SECURITIES AND EXCHANGE COMMISSION

                        Washington, D.C. 20549
                             _____________

                              FORM 10-KSB

(Mark One)

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1999

                                  OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ___________

                    Commission file number: 0-26464


                    CSI Computer Specialists, Inc.
        (Exact name of Registrant as specified in its charter)

Delaware                                  52-1599610
(State or other jurisdiction of           (I.R.S. Employer
incorporation or organization)            Identification No.)

904 Wind River Lane  Suite 100
Gaithersburg, Maryland                    20878
(Address of principal executive offices)        (Zip code)

                             301-921-8860
          (Registrant's telephone number including area code)

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

Title of Securities                       Exchanges on which Registered
Common Stock, par value $0.001 per share  OTB Bulletin Board



      Securities registered pursuant to section 12(g) of the Act:
N/A



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

      Check if there is no disclosure of delinquent filers pursuant
to Item 405 of Regulation S-B is not contained in this form, and no
disclosure will 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-KSB or any amendment to this
Form 10-KSB. |_|

State issuer's revenues for its most recent fiscal year.  $18,360,010


As of February 23, 2000, the aggregate market value of Common Stock
outstanding held by non-affiliates of the issuer was $3,195,565
(computed by reference to the average bid and asked price of the
Common Stock) and the total number of shares of Common Stock
outstanding was 3,715,888.


Transitional Small Business Disclosure Format (check one):
Yes ___; No X


Certain statements made in this Annual Report on Form 10-KSB are
forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995.  Such statements involve
known and unknown risks, uncertainties, and other factors that may
cause actual results, performance, or achievements of the Company to
be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking
statements.  Although the Company believes that the expectations
reflected in such forward-looking statements are based upon
reasonable assumptions, the Companys actual results could differ
materially from those set forth in the forward-looking statements.
Certain factors that might cause such a difference include, but are
not limited to, the timing of revenues, rapid technological change,
the demand for services for computer hardware systems and computer
equipment, the timing and amount of capital expenditures and other
risks detailed herein.


                                CONTENTS


                                                                      Page

Part I
      Item 1      Description of Business                              4

      Item 2      Description of Property                              8

      Item 3      Legal Proceedings                                    9

      Item 4      Submission of Matters to a Vote of Security Holders  9


Part II
     Item 5      Market for Common Equity and Related
                 Stockholder Matters                                   9

      Item 6      Management Discussion and Analysis                 9

      Item 7      Financial Statements                                F-1

      Item 8      Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure                 12


Part III
     Item 9      Directors, Executive Officers, Promoters and Control
                 Persons; Compliance with Section 16(a)               12

      Item 10     Executive Compensation                              13

      Item 11     Security Ownership of Certain Beneficial Owners and
                  Management                                          14

      Item 12     Certain Relationships and Related Transactions      15

      Item 13     Exhibits List and Reports on Form 8-K               15


                                     PART 1

Item 1.  Description of Business

  General

     CSI Computer  Specialists,  Inc. ,the Company, was  incorporated
pursuant to the laws of the State of Delaware  on  February  22,  1994.
The  Company  is  the  successor  to  CSI-Maryland.   CSI-Maryland  was
incorporated  pursuant  to the laws of the State of Maryland in October
1988  for  the  purpose  of  providing   computer  hardware   services,
including  installation  and  de-installation  of  equipment,  computer
upgrades,  computer  maintenance  and repair,  and the sale of computer
parts and  equipment.  The Company was  organized  by  CSI-Maryland  to
enable  CSI-Maryland  to merge  with and into the  Company on March 31,
1994  in  order  to  effectuate  a  reincorporation  in  the  State  of
Delaware.

      The  Company   provides  a  full  range  of   computer   hardware
services,  including  sales and  maintenance of mainframe and mid-range
computer   equipment  and  parts,   network  design  and  installation,
computer   upgrades,    and   installation   and   de-installation   of
equipment.   The  Company   provides   its   services   to   commercial
customers,  agencies  of  federal,  state  and local  governments,  and
universities,  hospitals,  and associations in the Mid-Atlantic  region
of the United  States,  including West  Virginia,  Virginia,  Maryland,
the  District  of  Columbia,   New  Jersey,   New  York,   Connecticut,
Pennsylvania, and in Illinois and California.

