TECHNISOURCE, INC. AND SUBSIDIARIES

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                             -----------------------
                                    FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934 For the quarterly period ended MARCH 31, 2000.

                                       or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 PR 15(D) PF THE SECURITIES EXCHANGE
    ACT OF 1934

For the transition period from _____________________ to _____________________

Commission File Number: 000-24391

                               TECHNISOURCE, INC.
                               ------------------
             (Exact name of registrant as specified in its charter)

                FLORIDA                                  59-2786227
                -------                                  ----------
    (State or other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                 Identification Number)

        1901 W. CYPRESS CREEK ROAD, SUITE 200, FORT LAUDERDALE, FL 33309
        ----------------------------------------------------------------
        (Address of principal executive offices)              (Zip Code)

                                 (954) 493-8601
                                 --------------
              (Registrant's telephone number, including area code)

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

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

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

         The number of shares outstanding of common stock as of March 31, 2000
was 10,354,000.

<PAGE>

                                      INDEX

PART I - FINANCIAL INFORMATION

 ITEM 1. Financial Statements
                                                                            PAGE

         Condensed Consolidated Balance Sheets as of March 31, 2000
         (Unaudited) and December 31, 1999                                     1

         Condensed Consolidated Statements of Income for the Three Months
         Ended March 31, 2000 (Unaudited) and 1999 (Unaudited)                 2

         Condensed Consolidated Statements of Cash Flows for the Three
         Months Ended March 31, 2000 (Unaudited) and 1999 (Unaudited)          3

         Notes to Condensed Consolidated Financial Statements (Unaudited)    4-8

 ITEM 2. Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                              9-14

 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk           15

PART II - OTHER INFORMATION

 ITEM 6. Exhibits and Reports on Form 8-K                                     16

Signatures                                                                    17

<PAGE>

                       TECHNISOURCE, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                               MARCH 31,       DECEMBER 31,
                                                                                 2000              1999
                                                                              ------------     ------------
                                                                              (UNAUDITED)
                                                                              ------------     ------------
<S>                                                                           <C>              <C>
                               ASSETS
Current assets:
     Cash and cash equivalents                                                $ 11,899,634     $ 17,353,780
     Trade accounts receivable, less allowance for doubtful
        accounts of $825,283 and $639,933 as of March 31, 2000
        and December 31, 1999, respectively                                     24,691,535       18,558,024
     Due from shareholders and employees                                           333,310          348,606
     Prepaid expenses and other current assets                                     681,475          613,669
     Prepaid income taxes                                                        1,217,631          415,350
     Deferred tax asset, current                                                   453,011          453,011
                                                                              ------------     ------------
              Total current assets                                              39,276,596       37,742,440
Property and equipment, net                                                      2,417,131        2,353,570
Other assets                                                                       369,542          360,340
Goodwill, net                                                                    5,139,943               --
Deferred tax asset, noncurrent                                                     128,148          128,148
                                                                              ------------     ------------
              Total assets                                                    $ 47,331,360     $ 40,584,498
                                                                              ============     ============
                LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                         $  1,164,661     $    369,199
     Accrued liabilities                                                         4,518,953        3,609,392
     Line of credit                                                              3,750,000               --
     Notes payable                                                               1,000,000               --
                                                                              ------------     ------------
              Total current liabilities                                         10,433,614        3,978,591
Shareholders' equity:
     Common stock, $0.01 par value, 50,000,000 shares authorized,
        10,385,000 issued as of March 31, 2000 and December 31, 1999               103,850          103,850
     Additional paid-in capital                                                 30,161,540       30,129,248
     Retained earnings                                                           6,812,919        6,522,809
     Less :  Treasury stock, 31,000 and 25,000 shares as of March 31, 2000        (180,563)        (150,000)
         and December 31, 1999, respectively
              Total shareholders' equity                                        36,897,746       36,605,907
                                                                              ------------     ------------
              Total liabilities and shareholders' equity                      $ 47,331,360     $ 40,584,498
                                                                              ============     ============
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       1
<PAGE>

                       TECHNISOURCE, INC. AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                       THREE MONTHS ENDED MARCH 31,
                                       -----------------------------
                                           2000             1999
                                       ------------     ------------
<S>                                    <C>              <C>
Revenues
         IT Staffing                   $ 30,047,750     $ 30,000,285
         Hardware Sales                     674,902        5,601,082
         Hardware Commissions               363,160          161,700
                                       ------------     ------------
                                         31,085,812       35,763,067
Cost of revenues
         IT Staffing                     22,397,269       22,744,789
         Hardware                           573,149        5,150,739
                                       ------------     ------------
                                         22,970,418       27,895,528

