion No. 16 and resulting goodwill is being amortized over a 10-year
period.

        Coincident with the above acquisition, the Company also acquired 10.5%
of Information Management Resources (U.K.) Limited ("IMR-Ltd."), a United
Kingdom Limited Liability Company, from the Company's majority shareholder and
his spouse for $520,000 in cash. The purchase price was determined through
negotiations between the Company and the shareholder and his spouse. The
acquisition from IMR's majority shareholder is accounted for as a reduction of
equity.

        Prior to the above acquisitions, the Company owned 39.5% of IMR-Ltd. and
Link owned 50% of IMR-Ltd. After the above acquisitions the Company effectively
owns 100% of both Link and IMR-Ltd. The operations of Link and IMR-Ltd. have
been merged and the operating company was renamed IMRglobal, plc ("IMR-U.K.").

                                       44

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. BUSINESS COMBINATIONS (CONTINUED):

        INFORMATION MANAGEMENT RESOURCES (NORTHERN IRELAND) LIMITED--During June
1997, the Company began operations in Belfast, Northern Ireland and acquired
certain assets in exchange for $270,000 cash and 11,250 shares of the Company's
stock. The acquisition was accounted for as a purchase pursuant to the
provisions of APB Opinion No. 16 and resulting goodwill is being amortized over
a 10-year period.

        LYON CONSULTANTS, S.A.--During May, 1998, the Company acquired 100% of
the outstanding stock of Lyon Consultants, S.A. ("Lyon"), a privately held
software engineering company headquartered in Paris, France. Lyon specializes in
rapid software application development, utilizing reusable business and
technical software objects, and information technology consulting. In exchange
for Lyon's common stock, Lyon's shareholders received $16.0 million in cash and
499,353 shares (valued at $12.1 million) of the Company's unregistered common
stock. In addition, $700,000 cash and 32,503 shares (valued at $875,000) of the
Company's unregistered common stock are payable in May 1999. These amounts are
included in the determination of the purchase price. The Lyon acquisition is
accounted for as a purchase pursuant to the provisions of APB Opinion No. 16 and
the resulting goodwill is being amortized over a 20-year period.

        The Company allocated the purchase price of Lyon based on the fair value
of the assets acquired and liabilities assumed. Significant portions of the
purchase price were identified as intangible assets in independent appraisals,
using proven valuation procedures and techniques. These intangible assets
include approximately $8.2 million for acquired in-process research and
development ("IPRD") for projects that did not have future alternative uses and
$2.7 million for developed technology. This allocation represents the estimated
fair value based on risk-adjusted cash flows related to the acquired in-process
research and development projects that give explicit consideration to the SEC
Staff's views on in-process research and development as set forth in the
September 15, 1998 letter to the American Institute of Certified Public
Accountants. At the date of the acquisition the development of the IPRD projects
had not yet reached technological feasibility and the IPRD in progress had no
alternative future use. Accordingly, these costs were expensed as of the
acquisition date. The acquired developed technology is being amortized over a
5-year period.

        Concurrent with the acquisition of Lyon, the Company entered into a
noncancellable 3 year licensing agreement with a seven year renewal option, with
Wyde S.A. ("Wyde"), an unrelated French company. Wyde provides the base
technology upon which the Lyon components have been developed. The licensing
agreement provides for the transfer of Wyde's computer code and technology to
the Company if Wyde should terminate its business. The amount of the licensing
fees is dependent on the value of company work sold and the countries where the
technology is utilized. Future minimum licensing fees payable to Wyde are
$400,000 in 1999 and 2000.

        RHO TRANSFORMATIONAL TECHNOLOGIES PTY LIMITED--During June, 1998, the
Company acquired 100% of the outstanding shares of RHO Transformational
Technologies Pty Limited ("RHO"), a privately held software services and
engineering company headquartered in Sydney, Australia. RHO specializes in
software

                                       45

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. BUSINESS COMBINATIONS (CONTINUED):

application conversion and maintenance services, utilizing proprietary tools and
provides these services to large global companies with Australian and Asia
Pacific operations. In exchange for RHO's common stock, RHO stockholders
received 285,000 shares of the Company's common stock. The RHO acquisition is
being accounted for as a pooling of interests in accordance with the provisions
of APB Opinion No. 16.

        The financial statements for 1996 and 1997 have not been restated due to
the immateriality of this transaction. The impact was a reduction to the 1998
opening retained earnings and comprehensive income of $69,000 and $59,000,
respectively. These amounts are included in common stock issued in connection
with business combinations.

        VISUAL SYSTEMS DEVELOPMENT CORPORATION--On October 2, 1998, the Company
acquired 100% of the outstanding shares of Visual Systems Development
Corporation ("Visual"). In exchange for Visual's common stock, Visual's
shareholders received $5.5 million in cash and 400,000 shares (valued $7.0
million) of the Company's common stock. In addition, $3.5 million of the
Company's unregistered common stock are payable if certain specified business
and financial objectives are achieved. These contingent payments are not
included in the determination of the purchase price. The Visual acquisition is
accounted for as a purchase pursuant to the provisions of APB Opinion No. 16 and
the resulting goodwill is being amortized over a 20-year period.

3. MARKETABLE SECURITIES:

        The Company currently invests only in high quality, short-term
investments which it classifies as available-for-sale. As such there were no
significant differences between amortized cost and estimated fair value at
December 31, 1998 and 1997. Additionally, because investments are short-term and
are generally allowed to mature, realized gains and losses have been minimal for
the years ended December 31, 1998, 1997 and 1996.

        The following table presents the estimated fair value of marketable
securities by category (in thousands):

                                                          1998          1997
                                                       ---------      --------
        Banker's Acceptance........................... $  10,157      $      -
        Commercial paper..............................    21,452             -
        Municipal debt securities.....................         -         4,453
                                                       ---------      --------

                                                       $  31,609      $  4,453
                                                       =========      ========

         The estimated fair value of marketable securities at December 31, 1998
was $22,992 due in one year or less and $8,617 due in one to three years.

                                       46

<PAGE>
                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. ACCOUNTS RECEIVABLE (IN THOUSANDS):

                                                        1998              1997
                                                      --------          --------
         Accounts receivable, trade...........        $ 20,531          $ 11,091
         Unbilled accounts receivable-
            Time-and-materials contracts......           4,144                65
         Reserve for doubtful accounts........            (288)                -
                                                      --------          --------

                                                      $ 24,387          $ 11,156
                                                      ========          ========

         During 1998, the Company established a reserve in the amount of
$288,000 with a charge to income.