     In  pursuit of its plans for  geographic  expansion,  the  Company
opened offices near  Philadelphia,  Pennsylvania  in January,  1995 and
in Richmond,  Virginia in December,  1995. In addition,  as part of the
Company's  efforts to expand its  technological  expertise and customer
base,  the  Company  completed  its  acquisition  of  Capitol  Computer
Systems,  Inc.,  doing  business  as CCS  Systems,  Inc.  in  December,
1995.  CCS Systems,  Inc. is a Lanham,  Maryland  value added  reseller
specializing  in  equipment  sales and computer  hardware  maintenance.
Furthering  its  expansion  efforts,  the Company  acquired  Cintronix,
Inc.,  which   specializes  in  the  sale  and  servicing  of  personal
computers,  in  January,  1997  and  Advanced  Network  Systems,  which
provides  network  integration  service  and  sales  to  companies  and
associations  in the  Washington,  DC  metropolitan  area, in February,
1997.  The  Company  acquired  the assets of Phoenix  Service,  Inc. in
May,  1997.   Phoenix  Service,   Inc.  provides  mainframe  sales  and
maintenance  services in the Eastern region of the country,  as well as
outside   Chicago,   Illinois  and  San  Francisco,   California.   The
Company  sold  the  assets  of  Cintronix,  Inc.,  on  June  30,  1999,
pursuant to poor performance as discussed later in this Form 10-K.

     Initially,   the  Company's  business  was  limited  to  providing
service  for  computer   mainframes   manufactured   by   International
Business Machines  and peripheral  equipment,  such as printers,
disk  drives,  tape drives and  computer  controllers.  The Company has
broadened  its  peripheral  support to include  servicing  for products
manufactured   by  Memorex,   Storage   Technology  and  various  other
original   equipment   manufacturers  of  input/output   products.   In
addition,   the  Company  offers  maintenance   services  for  personal
computers  and  associated  peripheral  equipment  produced  by several
major   manufacturers,   such   as  IBM,   Compaq,   NEC,   Epson   and
Hewlett-Packard.  The Company  also  provides  parts and  services  for
computer  mainframes  manufactured  by  Digital  Equipment  Corporation
 such as DEC VAX platforms and peripheral equipment.

     The  Company  provides  its  services  to  customers  pursuant  to
maintenance   agreements.    Substantially   all   of   the   Company's
maintenance  agreements  are fixed-fee  agreements  for terms of one or
more years.  Pursuant to such an  agreement,  a customer  agrees to pay
a  fixed  amount,  payable  monthly,  in  exchange  for  the  Company's
agreement  to  provide  all parts  (other  than  expendable  parts) and
labor  necessary  to maintain or repair the  equipment  during the term
of such  agreement.  The Company  occasionally  provides  services on a
"time-and-materials"  basis pursuant to which a customer  agrees to pay
a specified  rate for each  particular  service to be  performed by the
Company  and to  purchase  any  replacement  parts  used in  connection
therewith.

     The Company began actively  selling new and  refurbished  computer
equipment in 1993.  The Company sells  computer  equipment  pursuant to
equipment  sales  agreements.  Pursuant to such  agreements,  customers
pay for the  computer  equipment  that they  purchase  from the Company
upon delivery.  Given the Company's  large existing  customer base, the
addition  of  equipment  sales  enables  the  Company to  "bundle"  its
services  to  include  the  sale  of  equipment  to  a  customer,   the
installation  of such  equipment and the  maintenance  of the installed
equipment on a continuing basis.

      The   industry   in  which   the   Company   operates   has  been
characterized   by  rapid  and   continuous   technological   advances,
permitting cost reduction,  increased  computer  processing  capacities
and broadened  equipment  platforms.  Customers  frequently  upgrade or
replace  equipment and also use  mainframes  and  peripheral  equipment
manufactured  by various  vendors to take  advantage  of  technological
innovations.  As a result,  equipment,  which is replaced by  different
or  newer  models,   becomes  available  to  the  resale  or  secondary
market.  This  enables  the  Company to  purchase  this  equipment  and
support an additional product line.

     Management  believes  that the  Company  has been able to  compete
successfully  because  of the  high  quality  of  service  the  Company
provides  and  the  competitive  pricing  it is able  to  offer  to its
customers.  As a result,  since its  inception,  the  Company  has been
able  to  attract  and  maintain   long-term   relationships  with  its
existing  customers  and to expand its customer base  consistently  and
effectively.


  Maintenance Services

      The   Company   provides   third-party,   multi-vendor   computer
hardware and peripheral  equipment  maintenance  services to commercial
customers,   agencies   of  federal,   state  and  local   governments,
universities,  hospitals,  associations and other organizations located
primarily  in  the  Mid-Atlantic  region  of  the  United  States.  The
equipment  currently  maintained  and serviced by the Company  consists
of a wide range of peripheral  subsystems,  including  terminals,  disk
drives,  tape  drives,  printers  and  computer  controllers,  and also
includes  the   mainframes,   mid-range   minicomputers   and  personal
computers  on which  such  peripheral  subsystems  are  dependent.  The
equipment  serviced or maintained  by the Company  varies from customer
to  customer  and  ranges  from   providing   services  for  individual
computers or peripherals  to providing  services for many computers and
peripherals   located  in  a  customer's   mainframe   computer   room.
Services  provided  by  the  Company  consist  primarily  of  scheduled
preventive  maintenance  and emergency  remedial  services.  Preventive
maintenance  includes  inspections,   diagnostic  analysis,   cleaning,
adjustments,  and  replacement  of components  and parts.  In addition,
the Company  conducts  inspections  for  certification  of equipment in
connection   with   determining   whether   mainframes  and  peripheral
equipment meet original equipment manufacturer maintenance standards.