         Gross profit                     8,115,394        7,867,539

Selling, general and
   administrative expenses                7,789,774        5,710,545
                                       ------------     ------------
         Operating income                   325,620        2,156,994

Other income (expense):
     Interest and other income              224,135          224,574
     Interest expense                       (49,177)              --
                                       ------------     ------------
         Income before taxes                500,578        2,381,568

Provision for income taxes                  210,468          952,627
                                       ------------     ------------
         Net income                    $    290,110     $  1,428,941
                                       ============     ============
     Net income per share - basic      $       0.03     $       0.14
                                       ============     ============
     Net income per share - diluted    $       0.03     $       0.14
                                       ============     ============
     Weighted average common shares
        outstanding - basic              10,359,274       10,385,000
                                       ============     ============
     Weighted average common shares
        outstanding - diluted            10,517,067       10,547,158
                                       ============     ============
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       2
<PAGE>

                       TECHNISOURCE, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED MARCH 31,
                                                               -----------------------------
                                                                   2000             1999
                                                               ------------     ------------
<S>                                                            <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                 $    290,110     $  1,428,941
    Adjustment to reconcile net income to net cash provided
    by operating activities:
        Depreciation and amortization                               309,276          323,553
        Deferred compensation                                        32,292           32,292
        Changes in assets and liabilities:
            Increase in accounts receivable                      (4,538,194)      (4,124,891)
            Decrease in due from shareholders and employees          15,296           32,475
            Increase in prepaid expenses and other assets            (2,553)        (633,317)
            Increase in prepaid income taxes                       (802,281)              --
            Increase in accounts payable                            493,211          818,607
            Decrease in accrued liabilities                        (307,917)         (75,257)
            Increase in income tax payable                               --          352,627
                                                               ------------     ------------
NET CASH USED IN OPERATING ACTIVITIES                            (4,510,760)      (1,844,970)

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment                            (294,450)        (392,731)
    Acquisitions of business, net of cash acquired               (4,368,373)              --
                                                               ------------     ------------
NET CASH USED IN INVESTING ACTIVITIES                            (4,662,823)        (392,731)
                                                               ------------     ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Borrowings on line of credit                                  3,750,000               --
    Purchase of treasury stock                                      (30,563)              --
                                                               ------------     ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                         3,719,437     --
                                                               ------------     ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS                        (5,454,146)      (2,237,701)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                   17,353,780       17,545,183
                                                               ------------     ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                       $ 11,899,634     $ 15,307,482
                                                               ============     ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Interest paid                                              $     49,177     $         --
                                                               ============     ============
    Taxes paid                                                 $  1,012,749     $    759,780
                                                               ============     ============
SUPPLEMENTAL DISCLOSURE OF MDS CONSULTING ACQUISITION:
    Total purchase price                                       $    915,466
    Less:
              Fixed asset valuation                                 (10,786)
              Other asset valuation                                  (3,355)
                                                               ------------
    Amount included in goodwill                                $    901,325
                                                               ============

SUPPLEMENTAL DISCLOSURE OF PRISM ACQUISITION:
    Total purchase price, net of cash acquired                 $  4,452,907
    Less:
              Accounts receivable valuation                      (1,595,317)
              Fixed asset valuation                                 (36,369)
              Prepaid expenses and other assets valuation           (71,100)
    Add:
              Accounts payable valuation                            302,251
              Accrued liabilities valuation                       1,217,478
                                                               ------------
    Goodwill                                                   $  4,269,850
                                                               ============
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>

                       TECHNISOURCE, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. General

         ORGANIZATION AND DESCRIPTION OF BUSINESS

         The accompanying condensed consolidated financial statements include
Technisource, Inc. and its wholly owned subsidiaries (the "Company"). The
subsidiaries include Technisource of Florida, Inc., TSRC.net, Inc., TSRC of
Florida, Inc., Technisource Hardware, Inc., and former subsidiaries,
Technisource Midwest, Inc. and DFI Acquisition Corp.

         The Company is primarily an information technology ("IT") staffing
services and consulting firm, providing IT, e-commerce and web development
professionals principally on a time and materials basis to organizations with
complex IT needs. As of March 31, 2000, the Company had 32 branch office
locations.