5. COSTS AND ESTIMATED EARNINGS ON COMPLETED AND UNCOMPLETED CONTRACTS (IN
   THOUSANDS):

<TABLE>
<CAPTION>
                                                        1998              1997
                                                      --------          --------
<S>                                                   <C>               <C>
         Costs incurred on completed
            and uncompleted contracts ........        $ 31,965          $ 31,649
         Estimated earnings ..................          28,514            16,102
                                                      --------          --------

                                                        60,479            47,751
         Less billings to date ...............         (58,729)          (45,774)
                                                      --------          --------

                                                      $  1,750          $  1,977
                                                      ========          ========
</TABLE>

         The following is included in the accompanying balance sheets:

                                                        1998              1997
                                                      -------           -------

Unbilled work in process ...................          $ 5,145           $ 6,390
Deferred revenue ...........................           (3,395)           (4,413)
                                                      -------           -------

                                                      $ 1,750           $ 1,977
                                                      =======           =======

                                       47

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. PROPERTY AND EQUIPMENT:

         The major classifications of property and equipment at December 31,
1998 and 1997 is summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                            Estimated
                                           Useful Life
                                             (Years)        1998         1997
                                           -----------   ----------    --------
<S>                                        <C>           <C>           <C>
         Land                                      -     $    1,355    $      -
         Buildings and improvements......      10-40          3,531       2,671
         Computer equipment..............       3- 6          7,244       4,415
         Computer software...............       3-10          5,102       1,795
         Office furniture and equipment..       3-12          4,738       2,645
         Vehicles........................       3-20          2,088         124
         Construction in progress........                     4,225       1,652
                                                         ----------    --------

                                                             28,283      13,302
         Less accumulated depreciation
            and amortization.............                    (7,022)     (3,484)
                                                         ----------    --------

                                                         $   21,261    $  9,818
                                                         ==========    ========
</TABLE>

         Depreciation and amortization of property and equipment was
approximately $3.3 million, $1.2 million and $547,000 for the years ended
December 31, 1998, 1997 and 1996, respectively.

7. INTANGIBLE ASSETS (IN THOUSANDS):

                                                            1998         1997
                                                         ----------    --------
         Goodwill .......................                $   37,863    $ 11,517
         Acquired technology ............                     2,400        --
         Accumulated amortization .......                    (3,434)     (1,360)
                                                         ----------    --------

                                                         $   36,829    $ 10,157
                                                         ==========    ========

                                       48

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. OTHER CURRENT LIABILITIES (IN THOUSANDS):

                                                            1998          1997
                                                          -------        -------

         Accrued costs on Year 2000 contracts ........    $ 5,116        $  --
         Payroll taxes and value added taxes .........      2,896          1,077
         Income taxes ................................      2,202            258
         Deferred payments-acquisitions ..............      1,478          1,608
         Employee savings plans ......................        724            199
         Deferred income taxes .......................        464             40
         Current portion of long-term debt ...........         89            295
         Other .......................................      3,200          1,122
                                                          -------        -------

                                                          $16,169        $ 4,599
                                                          =======        =======

         During 1998, the Company accrued $5.1 million related to completed Year
2000 projects. The Company is liable to remediate selected issues which arise in
completed projects. Management has committed to clients that personnel will be
available to remediate Year 2000 issues that arise in late 1999 and early 2000.
To accomplish this goal, the Company has committed specific personnel to work on
completed Year 2000 projects. As of December 31, 1998, no claims have been
asserted. The Company has accrued the amount of costs it has committed to incur
based on the complexity of the Year 2000 projects completed and experience level
of personnel required.

9. RELATED PARTIES:

         During 1998, the Company advanced $406,000 to three officers. These
officers utilized the proceeds to acquire common stock of IMR. These loans are
secured by the IMR common stock investment, and are repayable in 2003 or upon
the officer's termination of employment with the Company. These loans bear
interest at 9.5% which is added to the principal portion of the note. At
December 31, 1998, the loan receivable balance was $427,000 including $21,000 of
accrued interest and is included in other assets.

         At December 31, 1997, other current liabilities include $1.6 million
due to a member of the Company's Board of Directors and his spouse in connection
with the acquisition of Link (See Note 2). This amount was noninterest bearing
and was paid in full during February 1998.

                                       49

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. RELATED PARTIES (CONTINUED):

         At December 31, 1996, the Company had outstanding notes payable to
shareholders of $814,000 in connection with the S Corporation termination (See
Note 13). These notes were unsecured with interest at 8% and were paid in full
during February 1997. Interest expense on notes payable-shareholder for the year
ended December 31, 1997 and 1996 was $12,000 and $19,000, respectively.

         Prior to the IMR-U.K. acquisition, IMR-India provided software
development services to IMR-Ltd. at market rates. During the year ended December
31, 1996, the Company recognized revenues from IMR-Ltd. of approximately
$877,000.

         At December 31, 1996, the Company had two notes receivable from
IMR-Ltd. totaling $692,500, which resulted from cash advances. During 1996, the
Company recognized approximately $35,000 of interest income on these notes. As a
result of the 1997 IMR-U.K. acquisition, these intercompany notes are eliminated
in the consolidated financial statements.

         Cash flows from financing activities included payments on notes
payable-shareholders of approximately $814,000 and $350,000 for the years ended
December 31, 1997 and 1996.

10. CREDIT FACILITIES:

    REVOLVING CREDIT FACILITIES

         The Company maintains an uncollateralized $10.0 million revolving
credit facility which allows the Company to borrow up to 80% of the book value
of U.S. accounts receivable. Interest is at LIBOR plus 1% (currently 6.3%). No
borrowings have been made under this facility.

         IMR-India maintains an export sales accounts receivable discounting
facility denominated in Indian Rupees. Principal payments on amounts borrowed
are due within 90 days of the loan. Interest is payable at a rate set by the
Reserve Bank of India (currently 9.0%). At both December 31, 1998 and 1997, no
amount was due under the facility. The maximum amount available under this
facility at December 31, 1998 was approximately $703,000. This facility is
collateralized by IMR-India's accounts receivable and property and equipment.