      IBM manufactures most of the mainframe  computers  maintained and
serviced by the  Company,  although  the  Company  also  provides  such
services  for  computers  manufactured  by other  companies,  including
Memorex,  Storage Technology,  and DEC. Numerous companies  manufacture
the personal computers and peripheral  equipment  currently serviced by
the  Company.  The Company,  in 1995,  expanded its business to include
the sale and  servicing  of IBM RISC  System/6000,  IBM  AS/400 and IBM
ES/9000.  In  addition,  the  Company  greatly  expanded  its sales and
servicing   capabilities  in  the  mid-range  computer  area  with  the
acquisition of Advanced Network Systems in early 1997.


  Maintenance Agreements

      The  Company   provides   most  of  its   services   pursuant  to
maintenance  agreements  having  terms of one or more  years.  Pursuant
to such  agreements,  a customer is  obligated to pay a fixed amount on
a monthly  basis in exchange  for the  Company's  agreement  to provide
all  parts  (other  than  expendable  parts)  and  labor  necessary  to
maintain or repair the equipment  subject to the  agreement  during the
term  of  the  agreement.   Additionally,   the  Company   occasionally
provides services on a  "time-and-materials"  basis pursuant to which a
customer  agrees to pay a specified  rate for each  particular  service
to be performed by the Company and to purchase  any  replacement  parts
used  in  connection  therewith.  The  Company's  standard  maintenance
agreement  provides  that upon  expiration of the initial term thereof,
such  agreement  will  continue  on a  month-to-month  basis until such
time  as  either  party  terminates  the  agreement.  It has  been  the
Company's  experience that very few of its maintenance  agreements with
its customers  are canceled or  discontinued  upon  expiration of their
initial terms given the monthly renewal provisions.

      Most of the  Company's  maintenance  agreements  with agencies of
the  federal  government  are  entered  into for terms of three to five
years.  However,  such  maintenance   agreements  provide  agencies  an
annual right to  terminate  the contract in the event that the agencies
do not  receive  the  requisite  governmental  funding.  Revenues  from
such  contracts  are,  therefore,  dependent  upon annual  governmental
funding.   Such   termination   rights  have  seldom  been   exercised,
however,   and  such   maintenance   agreements  have  terminated  upon
expiration  of their  specified  terms and,  in most  cases,  have been
renewed for one-year periods.


  Subcontracting

     The  Company  has  entered  into  subcontracting  agreements  with
several of its vendors  pursuant to which such vendors  perform certain
services   which  the  Company  has  agreed  to  provide  to  customers
pursuant  to  existing  maintenance  agreements.  In  such  cases,  the
Company acts as the "prime  contractor"  for the  provision of computer
maintenance  services and the vendor acts as the  "subcontractor."  The
Company enters into such  agreements for several  reasons.  The Company
may elect to enter into  subcontracting  agreements  when the equipment
that  is  subject  to  a  maintenance  agreement  is  expensive  or  is
otherwise  difficult  for the Company to obtain or replace.  Similarly,
such  subcontracting  agreements have been  advantageous to the Company
when the services  required by a maintenance  agreement  have been of a
particular  level of  engineering  expertise  that the Company does not
otherwise  provide.   The  Company  also  enters  into   subcontracting
agreements  because customers  sometimes prefer to be provided services
by one entity,  such as the  Company.  , By  employing  subcontractors,
the Company has the ability to service all of its  customer  computer
equipment  (notwithstanding  the  manufacturer  or the  model),  rather
than  the  customer  relying  on the  services  which  may be  provided
individually  by each  vendor  with  respect  to its  own  manufactured
product  or model.  Either  party  may  terminate  most  subcontracting
agreements  at any time  upon  delivery  of  written  notice 30 days in
advance  of such  termination.  Several  companies  offer the  services
and  expertise  for  which  the  Company  enters  into   subcontracting
agreements.  Therefore,  management  believes  that  the  loss  of  the
services  of any one  subcontractor  would not have a material  adverse
effect on the Company's business.