         INTERIM FINANCIAL DATA

         The interim financial data as of March 31, 2000, and for the three
months ended March 31, 2000 and 1999 is unaudited and has been prepared in
accordance with generally accepted accounting principles for interim financial
reporting purposes and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Certain information and footnote disclosure normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations.
The information reflects all adjustments, consisting only of normal recurring
entries, that, in the opinion of management, are necessary to present fairly the
financial position and results of operations or cash flows of the Company for
the periods indicated. Results of operations and cash flows for the

                                       4
<PAGE>

                       TECHNISOURCE, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            (UNAUDITED) - (CONTINUED)

interim periods are not necessarily indicative of the results of operations or
cash flows for the full fiscal year. These condensed consolidated financial
statements should be read in conjunction with the Company's Financial Statements
and the notes thereto for the year ended December 31, 1999, included in the
Company's annual report on Form 10-K.

         RECLASSIFICATIONS

         Certain reported amounts for 1999 have been reclassified to conform to
the 2000 presentation.


2. Acquisitions

         ACQUISITION OF MDS CONSULTING SERVICES, INC.

         On February 18, 2000, the Company, through a wholly owned subsidiary,
completed the acquisition of the assets of MDS Consulting Services, Inc., an IT
Staffing company for approximately $915,000 in cash. Up to an additional
$975,000 cash consideration may be paid in the form of an earn-out payable over
three years based on certain specified criteria. The transaction was accounted
for under the purchase method of accounting.

         ACQUISITION OF PRISM GROUP CONSULTING, LLC AND PRISM GROUP, LLC

         On March 1, 2000, the Company acquired substantially all of the assets
and certain liabilities of PRISM Group Consulting, LLC and PRISM Group, LLC, IT
staffing companies for approximately $4,770,000 cash and a promissory note in
the amount of $1,000,000 which matures February 28, 2001. In connection with the
acquisition, the Company utilized $3,750,000 of the bank line of credit. (Note
5) The transaction was accounted for under the purchase method of accounting.
The proforma effect of the acquisition as if it occurred on January 1, 2000 and
January 1, 1999 is as follows:

                                                           MARCH 31,
                                               --------------------------------
                                                    2000              1999
                                               -------------     --------------
           Revenue                             $32,784,370       $37,902,578

           Net Income                          $   277,293       $ 1,497,924

           Net Income per share - basic        $      0.03       $      0.14
           Net Income per share - diluted      $      0.03       $      0.14

                                       5
<PAGE>

                       TECHNISOURCE, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            (UNAUDITED) - (CONTINUED)

3. Summary of Significant Accounting Policies

         GOODWILL

         Goodwill represents the excess of the purchase price over the fair
value of acquired companies and is being amortized on a straight line basis over
fifteen years for the acquisition of PRISM Group Consulting, LLC, PRISM Group,
LLC and MDS Consulting, Inc.

         REVENUE RECOGNITION

         The Company generally recognizes services revenue at the time services
are performed. The Company generally recognizes product and related service
revenue at the time of shipment to the customer. However, when the Company does
not take title to the product, revenue is recognized as commission revenue when
the product is received by the customer.

         BUSINESS RISKS AND CONCENTRATION

         The Company's operations depend upon, among other things, the Company's
ability to attract, develop and retain a sufficient number of highly skilled
professional employees. The IT service industry 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 these competitors have
substantially greater financial, technical and marketing resources and greater
name recognition than the Company.

         The Company provides IT professional services to customers located in
the United States and Canada. The Company's revenue is generated from a limited
number of clients in specific industries. Future operations may be affected by
the Company's ability to retain these clients and the cyclical and economic
factors that could have an impact on those industries. Financial instruments,
which potentially expose the Company to concentrations of credit risk, consist
primarily of accounts receivable. Additionally, the Company maintained
approximately $11.9 million at March 31, 2000 in one financial institution,
which is in excess of the FDIC insured limits.

4. Contingent Liability

         The Company is currently undergoing a review by the Department of
Labor. Although Management believes the ultimate outcome of the review will not
have an adverse material effect on the Company's results of operations or
financial position, the outcome and effect of the review cannot yet be
determined.

                                       6
<PAGE>

                       TECHNISOURCE, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            (UNAUDITED) - (CONTINUED)

5. Line of Credit

         On March 9, 1999, the Company established a line of credit with a bank
that provides for maximum borrowings of up to $25 million, $10 million of which
may be used for acquisitions and $15 million of which may be used for working
capital. Interest is payable monthly at a variable rate of LIBOR plus 1.4%. The
line of credit expires January 31, 2002. In connection with the acquisition of
PRISM Group, LLC and PRISM Group Consulting, LLC the Company utilized $3.75
million of the line of credit which is outstanding at March 31, 2000.