                                       50

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. CREDIT FACILITIES (CONTINUED):

    LONG-TERM DEBT

         Long-term debt at December 31, 1998 and 1997 is summarized as follows
(in thousands):

<TABLE>
<CAPTION>
                                                                           1998     1997
                                                                          ------   ------
<S>                                                                       <C>      <C> 
         France:
            Loans from French government agencies at 0% interest
            payable in four annual installments commencing
            March 1999, collateralized by property and equipment ......   $  742   $ --

         India:
            Loan payable with interest at LIBOR plus 3.0%,
            (8.9% at December 31, 1997) principal repayable in
            eight equal semiannual installments of $148
            commencing commending February 1998, collateralized
            by property and equipment (balance prepaid during 1998) ...     --      1,180
                                                                          ------   ------

                                                                             742    1,180
         Less current portion .........................................       89      295
                                                                          ------   ------

         Long-term debt, net of current portion .......................   $  653   $  885
                                                                          ======   ======

         Maturities of long-term debt are as follows (in thousands):

         2000 ...................................................         $  192
         2001 ...................................................            192
         2002 ...................................................            269
                                                                          ------

                                                                          $  653
                                                                          ======
</TABLE>

         At December 31, 1998, the Company was in compliance with financial
covenants of certain debt agreements.

                                       51

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. INCOME TAXES:

         The provision (benefit) for income taxes is as follows (in thousands):

<TABLE>
<CAPTION>
                                                         1998        1997        1996
                                                       --------    --------    --------
<S>                                                    <C>         <C>         <C>     
         Current:
            Federal .................................  $ 16,073    $  6,378    $    412
            State (net of federal tax benefit) ......     1,379         911          66
            Foreign .................................     1,979         338          68
                                                       --------    --------    --------

               Total current provision for income tax    19,431       7,627         546

         Deferred:
            Federal .................................    (5,445)     (1,920)        735
            State (net of federal tax benefit) ......      (467)       (275)        118
            Foreign .................................    (1,124)       --             2
                                                       --------    --------    --------

               Total deferred provisions (benefit)
                  for income taxes ..................    (7,036)     (2,195)        855
                                                       --------    --------    --------

               Total provision for income taxes .....  $ 12,395    $  5,432    $  1,401
                                                       ========    ========    ========
</TABLE>

         Upon termination of the S Corporation election, as described in Note 1,
current and deferred income taxes reflecting the tax effects of temporary
differences between the Company's financial statement and the tax bases of
certain assets and liabilities became liabilities of the Company. Accordingly,
the above provision for 1996 income taxes included a $1.1 million nonrecurring
expense resulting from the termination of the S Corporation election. In
accordance with applicable sections of the Internal Revenue Code, the Company
elected to pay this nonrecurring expense over a four year period beginning in
1996.

         The components of the net deferred tax asset (liability) are as follows
(in thousands):

                                                1998        1997  
                                              --------    --------
Deferred tax assets:
   Accrued compensation ...................   $  4,997    $  1,684
   Accrued costs on Year 2000 contracts ...      2,102        --
   Net operating loss .....................      5,375         625
   Research and development tax credit ....      1,759        --
   Other ..................................        459        --
                                              --------    --------

      Total deferred tax assets ...........     14,692       2,309

                                       52

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. INCOME TAXES (CONTINUED):

                                                            1998         1997
                                                          --------     --------
         Deferred tax liabilities:
            Cash to accrual conversion ...............        (238)        (500)
            Intangibles ..............................        (750)        --
            Foreign ..................................        (460)         (40)
            Other ....................................        (247)        (151)
                                                          --------     --------

                  Total deferred tax liabilities .....      (1,695)        (691)
                                                          --------     --------
         Net deferred tax asset before
            valuation allowance ......................      12,997        1,618
         Valuation allowance - foreign ...............        (450)        (315)
                                                          --------     --------
         Deferred tax asset
            net of valuation allowance ...............    $ 12,547     $  1,303
                                                          ========     ========

         The balance sheet classification of the net deferred tax asset is
summarized as follows (in thousands):

                                                             1998         1997
                                                          --------     --------
         Deferred tax asset -  current ..............     $ 14,051     $  1,889
         Deferred tax liability - current ...........         (464)         (40)
         Deferred tax liability - noncurrent ........       (1,040)        (546)
                                                          --------     --------

                                                          $ 12,547     $  1,303
                                                          ========     ========

         As reflected above, as of December 31, 1998 and 1997, the Company has
recorded a valuation allowance of approximately $450,000 and $315,000,
respectively, against the deferred tax asset related to net operating losses and
non deductible accruals and reserves of a foreign subsidiary.

                                       53

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. INCOME TAXES (CONTINUED):

         As of December 31, 1998, the Company had approximately $13 million of
net operating loss carryforwards for regular income tax purposes which will
expire between 2012 and 2013.

         During the year ended December 31, 1998 and 1997, various non-statutory
stock options were exercised resulting in tax benefits of approximately $21.9
million and $6.8 million in 1998 and 1997, respectively, which were directly
credited to shareholders' equity.

         Under the Indian Income Tax Act of 1961 (the "Act"), a substantial
portion of IMR-India's income is exempt from Indian Income Tax as profits
attributable to export operations or a tax holiday expiring in 2007. Under the
Act, there are certain alternative minimum tax provisions which impose tax on
net profits at a rate of 10.5%. Management has determined that these provisions
are not currently applicable due to the tax holiday. Accordingly, the effective
tax rate imposed on IMR-India's income is substantially less than the current
statutory rate of 35%.

         Undistributed earnings of the Company's foreign subsidiaries amounted
to approximately $20 million at December 31, 1998. These earnings are considered
to be indefinitely reinvested and, accordingly, no provision for United States
federal and state income taxes has been provided thereon. On remittance, certain
countries impose withholding taxes that, subject to certain limitations, are
then available for use as tax credits against a U.S. tax liability, if any.
Determination of the amount of unrecognized deferred United States income tax
liability or foreign tax withholding is not practicable because of the
complexities associated with its hypothetical calculation.

         The following table accounts for the differences between the actual tax
provision and the amounts obtained by applying the statutory U.S. federal income
tax rates of 35% in 1998 and 1997 and 34% in 1996 to the income before income
taxes and minority interest (in thousands).