  Equipment Sales

   The Company sells  computer  equipment  pursuant to equipment  sales
agreements.  Pursuant  to  such  agreements,   customers  pay  for  the
computer   equipment   that  they   purchase   from  the  Company  upon
delivery.  Generally,  the Company takes an order for equipment  from a
customer,  contacts its suppliers to ascertain the  availability of the
equipment,   provides  the  customer   with  a  quoted  price  for  the
equipment and executes an agreement upon the  customer's  acceptance of
the terms.  The Company  does not,  therefore,  maintain  an  inventory
of computer  equipment,  particularly  mid-range and personal  computer
equipment,  which  is  readily  available.  Revenues  from  the sale of
computer  equipment have steadily  increased during recent years,  with
the  largest  increase   resulting  from  the  sale  of  mid-range  and
personal   computer    equipment.    Due   to   recent   decisions   by
manufacturers  to develop direct  channels to end user  customers,  and
changes  in  the  buying  patterns  of  the  federal  government,   the
reseller  market for personal  computers  has  substantially  decreased
with  accompanying  decreased  margins.  As a result  of these  changes
management  decided  to  significantly  reduce  the  sale  of  personal
computers,  except to customers  where other Company  services might be
leveraged by the sale of equipment.


  Sales and Marketing

     The  Company   currently   employs  twelve   full-time   marketing
representatives.   Most   representatives   direct  their   efforts  to
promoting  the  Company's  sales and services to  commercial  accounts,
universities,  hospitals and associations in the  Mid-Atlantic  region,
Illinois  and  California.  The  remaining  representatives  market the
Company's  services  primarily  to  federal  government  agencies.  The
majority  of the leads  pursued by the  marketing  representatives  are
generated  by  existing   customers  and  by  referrals   from  various
vendors.  In addition,  the Company utilizes  service/product  specific
databases  for  telemarketing  and direct  contact by the sales  force.
To  date,  the  Company  has  done  little  advertising.  However,  the
Company is in the process of  developing  an  effective  marketing  and
advertising  program,  a primary part of which will be the  integration
and  cross-education  of sales  personnel  to market each  subsidiarys
and divisions products and services to the others' customer base.


  Principal Suppliers and Subcontractors

     The Company  acquires from IBM a significant part of the equipment
and  parts  that it  uses  in  connection  with  providing  maintenance
services.  The  Company  also  relies on IBM to provide  subcontracting
services.  Acquisitions  of parts and equipment for resale,  especially
personal computer and network  equipment,  are purchased from a variety
of  suppliers,  including  Ingram  Micro,  Pinacor,  Merisel  and  Tech
Data.  The  Company  also  subscribes  to a service  called  "CDLANET,"
which  provides  the  Company  with access to an  "on-line"  nationwide
database  of  equipment   offered  for  sale  by  various  vendors  and
distributors.  The Company  frequently  acquires equipment from various
vendors  identified using this service.  Due to the significant  number
of  comparable  vendors of these  products,  the Company  does not feel
that  the  loss of any  one  supplier  would  have a  material  adverse
effect on the Company's business.


  Customers

     Historically,  most of the  Company's  direct  revenue  is derived
from   services   performed   through   maintenance   agreements.   The
percentage of  commercial  customers  serviced by the Company  pursuant
to  maintenance  agreements  for the fiscal  years ended  December  31,
1999 and 1998 equaled approximately 85% and 82%,  respectively,  of all
customers   serviced   by   the   Company   pursuant   to   maintenance
agreements.   Federal   government   agencies   serviced   pursuant  to
maintenance   agreements  accounted  for  approximately  19%  and  18%,
respectively,  of the  Companys  customers  for the fiscal years ended
December 31, 1999 and 1998.  Revenues  derived from time and  materials
agreements  approximated  3% and  5%,  respectively,  of the  Company's
gross  revenues  for the  fiscal  years  ended  December  31,  1999 and
1998.  Revenues  generated  by parts and  equipment  sales  represented
approximately  30% and 31%,  respectively,  of gross  revenues  for the
fiscal years ended December 31, 1999 and 1998.

     The Company's  customers  generally  have been loyal.  It has been
the Company's  experience that most of its  maintenance  agreements are
renewed.  Currently,  no one  customer  represents  more than 5% of the
total  revenues of the  Company.  The  Company's  commercial  customers
include American  Management Systems,  Inc., Lockheed Martin,  Northrop
Grumman,  IBM,  Interactive Systems,  Inc.,  ACS, Amdahl, INOVA
Health System and Medlantic Health Care System, Inc.