6. Earnings Per Share

         Basic earnings per share is computed by dividing net income
attributable to common shares by the weighted average number of common shares
outstanding during the period. Diluted earnings per share is computed by
dividing net income attributable to common shares by the weighted average number
of common shares outstanding during the period increased to include the number
of additional common shares that would have been outstanding if the diluted
common shares had been issued. The diluted effect of outstanding options is
reflected in diluted earnings per share by application of the treasury stock
method.

                                                THREE MONTHS ENDED MARCH 31,
                                                  ------------------------
                                                     2000          1999
                                                  ----------    ----------
   Basic:
                Weighted average common shares
                outstanding                       10,359,274    10,385,000
                                                  ==========    ==========
   Dilute:
                Weighted average common shares
                outstanding                       10,359,274    10,385,000
                Dilutive effect of options           157,793       162,158
                                                  ----------    ----------
         Total                                    10,517,067    10,547,158
                                                  ==========    ==========

7. Stock Repurchase Plan

         On April 22, 1999, the Company's Board of Directors approved a Stock
Repurchase Plan pursuant to which the Company can repurchase up to $1 million of
the Company's common stock on the open market. As of March 31, 2000, the Company
had repurchased 31,000 shares of its common stock at an aggregate cost to the
Company of $180,563.

                                       7
<PAGE>

                       TECHNISOURCE, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            (UNAUDITED) - (CONTINUED)

8. Reportable Segment

         The Company operates in two business segments: IT Staffing and Computer
Hardware Sales. The segment information set forth below is based on the nature
of the services offered. The chief operating decision-makers evaluate each
segment's performance based primarily on their revenues, gross margin and
operating income. The accounting policies of the operating segments are the same
as those of the entire Company.

                                 THREE MONTHS        THREE MONTHS
                                    ENDED                ENDED
                                MARCH 31, 2000       MARCH 31, 1999
                                 -----------          -----------
         Revenues 1
            IT Staffing          $30,047,750          $30,000,285
           Hardware Sales          1,038,062            5,762,782
                                 -----------          -----------
                                 $31,085,812          $35,763,067
                                 ===========          ===========
         Income Before Taxes 2
           IT Staffing           $   434,372          $ 2,047,535
            Hardware Sales            66,206              334,033
                                 -----------          -----------
                                 $   500,578          $ 2,381,568
                                 ===========          ===========

9. Subsequent Events

         Pursuant to the Stock Repurchase Plan, the Company purchased 10,500
shares for $48,157 through May 12, 2000.

---------------
1        Two of the Company's clients accounted for approximately 15.9% and
         54.9%, respectively, of the Company's hardware sales for the period
         ended March 31, 2000.

2        Since all expenses have not been allocated to the hardware sales
         segment, this basis is not necessarily a measure completed in
         accordance with generally accepted accounting principles and may not be
         comparable to other companies.

                                       8
<PAGE>

                      TECHNISOURCE, INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         CERTAIN STATEMENTS CONTAINED IN THIS FORM 10-Q, PRINCIPALLY IN THIS
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS," THAT ARE NOT RELATED TO HISTORICAL RESULTS, INCLUDING STATEMENTS
RELATING TO WORKING CAPITAL, COSTS OF SETTING UP NEW BRANCH OFFICES,
PROFITABILITY OF BRANCH OFFICES, AND THE EFFECT OF LIABILITY, IF ANY, IMPOSED ON
THE COMPANY BY THE DEPARTMENT OF LABOR ARE FORWARD-LOOKING STATEMENTS. THESE
FORWARD-LOOKING STATEMENTS INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES,
INCLUDING, WITHOUT LIMITATION, THE COMPANY'S ABILITY TO RECRUIT AND RETAIN
QUALIFIED TECHNICAL PROFESSIONALS; IDENTIFY, ACQUIRE AND INTEGRATE SUITABLE
ACQUISITION CANDIDATES; OBTAIN SUFFICIENT WORKING CAPITAL TO SUPPORT SUCH
GROWTH; COMPETE SUCCESSFULLY WITH EXISTING AND FUTURE COMPETITORS; THE ABILITY
OF NEW BRANCH OFFICES TO ACHIEVE PROFITABILITY AND OTHER FACTORS DESCRIBED
THROUGHOUT THIS FORM 10-Q. THE ACTUAL RESULTS THAT THE COMPANY ACHIEVES MAY
DIFFER MATERIALLY FROM ANY FORWARD-LOOKING STATEMENTS DUE TO SUCH RISKS AND
UNCERTAINTIES. WORDS SUCH AS "BELIEVES," "ANTICIPATES," "EXPECTS," "INTENDS,"
AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, BUT
ARE NOT THE EXCLUSIVE MEANS OF IDENTIFYING SUCH STATEMENTS. THE COMPANY
UNDERTAKES NO OBLIGATION TO REVISE ANY FORWARD-LOOKING STATEMENTS IN ORDER TO
REFLECT EVENTS OR CIRCUMSTANCES THAT MAY ARISE AFTER THE DATE OF THIS REPORT.
READERS ARE URGED TO CAREFULLY REVIEW AND CONSIDER THE VARIOUS DISCLOSURES MADE
BY THE COMPANY IN THIS REPORT AND IN THE COMPANY'S OTHER REPORTS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION THAT ATTEMPT TO ADVISE INTERESTED PARTIES OF
THE RISKS AND FACTORS THAT MAY AFFECT THE COMPANY'S BUSINESS.