<TABLE>
<CAPTION>
                                                           1998     1997      1996
                                                         -------   -------   -------
<S>                                                      <C>       <C>       <C>    
         Statutory tax provision .....................   $10,958   $ 6,081   $ 1,604
         State taxes, net of federal benefit .........       897       737        34
         U.S. S Corporation income not subject to
            federal income taxes .....................      --        --        (989)
         Foreign and U.S. tax effects
            attributable to foreign operations .......       238    (1,802)     (365)
         (Income) loss in foreign equity investment ..      --        --         (22)
         Termination of S Corporation status .........      --        --       1,075
         Increase in valuation allowance .............       135       315      --
         Other net ...................................       167       101        64
                                                         -------   -------   -------

               Total provision for income taxes ......   $12,395   $ 5,432   $ 1,401
                                                         =======   =======   =======
</TABLE>

                                       54

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. LEASES:

         The Company leases office facilities and certain residential premises
for employees under noncancellable operating lease agreements. Rental expense
under these leases was approximately $2.1 million, $1.1 million and $604,000
during 1998, 1997 and 1996, respectively. Future minimum lease payments as of
December 31, 1998 for leases with noncancellable terms in excess of one year are
approximately as follows (in thousands):

         1999 ...............................................  $ 2,574
         2000 ...............................................    1,780
         2001 ...............................................    1,560
         2002 ...............................................    1,437
         2003 ...............................................      958
         Thereafter .........................................    4,495
                                                               -------

         Total minimum payments .............................  $12,804
                                                               =======

13. SHAREHOLDERS' EQUITY, STOCK OPTION AND STOCK PURCHASE PLANS:

         On September 12, 1996, the Company filed Amended and Restated Articles
of Incorporation which (i) effected a reclassification of each share of its
voting and nonvoting common stock into 10 shares of common stock, par value $.10
per share, (ii) increased the Company's authorization of common stock to
40,000,000 shares; and (iii) created and authorized 10,000,000 shares of
preferred stock, par value $.10 per share, under terms that allow the Board of
Directors to designate one or more classes of preferred stock and to designate
the rights, privileges, preferences and limitations of each such class.

         On November 11, 1996, in connection with the termination of IMR's S
corporation election (see Note 1), IMR's remaining retained earnings were
transferred to additional paid-in capital. Also, a cash dividend of $1.6 million
was paid to the shareholders of the S Corporation as a final distribution of
Subchapter S earnings.

         During November 1996, the Company completed an initial public offering
and received $40.7 million in cash (net of offering expenses of $1.1 million) in
exchange for the issuance of 7,228,125 shares of common stock. The Company's
common stock commenced trading on the Nasdaq National Market on November 8,
1996.

                                       55

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. SHAREHOLDERS' EQUITY, STOCK OPTION AND STOCK PURCHASE PLANS (CONTINUED):

         On March 9, 1998 and June 17, 1997, the Company declared 3-for-2 stock
splits in the form of stock dividends payable on April 3, 1998 and July 10,
1997, respectively, to shareholders of record on March 20, 1998 and June 26,
1997, respectively. All applicable share and per share amounts in the
accompanying financial statements have been retroactively adjusted.

         During July 1997, the Company completed a public offering and received
$52.5 million in cash (net of offering expenses of $600,000) in exchange for the
issuance of 2,587,500 shares of common stock.

         On May 4, 1998, the shareholders approved (i) an amendment to 4.1 of
the Company's Amended and Restated Articles of Incorporation to increase the
number of shares of the Company's Common Stock authorized for issuance from
40,000,000 to 100,000,000 shares, (ii) an increase in the number of shares of
Common Stock available for grant under the Company's Stock Incentive Plan from
12,253,455 to 16,003,455 shares.

         EMPLOYEE STOCK OPTION PLAN--IMR has granted certain employees
non-qualified stock options with vesting periods of up to five years. The number
of shares of common stock authorized for issuance under this plan is 16,003,455.
These options give the employees the right to purchase common stock at an
exercise price at least equal to the fair market value of the stock at the date
of the option's grant. On July 15, 1996 management reset the term for all
options granted through that date to 10 years starting July 15, 1996. All
options granted subsequent to July 15, 1996 expire 7 to 10 years from their
grant date.

         NONEMPLOYEE DIRECTORS STOCK OPTION PLAN--During September 1996, the
Company established the Nonemployee Directors Stock Option Plan, whereby
nonemployee directors may be granted non-qualified options to purchase common
stock. The number of shares of common stock authorized for issuance under this
plan is 337,500. The exercise price of the stock option may not be less than the
fair market value of the common stock on the date of the grant. Each nonemployee
director is granted an option of 22,500 shares for each two year period they
serve on the Board. The options expire 10 years from the grant date. Beginning
with the grant date, these options vest 50% at the end of the first year and
100% at the end of the second year. As of December 31, 1998, 225,000 options are
available for future grants and 112,500 options are outstanding of which 67,500
are exercisable.

                                       56

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. SHAREHOLDERS' EQUITY, STOCK OPTION AND STOCK PURCHASE PLANS (CONTINUED):

         STOCK OPTION DISCLOSURES--The Company applies APB Opinion No. 25 and
related interpretations in accounting for stock options. Accordingly, no
compensation cost has been recognized in connection with the issuance of these
options. Had compensation cost for the Company's stock option plan been
determined based on the fair value at the grant dates for the awards under the
plan consistent with the method of SFAS Statement No. 123, the Company's net
income and earnings per share for the year ended December 31, 1998, 1997 and
1996 would have been reduced to the adjusted amounts indicated below:

                                                    1998       1997       1996
                                                  --------   --------   -------
         Pro forma net income:
            As reported.......................... $ 18,909   $ 11,895   $ 2,545
            As adjusted (unaudited).............. $ 10,489   $  9,956   $ 1,733

         Pro forma diluted earnings per share:
            As reported.......................... $   0.50   $   0.35   $  0.09
            As adjusted (unaudited).............. $   0.28   $   0.29   $  0.07

         The pro forma disclosures are not likely to be representative of the
effects on reported net income for future years.

         The estimated per share fair value of options granted during 1998, 1997
and 1996 was $17.12, $12.46 and $0.31, respectively. The fair value of each
option granted is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions for grants
in 1998, 1997 and 1996, respectively: no dividend yield for each year presented;
risk-free interest rates of 5.3%, 6.0% and 5.9%; expected lives of the options
prior to exercise of 5.0, 6.5 and 10.4 years. For options granted prior to the
Company's initial public offering in November, 1996, volatility of the stock
price was omitted from the pricing model as permitted by SFAS No. 123. For 1998
and 1997 option grants, a volatility measure of 80% and 85%, respectively, was
employed.