  Business Strategy

      The  objectives  of the Company are to increase its customer base
while  expanding  product  offering to existing  customers.  Management
believes that  increasing  the Company's  customer base can be achieved
by the cross  marketing of products  and  services  between the Company
and its acquired  subsidiaries and divisions,  as well as the expansion
of  sales  and   servicing  of   additional   mainframe  and  mid-range
computers.   The  Company  can  also  realize   these   objectives   by
expanding  its  business to provide  sales and  service  outside of the
Mid-Atlantic  region  into  other  geographical  locations.  Management
also  believes  that it can continue to increase its sales of parts and
equipment as a result of the  Companys  designation  as a Value Added
Reseller of computer equipment produced by various  manufacturers.  By
combining  equipment  offerings  with  network  design and  integration
services  the  Company  is in a  position  to  provide a more  complete
infrastructure   to   new   and   existing   customers.   Additionally,
designation  as  a  "Value  Added  Reseller"  enables  the  Company  to
acquire  computer  equipment  directly from  manufacturers at discounts
based upon the volume of its purchases thus  increasing  overall profit
on each sale.

  Acquisitions

     The  Company's  long-term  plan has been to pursue  its growth and
acquisition  strategy on both a regional and national  level.  Entering
a new  geographic  area on a cost effect  basis is greatly  facilitated
through   acquisition   of  a  local  service   company.   The  Company
implemented  this  strategy  in 1997  when it  acquired  the  assets of
Phoenix  Service,  Inc., which gives the Company the ability to develop
business  in  major   population  areas  in  California  and  Illinois.
Management  had hoped  that the  acquisition  of  Cintronix,  Inc.  and
Advanced  Network  Systems in early 1997 would  further  the  Companys
goal  of   developing   regional   clusters   of  sales   and   service
representatives  to  improve  customer  service  and  to  gain  greater
market   penetration,   but   the   expected   integration   of   these
acquisitions  and the  projected  increase in marketing and decrease in
costs due to  economies of scale failed to  materialize  in 1998.  Only
the  Phoenix  Service  division  of the  Company  provided  significant
expansion in growing the customer base  profitably.  The  disappointing
performance  of  these  acquisitions  caused  the  Company  to  take  a
one-time  charge  of  approximately  $1.7  million  to  write  down the
carrying  value  of  these  companies  due  to  the  impairment  of the
related  assets,  primarily  goodwill.  In  addition,  the Company sold
certain of the assets of  Cintronix,  Inc. in June,  1999,  in response
to  the  poor  performance,  and  in  an  effort  to  stem  the  losses
generated  by  changes in the  personal  computer  equipment  and sales
market.  The  Company  now  plans  to  focus  its  efforts  on the core
business  of  mainframe  computer  maintenance  and sales,  and to take
advantage of  opportunities  for  expanding  national  accounts in this
segment  of  operations.  The  Company  does not  presently  anticipate
any further  acquisitions until it has sufficiently  recovered from the
disappointing  performance  in 1998 of the acquired  companies  and the
overall effect on the combined  operations of the Company.  The Company
has fully  assimilated  the  remaining  acquisitions  and  returned  to
profitability during the second half of 1999.

      The  Company  could be subject  to  liabilities  arising  from an
acquisition   in  the  event  the  Company   has  assumed   unknown  or
contingent  liabilities  or in the event such  liabilities  are imposed
on the Company.  In an effort to minimize  such risks,  prior to making
acquisitions,  the Company has conducted  due diligence  investigations
of its  targets.  In  addition,  the  Company  has sought to avoid such
liabilities by purchasing  only selected  assets and assuming  selected
liabilities  of certain  acquirees and seeking  indemnification.  There
can be no  assurance,  however,  that these  efforts will result in the
Companys  avoidance  of  any  such  liabilities,  which  could  have a
material adverse effect on the Companys financial condition.


  Employees

     The Company  has reduced  total  full-time  employees  from 160 on
December  31,  1998  to 129 as of  December  31,  1999.  Employees  are
located at the Companys  headquarters  in  Gaithersburg,  Maryland and
in eight cities in the Mid-Atlantic region, Illinois and California.



Item 2.  Description of Property

      The   Company's   headquarters   are  located  in   Gaithersburg,
Maryland   (the   "Gaithersburg   facility").   In   addition   to  the
Gaithersburg  facility,  the Company  maintains  its  National  Support
Center in  Beltsville,  Maryland  (the  "Beltsville  facility").  Sales
and  marketing  offices are located in Towson,  Maryland  ("the  Towson
facility"),  Fairfield,  New Jersey  (the  "Fairfield  facility"),  and
Addison,  Illinois  (the  "Addison  facility").  The  Company has sales
and  warehouse  space  in  Moorestown,   New  Jersey  (the  "Moorestown
facility"),   Sunnyvale,  California  (the  "Sunnyvale  facility")  and
Richmond,   Virginia  (the  "Virginia  facility").   In  addition,  CCS
Systems,  Inc., a  wholly-owned  subsidiary  of the Company,  maintains
its offices and service  facilities in the Companys  Gaithersburg  and
Beltsville facilities

     The  Gaithersburg  facility is leased by the Company pursuant to a
lease  having a term of ten  years,  which term  expires  in  November,
2007.  The  Gaithersburg  facility  consists of 12,566  square feet and
is  used  by  the  Company  primarily  as  general  office  space.  The
monthly rental payment for such space is  approximately  $13,350 and is
subject to annual increases.