         OVERVIEW

         Technisource is a national provider of IT staffing services through 32
offices in the United States and Canada, utilizing over 1,200 highly trained
professionals. The Company has achieved a compound annual revenue growth rate of
56% over the past five years based on years-ended 1994 through 1999. This growth
rate has been generated internally, without the benefit of acquisitions.

         The Company's revenues grew from $29.1 million in 1995 to $144.7
million in 1999. The Company's historical revenue growth during this period has
been driven primarily by increases in the number of professionals placed with
existing and new clients. The number of professionals utilized by the Company
grew from 320 as of December 31, 1995, to 1,163 as of December 31, 1999, and to
1,221 as of March 31, 2000. For each of 1999, 1998, and 1997, clients from the
previous year generated at least 70% of the Company's revenues.

         Through 1999, the Company generated primarily all of its revenues from
fees for the provision of IT Staffing. For the period ended March 31, 2000, the
Company generated 96.7% of its revenues from fees for the provision of IT
staffing services and 3.3% from hardware sales.

         With respect to IT staffing services, clients are typically billed and
professionals paid on a weekly basis. The Company recognizes revenues from IT
staffing services as they are performed. With respect to hardware sales, clients
are typically billed on a weekly basis. The Company recognizes revenues from
hardware sales when the title to the computer hardware passes to the customer.

                                       9
<PAGE>

                       TECHNISOURCE, INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)


         The Company's most significant cost is its personnel expense, which
consists primarily of salaries, fees and benefits of the Company's
professionals. To date, the Company has generally been able to maintain its
gross profit margin by offsetting increases in professional salaries and fees
with increases in the hourly billing rates charged to clients. However, there
can be no assurance that the Company will continue to be able to offset
increases in the Company's cost of revenues by increasing the amounts the
Company bills to its clients. The Company attempts to control overhead and
indirect expenses, which are not directly passed through to its clients, by
controlling the rate of its branch office expansion and by maintaining
centralized operations and back-office infrastructure.

         The Company increased its administrative, sales, recruiting and
training professionals from 207 employees on December 31, 1997 to 324 employees
on December 31, 1999, and to 331 at March 31, 2000.

         Over the last ten years, the Company has developed and refined the
Technisource Growth Model, which is focused on facilitating rapid internal
growth through the replication of Development Triangles. Each Development
Triangle is typically comprised of one Account Manager, two or three recruiting
professionals and a group of IT professionals. The Company has grown from nine
Development Triangles as of December 31, 1995 to 62 Development Triangles as of
December 31, 1999, and to 67 Development Triangles as of March 31, 2000.
Although the Company's operating margins may be adversely affected during
periods following relatively large increases in the number of the Company's
Development Triangles, the Company leverages its initial investment in
infrastructure as Development Triangles mature and the Company's sales and
recruiting personnel achieve greater levels of productivity.

         The Company anticipates that each new branch office will require an
investment of approximately $100,000 to $150,000 in order to begin operations
and fund operating losses for an initial ten-to-twelve month period of
operations, which is the amount of time management believes should generally be
required for a new office to achieve profitability. The Company expenses the
costs of opening a new office as such expenses are incurred. The Company
anticipates continuing to leverage its current network of 32 branch offices, as
the start-up costs have already been expensed and additional start-up branch
office costs will constitute a smaller percentage of revenues as the Company
continues to increase its revenue base. There can be no assurance that new
Development Triangles or branch offices will be profitable within projected time
frames or at all.