                                       57

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. SHAREHOLDERS' EQUITY, STOCK OPTION AND STOCK PURCHASE PLANS (CONTINUED):

         A summary of the status of the Company's stock option plan as of
December 31, 1998, 1997 and 1996, and changes during the years ending on those
dates is presented below:

<TABLE>
<CAPTION>
                                       1998                               1997                                1996
                           ----------------------------      -----------------------------       ------------------------------
                                            Weighted-                          Weighted-                           Weighted-
                                             Average                            Average                             Average
   Fixed Options             Shares      Exercise Price        Shares       Exercise Price          Shares       Exercise Price
----------------------     ----------    --------------      ----------     --------------       ----------      --------------
<S>                        <C>           <C>                 <C>            <C>                  <C>             <C>
Outstanding at
  beginning of year        12,545,095      $    1.31         11,632,657       $     0.46          4,962,262        $   0.05
Granted                     1,279,450      $   25.28          2,015,700       $    16.12          7,265,250        $   0.66
Exercised                  (2,804,291)     $    0.34         (1,071,748)      $     0.25           (306,382)       $   0.05
Cancelled                    (215,440)     $   16.50            (31,514)      $     2.25           (288,473)       $   0.05
                           ----------                        ----------                          ----------

Outstanding at
   end of year             10,804,814                        12,545,095                          11,632,657
                           ==========                        ==========                          ==========

Options exercisable
   at year-end              7,375,447                         9,541,970                          10,240,673
                           ==========                        ==========                          ==========
</TABLE>

                                       58

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. SHAREHOLDERS' EQUITY, STOCK OPTION AND STOCK PURCHASE PLANS (CONTINUED):

         The following table summarizes certain information about stock options
at December 31, 1998:

<TABLE>
<CAPTION>
                         Options Outstanding                               Options Exercisable
          -----------------------------------------------------     --------------------------------
             Number        Weighted-Average                            Number
          Outstanding         Remaining                             Exercisable
          at 12/31/98      Contractual Life     Exercise Prices     at 12/31/98      Exercise Prices
          -----------      ----------------     ---------------     -----------      ---------------
<S>                             <C>               <C>                  <C>            <C>
             7,445,929          7.5 years         $   0.05-2.25        6,881,640      $   0.05-2.25
               310,500          7.8 years         $   4.45-6.22          162,000      $   4.45-6.22
               108,000          8.2 years         $        5.05           21,600      $        5.05
                 7,875          8.1 years         $        8.45            1,350      $        8.45
               775,310          8   years         $ 11.85-15.08          141,627      $ 11.85-15.08
             1,129,700          8.8 years         $ 18.25-18.75          164,980      $ 18.25-18.75
               285,000          9.2 years         $ 20.06-22.93            2,250      $ 20.06-22.93
               555,000          9.5 years         $ 24.06-31.75                -      $ 24.06-31.75
               187,500          9.8 years         $ 34.38-37.17                -      $ 34.38-37.17
           -----------                                                ----------                   

            10,804,814                                                 7,375,447
           ===========                                                ==========
</TABLE>

         As of December 31, 1998, options to purchase 1,587,718 shares of Common
Stock were available for future grants.

         EMPLOYEE STOCK PURCHASE PLAN--The Company's Employee Stock Purchase
Plan (the "Stock Purchase Plan") became effective on October 1, 1996. A total of
450,000 shares of the Company's Common Stock have been reserved for issuance
under the Stock Purchase Plan. An employee electing to participate in the Stock
Purchase Plan must authorize a stated dollar amount or percentage of the
employee's regular pay to be deducted by the Company from the employee's pay for
the purpose of purchasing shares of Common Stock on a quarterly basis. The price
at which employees may purchase Common Stock is 85% of the closing price of the
Common Stock on the Nasdaq National Market on the first day of the quarter or
the last day of the quarter, whichever is lower.

                                       59

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. SHAREHOLDERS' EQUITY, STOCK OPTION AND STOCK PURCHASE PLANS (CONTINUED):

         IMR-INDIA STOCK OPTION PLAN--IMR-India has adopted a separate Employee
Share Option Policy which provides for grants of options to employees to
purchase common shares of IMR-India. The maximum number of options that may be
granted under the policy is 51,900 common shares. Under the policy, options
granted to an employee vest upon completion of five years of continuous
employment with IMR-India or its affiliates. Vested options are valid for
exercise during the employees' employment with IMR-India or its affiliates and
for a period of six months thereafter. Options that are not exercised within six
months of cessation of employment expire.

         A summary of the status of IMR-India's stock option plan is as follows:

                                                                    Weighted
                                                                     Average
                                                    Shares       Exercise Price
                                                   --------      --------------
         Balance, December 31, 1996..............    20,500       $0.00 - $0.28
         Granted.................................     4,000          $22.82
         Canceled................................    (4,500)         $(0.00)
                                                   --------

         Balance, December 31, 1997..............    20,000          $4.66

         Exercised...............................    (8,220)         $0.23
         Canceled................................    (9,325)        $(0.23)
                                                   --------

         Balance, December 31, 1998..............     2,455       $0.23-$22.82
                                                   ========       ============

         At December 31, 1998 and 1997, exercisable options were 0 and 6,400,
respectively.

         Compensation expense has been recognized on the difference between fair
value at the date of the grant and the exercise price pursuant to APB Opinion
No. 25. Compensation expense is recognized over the life of the options.
Compensation expense under this plan for the years ended December 31, 1998, 1997
and 1996 was less than $3,000 annually. Under IMR-India's policy, options
granted subsequent to September 6, 1996 are granted at an exercise price equal
to the fair market value of the common shares of IMR-India at the time of the
grant. During 1998, management decided not to issue any additional shares under
this plan.

                                       60

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. EMPLOYEE BENEFIT PLANS:

         Defined contribution plans cover employees in the United States and
certain other countries, including Australia, France and India. Employees may
contribute to these plans and the Company matches these contributions in varying
amounts. Defined contribution pension expense for the years ended December 31,
1998, 1997 and 1996 was $1.0 million, $270,000 and $105,000, respectively.

         During 1998, the Company established a deferred compensation plan which
allows certain U.S. employees to defer portions of their annual compensation.
These assets are placed in a "rabbi trust" and are presented as assets of the
Company as they are available to the general creditors of the Company in the
event of the Company's insolvency. The value of the assets at December 31, 1998
was $2.8 million and is included in other assets. The related liability is
included in accrued compensation. The assets are invested in variable life
insurance products. At December 31, 1998 book value approximated fair value.

15. CONCENTRATIONS OF CREDIT RISK:

         Financial instruments which potentially subject the Company to
concentration of credit risk consist principally of cash and cash equivalents,
marketable securities and trade receivables. The Company maintains its cash with
high credit quality financial institutions and, by policy, limits the amount of
credit exposure to any one financial institution. The Company places its cash
equivalents and marketable securities in investment grade short-term debt
instruments and limits the amount of credit exposure to any one commercial
issuer.