     The  Beltsville  facility is leased by the  Company  pursuant to a
lease  having a term of five years,  which term is  scheduled to expire
in  October,  2002.  The  monthly  rental  payment  for  such  space is
$13,912 and is subject to annual  increases.  The  Beltsville  facility
currently  consists  of 31,680  square  feet and is used by the Company
to house the  Company's  technical  support  staff,  in-house  training
instructors  and  logistical   personnel,   and  for  the  storage  and
warehousing  of the bulk of the Company's  equipment,  parts and supply
inventories.

      The Towson facility is used by marketing personnel of the
Company and is leased by the Company on a month-to-month basis.  The
monthly rental payment for such space is $995.

      The  Fairfield  facility is used by  marketing  personnel  of the
Company.   The  lease  is  for  a  five  year  period  and  expires  in
September,   2003.  The  monthly  rental  payment  for  such  space  is
$2,600.

      The  Addison  facility  is used  by  marketing  personnel  of the
Company  and  includes  some  warehouse  space.  The  lease  is  for  a
five-year  period  and  expires  in March,  2001.  The  monthly  rental
payment for such space is $2,604.

     The  Moorestown  facility is leased by the  Company  pursuant to a
lease  having a term of five years,  which term is  scheduled to expire
in February,  2004. The Moorestown  facility  consists of approximately
19,200  square  feet  and  is  used  by the  Company  for  storage  and
warehousing  of  equipment,  parts and  supplies  for  accounts  in its
service  area,  as well as  office  space  for the  computer  engineers
assigned  to that area.  The monthly  rental  payment for such space is
$10,160 per month.

       The  Sunnyvale  facility is leased by the Company  pursuant to a
lease  having a term of two years,  which term is  scheduled  to expire
in April,  2001.  The  Sunnyvale  facility  consists  of  approximately
14,875  square  feet  and  is  used  by the  Company  for  storage  and
warehousing  of  equipment,  parts and  supplies  for  accounts in that
service  area,  as well as  office  space  for the  computer  engineers
assigned  to that area.  The monthly  rental  payment for such space is
$7,884 and is subject to annual increases.

     The  Virginia  facility  is leased by the  Company  pursuant  to a
lease  having a term of five years,  which term is  scheduled to expire
in December,  2000.  The Virginia  facility  consists of  approximately
5,900  square  feet  and  is  used  by  the  Company  for  storage  and
warehousing  of  equipment,  parts and  supplies  for  accounts in that
service  area,  as well as  office  space  for the  computer  engineers
assigned  to that area.  The monthly  rental  payment for such space is
$4,316 and is subject to annual increases.

      In addition to the foregoing facilities, the Company maintains
local parts storage facilities in various locations throughout the
Mid-Atlantic region of the United States and in Illinois to provide
local support to area accounts.  The monthly rental for these storage
centers is less than $100 each.  The facilities are leased pursuant
to month-to-month leases.  In the event that any lease is terminated
or not otherwise renewed, management believes that the Company would
be able to lease adequate space elsewhere on terms comparable to
those in the current lease.

      The Company does not intend to invest in real estate or
interests in real estate, real estate mortgages, or securities of or
interests in persons primarily engaged in real estate activities in
the foreseeable future.

Item 3.  Legal Proceedings

None.

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

None.


                                    PART II


Item 5.  Market for Common Equity and Related Stockholder Matters

The Companys  Common Stock trades on the OTC Bulletin  Board under the
symbol  CSIS.  The  following  table sets forth the range of high and
low trade price information for the periods indicated:

1st Quarter 1998        High  1 1/2       Low   3/4
2nd Quarter 1998        High  1 1/16      Low   9/16
3rd Quarter 1998        High  1           Low   13/32
4th Quarter 1998        High  1           Low   21/64
1st Quarter 1999        High  3/4         Low   1/2
2nd Quarter 1999        High  7/8         Low   7/16
3rd Quarter 1999        High 7/8          Low   9/16
4th Quarter 1999        High  1           Low   9/16


As of  February  1,  2000,  the  Companys  Common  Stock  was  held by
approximately  290 beneficial  holders of record. The Company has never
 declared or paid a cash  dividend and has no present
plan  to  do  so in  the  foreseeable  future.  The  Company  currently
intends  to  retain  its  future   earnings,   if  any,   to  fund  the
development  and  finance  the growth of its  business.  The amount and
timing  of  any  future  dividends  will  depend  on  general  business
conditions  encountered  by the  Company,  as  well  as  the  financial
condition,  earnings and capital  requirements of the Company, and such
other  factors  as the  Board  of  Directors  of the  Company  may deem
relevant.