         The Company's computer hardware sales were approximately $1 million in
the first three months of 2000 compared to approximately $5.8 million in the
same period of 1999. The gross margin on the sale of computer hardware has
increased substantially as a percentage of sales, exclusive of hardware
commissions, to 15.1% in the first three months of 2000 from 8.0% for the same
period in 1999. This increase is directly attributable to the amount of hardware
sales recognized as commission revenue as opposed to direct sales.

                                       10
<PAGE>

                       TECHNISOURCE, INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

         The following table set forth for the periods indicated, depicts the
percentage of revenues of certain items reflected in the Company's statements of
income:

                                                       THREE MONTHS ENDED
                                                             MARCH 31,
                                                     -----------------------
                                                       2000            1999
                                                     -------         -------
     Staffing Revenues                                96.7 %          83.9 %
     Hardware Revenues                                 3.3 %          16.1 %
                                                     -------         -------
        Total Revenues                               100.0 %         100.0 %
     Cost of revenues
     Staffing Cost of Revenues                        72.1 %          63.6 %
     Hardware Cost of Revenues                         1.8 %          14.4 %
                                                     -------         -------
     Gross profit                                     26.1 %          22.0 %
     Selling, general and administrative expenses     25.1 %          16.0 %
                                                     -------         -------
     Operating income                                  1.0 %           6.0 %
     Interest and other income                         0.7 %           0.7 %
     Interest expense                                 (0.1)%           0.0 %
                                                     -------         -------
     Income before income taxes                        1.6 %           6.7 %
     Income taxes                                      0.7 %           2.7 %
                                                     -------         -------
     Net Income                                        0.9 %           4.0 %

THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999

              REVENUES

         STAFFING DIVISION. The Company's staffing revenues remained flat at $30
million for the first three months of 2000 as compared to the same period in
1999. This is primarily attributable to the decline in the staffing industry
that occurred after the first quarter of 1999 and continued through to the end
of the year due to the Y2K issue. This decline in the industry caused staffing
revenues to decrease quarter to quarter, with a slight growth occurring between
the fourth quarter of 1999 and the first quarter of 2000. This growth was fueled
by the acquisition of two companies in Hartford, CT and San Francisco, CA, and
the opening of four branch offices throughout the quarter. The offices were
opened in Milwaukee, WI, St. Louis, MO, Santa Clara, CA and Ottawa, Canada. The
total number of client divisions and business units billed increased to 497 in
the first three months of 2000, from 363 in the first three months 1999. The
number of IT, e-commerce and web development professionals working for the
Company increased to 1,221 as of March 31, 2000 from 1,134 as of March 31,1999.

                                       11
<PAGE>

                       TECHNISOURCE, INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

         HARDWARE DIVISION. The Company's hardware revenues decreased to $1
million in the first three months of 2000 from $5.8 million for the same period
in 1999. The decrease in revenue is directly attributable to two factors. The
first factor is the one-time sale of $4.4 million of computer hardware the
Hardware Division experienced in the first three months of 1999. The second
factor is that during 2000, the Company experienced a change in the method of
delivery of its products. Increasingly, product is drop-shipped from the
Company's vendors to the Company's clients. Since the Company does not take
title to product which is being drop-shipped, the revenue from this type of sale
is considered to be commission revenue and as such is reported net of related
expenses. The change in the type of revenue recognized reduced gross revenue by
$2 million. The total number of hardware clients increased to 143 from 93 for
the first three months of 2000.

         GROSS PROFIT

         STAFFING DIVISION. Gross profit consists of revenues less cost of
revenues. The Company's staffing cost of revenues consists primarily of salary,
benefits and expenses for the Company's IT, e-commerce and web development
professionals and other direct costs associated with providing services to
clients. Gross profit increased 3.2% to $7.6 million for the three months ended
March 31, 2000 from $7.9 million for the same period in 1999. As a percentage of
staffing revenue, gross profit increased to 25.5% in the first quarter of 2000
compared to 24.2% for the three months ended March 31, 1999. The Staffing
Division's utilization rate for the first three months of 2000 was 97.7%
compared to 97.8% for the first three months of 1999.