         Concentrations of credit risk with respect to accounts receivable is
limited due to the dispersion of the Company's customer base across different
industries and geographies. The Company's two largest customers accounted for
approximately 16%, 17% and 40% of revenue for the years ended December 31, 1998,
1997 and 1996, respectively, and 7% and 14% of accounts receivable as of
December 31, 1998 and 1997, respectively. No other customer accounted for 10% of
revenue or accounts receivable for the above periods.

16. OTHER INCOME:

         Other income is summarized as follows (in thousands):

                                                   1998        1997        1996
                                                 -------     -------     -------
         Investment income                       $ 4,548     $ 2,014     $   192
         Income (loss) in equity investment         --          --            83
         Other income (expense)                       43         (67)         61
                                                 -------     -------     -------

                                                 $ 4,591     $ 1,947     $   336
                                                 =======     =======     =======

                                       61

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. COMMITMENTS AND CONTINGENCIES:

         During June 1998, the Company purchased land for the construction of
new facilities for its corporate headquarters. The land and commitments for the
construction of the first two buildings on the site are expected to cost
approximately $15 million of which approximately $4.2 million has been expended
at December 31, 1998.

         The Company from time to time is involved in legal actions arising in
the ordinary course of business. With respect to these matters, management
believes that it has adequate legal defense and/or provided adequate accruals
for related costs such that the ultimate outcome will not have a material
adverse effect on the Company's future financial position.

18. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (IN THOUSANDS):

<TABLE>
<CAPTION>
                                                                1998         1997        1996
                                                             ---------     --------    --------
<S>                                                          <C>        <C>        <C>  
         Cash paid during the year for interest............. $     218     $   132     $   301
                                                             =========     =======     =======
         Cash paid during the year for income taxes......... $   1,376     $ 1,595     $   132
                                                             =========     =======     =======
         Noncash investing and financing activities:
            Notes payable-shareholders issued in
               lieu of dividend............................. $       -     $     -     $   801
                                                             =========     =======     =======
            Common stock issued in connection
               with acquisition of subsidiaries............. $  19,186     $ 1,800     $     -
                                                             =========     =======     =======
            Deferred payments for acquisition
               of subsidiaries.............................. $   1,478     $ 1,608     $     -
                                                             =========     =======     =======

19. SEGMENT INFORMATION (IN THOUSANDS):

<CAPTION>
                                                                1998         1997        1996
                                                             ---------     --------    --------
<S>                                                          <C>           <C>         <C>    
         Revenue by service offering:
            Transitional outsourcing........................ $  66,930     $29,448     $16,385
            Year 2000.......................................    77,217      44,479       7,487
            Professional services...........................    14,105       9,623       4,076
                                                             ---------     -------     -------

                  Total revenue............................. $ 158,252     $83,550     $27,948
                                                             =========     =======     =======

         Revenue by geography:
            North America................................... $ 117,718     $63,059     $27,230
            Europe..........................................    32,520      18,178           -
            Asia Pacific....................................     8,014       2,313         718
                                                             ---------     -------     -------

                  Total revenue............................. $ 158,252     $83,550     $27,948
                                                             =========     =======     =======
</TABLE>

                                       62

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

19. SEGMENT INFORMATION (CONTINUED):

                                                    1998        1997      1996
                                                  --------   ---------   ------
         Income from operations:
            Sales organizations:
               North America..................... $ 28,958   $  12,334   $3,469
               Europe............................    4,696         125        -
               Asia Pacific......................    1,841         134        -
            Software Development Centers.........    8,129       5,052    1,315
                                                  --------   ---------   ------

               Income from operations - sales
                    and delivery centers.........   43,624      17,645    4,784

            Research and development.............   (6,247)       (919)       -
            Goodwill amortization................   (2,074)     (1,123)    (100)
            Purchased technology.................   (8,345)          -        -
                                                  --------   ---------   ------

               Income from operations............ $ 26,958   $  15,603   $4,684
                                                  ========   =========   ======

         Identifiable assets at December 31:
            Sales organizations:
               North America..................... $205,700    $128,348
               Europe............................   23,958       7,253
               Asia Pacific......................    4,108         633
            Software Delivery Organizations:
               India.............................   22,247      13,519
               Northern Ireland..................    2,565       2,663
            Eliminations.........................  (40,889)    (17,063)
                                                  --------    --------

               Total assets...................... $217,689    $135,353
                                                  ========    ========

         The Company is engaged in one business segment. The sales organizations
provide IT transitional outsourcing services to large companies in North
America, Europe and Australia. Software Development Centers consist of two
Indian facilities and one Northern Ireland facility that provide software
development services to the sales organizations. Intercompany sales between
geographical areas are accounted for at prices representative of unaffiliated
party transactions and are eliminated in consolidation.

         The chief operating decision makers of the Company review revenue by
geography and service offering. Operating results and other financial measures
are reviewed on a consolidated basis, as regional managers have discretion in
allocating resources among service offerings and due to the significant amount
of intercompany transactions across all geographic regions. Operating results by
geography include charges for sales, general and administrative expenses.

                                       63

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

20. ACQUISITIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS):

         During 1998 and 1997, the Company completed five international
acquisitions (See Note 2). The following unaudited table compares the Company's
reported operating results to pro forma information prepared on the basis that
the acquisitions had taken place at the beginning of the fiscal year for each of
the periods presented (in thousands except per share amounts):

                                                             December 31,
                                                        ----------------------
                                                          1998          1997
                                                        ---------    ---------
         As reported:
            Revenue.................................... $ 158,252    $  83,550
            Net income................................. $  18,909    $  11,895
            Basic earnings per share................... $    0.67    $    0.49
            Diluted earnings per share................. $    0.50    $    0.35

         Pro forma (unaudited):
            Revenue.................................... $ 175,013    $ 114,341
            Net income................................. $  19,801    $  14,616
            Basic earnings per share................... $    0.70    $    0.58
            Diluted earnings per share................. $    0.52    $    0.41

         In management's opinion, the unaudited pro forma combined results of
operations are not indicative of the actual results that would have occurred had
the acquisition been consummated at the beginning of 1998 or 1997 or of future
operations of the combined companies under the ownership and management of the
Company.

21. SUBSEQUENT EVENTS:

         On January 8, 1999, the Company acquired 100% of the outstanding stock
of Atechsys S.A. ("Atechsys"), a privately held information technology company
based in Paris, France. Atechsys specializes in business and technology
consulting specific to capital market businesses. In exchange for Atechsys'
common stock IMRglogal Corp. issued 720,000 shares of its common stock. The
acquisition will be accounted for as a pooling of interest pursuant to the
provisions of APB Opinion No. 16. Revenue and net income for 1998 for Atechsys
were approximately $11 million and $1 million, respectively. Impact on 1998
diluted earnings per share is $0.02. The Company has not determined the impact
of any accounting changes on Atechsys' operations.