***
Item 6.  Management's Discussion and Analysis


  GENERAL

     The Company provides a full range of computer  hardware  services,
including  sales and  maintenance  of mainframe and mid-range  computer
equipment  and  parts,   network  design  and  installation,   computer
upgrades,  and installation  and  de-installation  of equipment.  These
services are  provided to  commercial  customers,  agencies of federal,
state and local governments,  universities,  associations and hospitals
primarily in the  Mid-Atlantic  region of the United States,  including
West  Virginia,  Virginia,  Maryland,  the  District of  Columbia,  New
Jersey,  New York,  Connecticut and Pennsylvania,  and also in Illinois
and California.

     The   Companys   principal   business   is   providing   computer
maintenance  and repair  services,  which are provided under both fixed
fee  and  time  and  materials   arrangements.   Under  the  fixed  fee
arrangement,  which is the primary  method of service,  a customer pays
a fixed  monthly fee for the term of the  agreement,  generally  one to
two  years,  for which  the  Company  provides  the parts and labor for
both scheduled  preventative  maintenance  and emergency  repairs.  The
Company  records the revenue from fixed fee contracts  ratably over the
term of the  contract,  while the costs the  Company  incurs to provide
the  maintenance  and  emergency  repairs  are  charged  to  expense as
incurred.    Accordingly,    the   profitability   of   the   Companys
maintenance  and repair  services can and will be affected by period to
period  fluctuations  in the  number  and  severity  of  the  emergency
repairs  required by its  customers,  which the Company  cannot predict
or control.  Additionally,  in certain  circumstances  the Company will
choose to provide the  contracted-for  services by subcontracting  with
others.  Subcontractors  are used  when the  equipment  covered  by the
agreement  cannot  be  serviced  by the  Company  in a  cost  effective
manner,  is  difficult  to  repair  or  replace,   or  requires  unique
engineering  expertise that is not applicable to equipment  utilized by
a significant  number of the  Companys  other  customers.  The Company
obtains such  subcontracting  services through  short-term  agreements.
Profit  margin  will  generally  be  lower  than if the  work  were not
subcontracted.   Accordingly,  operating  results  may  fluctuate  from
period  to period as a result  of  changes  in the level and  nature of
subcontracted services.

     The sale of computer  equipment  accounts expanded rapidly in 1997
and leveled out in 1998, but, due to increased  competition,  decreases
in profit margins and changes in purchasers  buying patterns,  and the
sale of  Cintronix  in June of  1999,  revenues  from  equipment  sales
decreased  significantly  during  the  second  half  of 1999  and  will
continue at the lower level in the future.  Mainframe  equipment  sales
are  entered   into  more   commonly  to  secure   contracts   for  the
maintenance  thereof  than  for  the  profit  on  the  equipment  sale.
Margins   on  these   sales  of   equipment   are   subject  to  market
conditions.  Consequently,  operating  profits as a percentage of gross
sales are  subject to  fluctuation  due to the volume and the makeup of
equipment  sales.  Other  areas  of  expansion  are  in  the  areas  of
servicing laser  printers,  providing help desk support  services,  and
expanding the  Companys  technical  capabilities  to maintain the more
current mainframe technology.


  RESULTS OF OPERATIONS

     Revenues  from  continuing  operations  for the fiscal  year ended
December  31, 1999  decreased  to  $18,360,010  compared to revenues of
$18,598,620   for  the  fiscal  year  ended  December  31,  1998.  This
decrease in annual  revenues  resulted  from the  reduction of sales of
personal  computers and related  equipment  and  software.  Maintenance
revenues for 1999  increased  to  $12,901,125  compared to  maintenance
revenues of $12,788,646 for 1998.  Maintenance  services  accounted for
approximately  70%  of  the  Companys  continuing  revenues  for  1999
compared  to 69% for 1998.  Equipment  and  parts  sales  decreased  to
$5,458,885 for 1999 compared with  $5,809,974 for 1998,  comprising 30%
of continuing sales in 1999 and 31% of continuing sales in 1998.

     As a result of Cintronix,  Incs operations performing poorly and
increased  competition  in the personal  computer  equipment  business,
the Company  sold a majority of its  operating  assets and  liabilities
to  Interactive  Systems,  Inc., a  corporation  owned by the Companys
majority   stockholder.   The  transaction   resulted  in  the  Company
realizing  cash  proceeds of  $200,000  and a gain on the sale of these
discontinued operations,  approximating $67,000.  Accordingly,  results
from Cintronix,  Inc. are shown as  discontinued  operations with prior
years restated.  Revenues from  discontinued  operations for the fiscal
year ended  December  31,  1999  decreased  to  $5,368,345  compared to
revenues of $10,356,219.  The  discontinued  operations  cost of sales
as a  percentage  of  net  discontinuing  revenues  were  99%  in  1999
compared  to  92%  in  1998.   Selling,   general  and   administrative
expenses as a percentage  of net  discontinuing  revenues  were 11% and
2%, respectively, for 1999 and 1998.