         HARDWARE DIVISION. The Company's hardware cost of revenues consists
primarily of direct costs associated with the products provided to the clients.
Gross profit decreased to $464,913 in the first three months of 2000 from
$612,043 in the first three months of 1999. As a percentage of hardware
revenues, gross profit increased to 15.1% in the first quarter of 2000 from 8.0%
for the same period in 1999. Commission revenue increased 125% to $363,000 from
$162,000.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         STAFFING DIVISION. Staffing division selling, general and
administrative expenses consist primarily of costs associated with the staffing
division's direct selling and marketing efforts, human resources and recruiting
departments, administration, training and facilities. Staffing selling, general
and administrative expenses increased 37.9% to $7.4 million for the three months
ended March 31, 2000 from $5.4 million for the three months ended March 31,
1999. As a percentage of revenues, selling, general and administrative expenses
increased to 24.0% in the first quarter of 2000, from 15.2% in the same period
of 1999. This increase resulted from expenses incurred to build and enhance the
infrastructure necessary to support the Company's continued growth. This
included the addition of six offices during the first quarter of 2000, and the
addition of six Development Triangles, which increased the number of sales and
recruiting professionals during this period.

         HARDWARE DIVISION. Hardware division selling, general and
administrative expenses consist primarily of costs associated with the Hardware
Division's direct selling and marketing efforts,

                                       12
<PAGE>

                       TECHNISOURCE, INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

human resources and sales departments, administration and facilities. Hardware
selling, general and administrative expenses increased to $340,090 for the
quarter ended March 31, 2000 from $281,270 for the quarter ended March 31, 1999.
As a percentage of revenues, selling, general and administrative expenses
increased to 1.1% for the first quarter of 2000 from 0.8% in the same period of
1999. This increase resulted from the continued growth of the Hardware
Division's personnel and resources.

         NET INTEREST INCOME

         Net interest income was $174,958 for the three months ended March 31,
2000, as compared to $224,574 for the three months ended March 31, 1999. The
decrease is attributable to the interest payable on the line of credit, the
interest payable on the note payable of $1,000,000 for the acquisition of PRISM
Group Consulting, LLP and PRISM Group, LLP and the decrease in cash outstanding
due to use for acquisitions.

         INCOME TAXES

         Income taxes for the first three months of 2000 reflect a 42% effective
income tax rate which compares to 1999.

         LIQUIDITY AND CAPITAL RESOURCES

         The Company's primary sources of liquidity have been cash flow from
operations and available borrowings under its line of credit. Cash and cash
equivalents and working capital approximated $11.9 million and $28.8 million,
respectively, as of March 31, 2000.

         Net cash used by operating activities was approximately $4.5 million
for the period ended March 31, 2000, as compared to $1.8 million during the
three month period ended March 31, 1999. The increase in cash used in operations
is primarily due to an increase in accounts receivable.

         Net cash used in investing activities was approximately $5.7 million
during the three month period ended March 31, 2000 as compared to $393,000
during the three months ended March 31, 1999. The increase in cash used in
investing activities is primarily due to the acquisitions of PRISM Group LLC,
PRISM Group consulting, LLC and MDS Consulting, Inc.

         For the three-month period ended March 31, 2000, net cash provided by
financing activities was $4.7 million and primarily related to the financing of
acquisitions and the purchase of treasury stock.

         On March 9, 1999 the Company established a line of credit with a bank
which provides for maximum borrowings of up to $25 million. As of March 31,
2000, $3.75 million has been used for acquisition purposes, leaving $6.25
million for future acquisitions and $15 million to be used

                                       13
<PAGE>

                       TECHNISOURCE, INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

for working capital. Under the bank line of credit, interest is payable monthly
at LIBOR plus 1.4%. The line of credit expires January 31, 2002.

         On February 18, 2000, the Company acquired substantially all the assets
of MDS Consulting, Inc. of Hartford, Connecticut, for approximately $800,000
cash. On March 1, 2000, the Company used funds from the line of credit to
acquire substantially all of the assets and certain liabilities of PRISM Group,
LLC and PRISM Group Consulting, LLC, both of San Francisco, California. The
total consideration associated with the acquisition of the two companies was
approximately $6.1 million.

         On April 22, 1999, the Company's Board of Directors approved a Stock
Repurchase Plan pursuant to which the Company can repurchase up to $1 million of
the Company's common stock on the open market. As of March 31, 2000, the Company
has repurchased 31,000 shares of its common stock at an aggregate cost to the
Company of $180,563.

         During the second quarter of 2000, the Company decided to spinoff its
computer hardware sales operations. At that time, the computer hardware sales
segment of the Company was offered for sale. In the event that a buyer is not
found, the computer hardware operation may be discontinued.

         The Company anticipates that its primary uses of working capital in
future periods will be for the internal development of new offices, investments
in its management information systems, possible acquisitions and decreases in
working capital. The Company continually reviews and evaluates acquisition
candidates to complement and expand its business. The Company's ability to grow
through acquisitions is dependent on the availability of suitable acquisition
candidates and the terms on which such candidates may be acquired, which may be
adversely affected by competition for such acquisitions. The Company cannot
predict to what extent new offices will be added through acquisitions as
compared to internal development. The Company currently has no commitments with
respect to any potential acquisitions.