                                       64

<PAGE>

                                 IMRGLOBAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

21. SUBSEQUENT EVENTS (CONTINUED):

         On January 15, 1999, the Company acquired 100% of the outstanding stock
of ECWerks, Inc. ("ECWerks"), a privately held leading electronic commerce
business and technology consulting company based in Tampa, Florida. In exchange
for ECWerks' common stock, ECWerks' shareholders received cash and 163,054
shares of IMRglobal Corp. common stock valued at approximately $5.0 million with
additional contingent payments if certain specific goals are achieved during
1999. The acquisition will be accounted for as a purchase pursuant to the
provisions of APB Opinion No. 16. The purchase price will be allocated to the
assets acquired and the liabilities assumed based on their estimated fair
values. Any excess of the purchase price over the net assets acquired (goodwill)
will be amortized over a period not to exceed 20 years.

         During January 1999, the Company entered into an agreement to purchase
land and buildings in Bangalore, India for an approximate cost of $1.8 million.

                                       65

<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

         There have been no disagreements with any of IMR's accountants on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure. On January 14, 1999, IMR appointed Ernst & Young
LLP as the independent accounting firm engaged as the principal accounting firm
to audit IMR's financial statements for the year ended December 31, 1998. The
decision to change the principal accounting firm was approved by the Audit
Committee of IMR's Board of Directors on January 14, 1999. For further
information relating to IMR's change in certifying accountants, please refer to
IMR's Current Report on Form 8-K dated January 15, 1999 on file with the
Commission.

                                    PART III

         The Company will file with the Securities and Exchange Commission a
definitive Proxy Statement, pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended, not later than 120 days after the end of its
fiscal year. Accordingly, certain information required by Part III has been
omitted under Item G of the general Instructions for Form 10-K. Only these
sections of the definitive Proxy Statement which specifically address the items
set forth herein are incorporated by reference.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information required by this Item 10 with respect to the directors
and executive officers of the Company is incorporated herein by reference to the
material under the caption "Election of Directors" and "Executive Officers" in
the Company's Proxy Statement to be filed with the Securities and Exchange
Commission (the "Commission") within120 days after the close of the Company's
fiscal year ended December 31, 1998.

ITEM 11. EXECUTIVE COMPENSATION

         The information required by this Item 11 with respect to management
remuneration and transactions is incorporated herein by reference to the
material under the caption "Executive Compensation" in the Company's Proxy
Statement to be filed with the Commission within 120 days after the close of the
Company's fiscal year ended December 31, 1998.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this Item 12 with respect to security
ownership of certain beneficial owners and management is incorporated herein by
reference to the material under the caption "Stock Ownership of Certain
Beneficial Owners and Management" in the Company's Proxy Statement to be filed
with the Commission within 120 days after the close of the Company's fiscal year
ended December 31, 1998.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this Item 13 with respect to certain
relationships and related transactions is incorporated herein by reference to
the material under the caption "Certain Relationships and Related Transactions"
in the Company's Proxy Statement to be filed with the Commission within 120 days
after the close of the Company's fiscal year ended December 31, 1998.

                                       66

<PAGE>

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

         (a) The following documents are filed as part of this report:

             (1) FINANCIAL STATEMENTS

                 The financial statements of the Company and reports of
                 independent auditors as set forth under Item 8 of this Report
                 on Form 10-K are incorporated herein by reference.

             (2) FINANCIAL STATEMENT SCHEDULES

                 Financial Statement Schedules have been omitted because they
                 are not applicable or are not required or the information
                 required to be set forth therein is included in the
                 consolidated financial statements or notes thereto.

         (b)     FORM 8-K

             (1) There were no reports on Form 8-K filed during the quarter
                 ended December 31, 1998.

             (2) The Registrant filed a report on Form 8-K on January 15, 1999
                 under Item 4 disclosing a change in the Registrant's
                 certifying accountant.

         (c)     EXHIBITS

                 The following exhibits are filed as a part of, or are
                 incorporated by reference into, this Report on Form 10-K:

                                       67

<PAGE>

                                  EXHIBIT INDEX

  EXHIBIT
  NUMBER                              DESCRIPTION
  -------    -------------------------------------------------------------------
   3.1*      Amended and Restated Articles of Incorporation of the Registrant.
   3.2*      Restated Bylaws of the Registrant.
   4.1       See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated
             Certificate of Incorporation and Restated Bylaws of the Registrant
             defining rights of the holders of Common Stock of the Registrant.
   4.2*      Specimen Stock Certificate.
  10.1       Master Services Agreement dated April 1, 1996 between the
             Registrant and IMR-India. (Incorporated by reference to Exhibit
             10.4 filed with IMR's Registration Statement on Form S-1)
             (Registration No. 333-12037).
  10.2       Master Services Agreement dated April 1, 1996 between IMR-U.K. and
             IMR-India. (Incorporated by reference to Exhibit 10.5 filed with
             IMR's Registration Statement on Form S-1) (Registration No.
             333-12037).
  10.3       Master Services Agreement for Information Technology Professional
             and related schedules between the Registrant and Dayton Hudson
             Corporation. (Incorporated by reference to Exhibit 10.9 filed with
             IMR's Registration Statement on Form S-1) (Registration No.
             333-12037).
  10.4       Master Services Agreement and related schedules between the
             Registrant and Dean Witter Discover & Co., Inc. (Incorporated by
             reference to Exhibit 10.10 filed with IMR's Registration Statement
             on Form S-1) (Registration No. 333-12037).
  10.5       Master Agreement for Computer Consulting and Programming Services
             and related schedules between the Registrant and Target Stores.
             (Incorporated by reference to Exhibit 10.12 filed with IMR's
             Registration Statement on Form S-1) (Registration No. 333-12037).
  10.6       Revolving Line of Credit Business Loan Agreement dated June 5, 1996
             between the Registrant and Barnett Bank of Pinellas County and
             related Promissory Note, Commercial Security Agreement and
             Continuing Unlimited Commercial Guaranty, each dated June 5, 1996.
             (Incorporated by reference to Exhibit 10.13 filed with IMR's
             Registration Statement on Form S-1) (Registration No. 333-12037).
  10.7       Principal Plus Interest Business Loan Agreement dated June 5, 1996
             between the Registrant and Barnett Bank of Pinellas County and
             related Promissory Note, Commercial Security Agreement and
             Continuing Unlimited Commercial Guaranty each dated June 5, 1996.
             (Incorporated by reference to Exhibit 10.14 filed with IMR's
             Registration Statement on Form S-1) (Registration No. 333-12037).
  10.8       Form of Employment Agreement between Registrant and Satish K.
             Sanan. (Incorporated by reference to Exhibit 10.15 with IMR's
             Registration Statement on Form S-1) (Registration No. 333-12037).
  10.9       401(k) Profit Sharing Plan effective January 1, 1992 and Amendment
             thereto effective January 1, 1994. (Incorporated by reference to
             Exhibit 10.17 filed with IMR's Registration Statement on Form S-1)
             (Registration No. 333-12037).
 10.10       Stock Incentive Plan effective July 15, 1996. (Incorporated by
             reference to Exhibit 10.18 filed with IMR's Registration Statement
             on Form S-1) (Registration No. 333-12037).
 10.11       Form of Directors Stock Option Plan. (Incorporated by reference to
             Exhibit 10.19 filed with IMR's Registration Statement on Form S-1)
             (Registration No. 333-12037).
 10.12       Form of Employee Stock Purchase Plan. (Incorporated by reference to
             Exhibit 10.20 filed with IMR's Registration Statement on Form S-1)
             (Registration No. 333-12037).
 10.13       Lease Agreement dated March 22, 1993 between the Registrant and ABR
             Plymouth Plaza, Ltd. regarding 22,578 square feet of office space
             located at 26750 U.S. Highway 19 North, Clearwater, Florida; First
             Amendment to Lease Agreement dated October 18, 1995 and Second
             Amendment to Lease Agreement dated December 11, 1995. (Incorporated
             by reference to Exhibit 10.21 filed with IMR's Registration
             Statement on Form S-1) (Registration No. 333-12037).

                                       68

<PAGE>

                                  EXHIBIT INDEX

(CONTINUED)

  EXHIBIT
  NUMBER                              DESCRIPTION
  -------    -------------------------------------------------------------------
 10.14       Loan Agreement between IMR-India and Canara Bank and related
             documents. (Incorporated by reference to Exhibit 10.27 filed with
             IMR's Registration Statement on Form S-1) (Registration No.
             333-12037).
 10.15       Loan Agreement between IMR-India and Exim Bank of India and related
             documents. (Incorporated by reference to Exhibit 10.28 filed with
             IMR's Registration Statement on Form S-1) (Registration No.
             333-12037).
 10.16       Employee Stock Purchase Plan, as amended. (Incorporated herein by
             reference to Exhibit 10.29 filed with Annual Report on Form 10-K)
             (Commission File No. 0-28840).
 10.17       Acquisition Agreement dated January 13, 1997 between the Registrant
             and Philip and Sheila Shipperlee relating to the acquisitions of
             Link Group Holdings Limited. (Incorporated herein by reference to
             Exhibit 2.1 filed with Current Report on Form 8-K filed with the
             Commission on January 13, 1997) (Commission File No. 0-28840).
 10.18       Share Purchase Agreement dated January 13, 1998 between the
             Registrant and Satish and Anne Sanan relating to the acquisition of
             IMR-U.K. (Incorporated herein by reference to Exhibit 10.30 filed
             with the Company's Registration Statement on Form S-1)
             (Registration No. 333-30741).
 10.19       Share Purchase Agreement dated May 15, 1998 between the Registrant
             and Jean Rene Lyon, Pierre Barberis, Marie-Amelie Barberis, Romain
             Barberis and Didier Lamour (Sellers) relating to the acquisition of
             Lyon Consultants, S.A. (Incorporated herein by reference to Exhibit
             2.1 filed with the Company's Current Report on Form 8-K filed with
             the Commission on May 28, 1998) (Commision File No. 0-28840).
 11.1        Computation of Net Income Per Share.
 21.1        List of Subsidiaries.
 23.1        Consent of PricewaterhouseCoopers LLP.
 23.2        Consent of Ernst & Young L.L.P.
 24.1        Powers of Attorney (included on signature page).
 27.1        Financial Data Schedule.
------------
* Incorporated by reference to Exhibit of the same number filed with the
  Company's Registration Statement on Form S-1 (Registration No. 333-12037).


+ Confidential treatment has been granted with respect to portions of these
  documents. The omitted portions of these documents have been filed separately
  with the Securities and Exchange Commission.

                                       69

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on this 29th day of March,
1999.

                                              IMRGLOBAL CORP.

                                              By: /s/ SATISH K. SANAN
                                                  ------------------------------
                                                      Satish K. Sanan
                                                      Chief Executive Officer

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Satish K. Sanan and Dilip Patel, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments to this Report on Form 10-K,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

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

<TABLE>
<CAPTION>
              SIGNATURE                               TITLE                        DATE
              ---------                               -----                        ----
<S>                                  <C>                                     <C>
/s/ SATISH K. SANAN                  Chief Executive Officer                 March 29, 1999
-----------------------------------     (Principal Executive Officer)
          Satish K. Sanan               and Director

/S/ John R. Hindman                  President                               March 29, 1999
-----------------------------------     (Principal Operating Officer)
          John R. Hindman

/S/ Robert M. Molsick                Chief Financial Officer                 March 29, 1999
-----------------------------------     (Principal Financial Officer)
         Robert M. Molsick

/S/ Michael J. Dean                  Vice President-finance, Controller      March 29, 1999
-----------------------------------     (Principal Accounting Officer)
          Michael J. Dean 

/S/ Vincent Addonisio                Senior Vice President                   March 29, 1999
-----------------------------------     Director
         Vincent Addonisio

/S/ Philip Shipperlee                Senior Vice President-global            March 29, 1999
-----------------------------------     Sales and Marketing
         Philip Shipperlee              Director

/S/ Charles C. Luthin                Director                                March 29, 1999
-----------------------------------
         Charles C. Luthin

/S/ Jeffery S. Slowgrove             Director                                March 29, 1999
-----------------------------------
       Jeffery S. Slowgrove
</TABLE>

                                       70

<PAGE>

                                 EXHIBIT INDEX

EXHIBIT        DESCRIPTION
-------        -----------

 11.1          Computation of Net Income Per Share.
 21.1          List of Subsidiaries.
 23.1          Consent of PricewaterhouseCoopers LLP.
 23.2          Consent of Ernst & Young L.L.P.
 27.1          Financial Data Schedule.