         The Company believes that the existing cash and cash equivalents, cash
flow from operations and available borrowings under the Credit Facility will be
sufficient to meet the Company's presently anticipated working capital needs for
at least the next twelve months.

         Inflation did not have a material impact on the Company's revenues or
income from operations in the first quarter of 2000. The Company cannot predict
what effect, if any, inflation may have on its future results of operations.

                                       14
<PAGE>

                       TECHNISOURCE, INC. AND SUBSIDIARIES


ITEM 3. QUANTITIVE AND QUALITIVE DISCLOSURES ABOUT MARKET RISK

         The Company owns no derivative financial instruments or derivative
commodity instruments. The Company does not derive a significant amount of
revenues from international operations and does not believe that it is exposed
to material risks related to foreign currency exchange rates.

                                       15
<PAGE>

PART II - OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits

              EXHIBIT NUMBER        DESCRIPTION

                   2.1           Asset Purchase Agreement dated February 18,
                                 2000, among DFI Acquisition Corp. and MDS
                                 Consulting Services, Inc. and Mark D. Solomon
                                 (Filed without exhibits or schedules which will
                                 be furnished supplementally to the Commission
                                 upon request.)

                   2.2*          Asset Purchase Agreement dated March 1,
                                 2000, among PRISM Group, LLC, PRISM Group
                                 Consulting, LLC, Gus Gonzalez and Nancy E.
                                 Agatiello, Revocable Inter-Vivos Trust, Barbara
                                 S. Berk, Nancy E. Agatiello and TSRC.net, Inc.

                   3.1**         Amended and Restated Articles of incorporation
                                 of the Company

                   3.2**         Amended and Restated Bylaws of the Company

                   4.1           See Exhibits 3.1 and 3.2 for provisions of the
                                 Articles of Incorporation and Bylaws for the
                                 Company defining the rights of holders of
                                 Common Stock of the Company

                   4.2**         Specimen certificate for the Company's Common
                                 Stock

                   10.1          Employment Agreement, dated January 1, 2000,
                                 between Thomas Hoshko and the Company

                   10.2          Technisource, Inc. Nonqualified Stock Option
                                 Agreement, dated January 1, 2000, between
                                 Thomas Hoshko and the Company

                   10.3          Technisource, Inc. Incentive Stock Option
                                 Agreement dated January 1, 2000, between
                                 Thomas Hoshko and the Company

                   21            Subsidiaries of the Company

                   27            Financial Data Schedule

         (b) Current Reports on Form 8-K

                  A report on Form 8-K was filed March 16, 2000 relating to Item
             2 - Acquisition or Disposition of Assets.

--------------------
*        Filed with the Company's Form 8-K filed with the Securities and
         Exchange Commission on March 16, 2000, and incorporated by reference.
**       Filed with the Company's Registration Statement on Form S-1 (File No.
         333-50803) filed with the Securities and Exchange Commission on April
         23, 1998, and incorporated herein by reference.

                                       16
<PAGE>

                                   SIGNATURES

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

                                          TECHNISOURCE INC.

Dated: May 15, 2000
                                          By: /s/ James F. Robertson
                                             -----------------------------------
                                              James F. Robertson
                                              Executive Vice President,
                                              Chief Operating Officer

 Dated: May 15, 2000                      By: /s/ John A. Morton
                                             -----------------------------------
                                              John A. Morton
                                              Vice-President
                                              Chief Financial Officer
                                              (Principal Financial Officer)

                                       17
<PAGE>

                                INDEX OF EXHIBITS

EXHIBIT NUMBER                   DESCRIPTION
--------------                   -----------
    2.1                Asset Purchase Agreement dated February 18, 2000, among
                       DFI Acquisition Corp. and MDS Consulting Services, Inc.
                       and Mark D. Solomon (Filed without exhibits or schedules
                       which will be furnished supplementally to the Commission
                       upon request.)

    10.1               Employment Agreement, dated January 1, 2000, between
                       Thomas Hoshko and the Company

    10.2               Technisource, Inc. Nonqualified Stock Option Agreement,
                       dated January 1, 2000, between Thomas Hoshko and the
                       Company

    10.3               Technisource, Inc. Incentive Stock Option Agreement
                       dated January 1, 2000, between Thomas Hoshko and the
                       Company

    21                 Subsidiaries of the Company

    27                 Financial Data Schedule