      The  Company's  cost of sales as a  percentage  of revenues  were
82% in 1999  compared  to 82% in  1998.  The 3rd  and 4th  Quarters  of
1999 show a lower  percentage  of cost of sales as a result of a higher
percentage of revenues  comprised of maintenance  services,  which have
a higher  profit  margin than that  available on equipment  sales.  The
costs of maintenance  services has remained  basically steady,  with an
increase  in  subcontract  costs  offset by a current  decrease  in the
need  for  emergency  replacement  parts.   Subcontractor  costs  could
decrease as the necessary  expertise is further  developed  in-house to
service  newer  technology;   however,   as  the  Company  enters  into
contracts   on  even  more   recent   technology,   the   services   of
subcontractors  may  still be  required.  Gross  margins  on  equipment
sales  increased  slightly  during the third and fourth quarters of the
year,  primarily  as a result of the mix change to more  mainframe  and
used  equipment  sales,  which carry higher  margins.  As revenues from
sales of personal  computer and mid-range  network  computers  continue
to  decrease,  the  margins  on these  equipment  sales  will show some
increase  based on the mix between the mid-range and personal  computer
sales and the  mainframe  computer  sales,  which  usually carry higher
margins.

      Selling,  general and administrative  expenses as a percentage of
net continuing  revenues were 18% and 35%,  respectively,  for 1999 and
1998.   The   Company   expects   short-term   fluctuations   in   this
percentage  in  the  future  as  it  adds  to  its  technical  support,
marketing staff and other  administrative  personnel in order to expand
its customer base and increase  equipment sales.  The selling,  general
and  administrative  expenses  decreased  49%  to  $3,325,332  in  1999
compared  to  $6,484,247  for 1998.  The  reduction  resulted  from the
reduction of sales in the personal  computer  product area,  reductions
in  overhead  and  support  staff,  and  the  fact  that a  significant
write-down  for  uncollectable  debt and  goodwill  was required at the
close of 1998.


      The Company's  operating loss from continuing  operations for the
fiscal  year ended  December  31, 1999  decreased  to a loss of $98,282
compared  to  a  loss  of  $3,994,936  for  1998.  The  1999  net  loss
includes  $500,804 loss  attributable to a discontinued  business (sale
of  assets and book of business of Cintronix, Inc).


      Net  interest  expense  increased  to $71,998 for 1999,  compared
to net  interest  expense of $8,899 for 1998.  The  increase was due to
a  reduction  of  interest   income.   The  Company  expects  that  net
interest  expense  reduce as the Company starts  generating  additional
cash from operations.

      Net loss  decreased  to a loss of  $743,084  for 1999 from a loss
of $3,986,475  for the prior year as a result of operating  adjustments
outlined in the above paragraphs.

      Management  is now focused on the  expansion of the core business
of the Company,  primarily maintenance  services,  and taking advantage
of what are  perceived  to be  favorable  conditions  for  expansion in
this industry.


  LIQUIDITY AND CAPITAL RESOURCES

      Working  capital was $152,322 at December  31, 1999,  compared to
$410,848 at December 31, 1998.  Cash flows  provided by operations  for
1999  totaled  $665,525.  The  decrease  in  working  capital  resulted
primarily   from  a  reduction  in  the  revolving   credit  line  made
available  by  Crestar  Bank.  The ratio of  current  assets to current
liabilities  decreased  slightly  to 1.04:1 at  December  31, 1999 from
1.08:1 at December 31, 1998.

      The Company has a line of credit with  Crestar  Bank that expired
in October,  1998 and  continued  under a forbearance  agreement  until
May,  1999,  until the  financial  operations  of the Company  could be
reevaluated  by the bank.  The bank has since  rejected  extending this
line for  another  year,  but has  extended  the line until the Company
has acquired  alternative  financing.  The bank reduced the credit line
from  $2,000,000  to  $1,750,000 in September of 1999 and increased the
interest  rate being  charged to 3% over prime.  At December  31, 1999,
the balance owed on this line of credit was $1,595,672.

Effective  March 6,  2000,  the  bank has  notified  the  Company  that
further  reductions  will  be made to the  maximum  outstanding  amount
under the line of  credit.  From March 6, 2000  until  March 16,  2000,
the  maximum   outstanding   amount  under  the  line  will  remain  at
$1,750,000.  For the  period  from  March 17,  2000 to March 23,  2000,
the  maximum  outstanding  amount  under  the line will be  reduced  to
$1,500,000.   Finally,   beginning   March  24,   2000,   the   maximum
outstanding amount under the line will decrease by $100,000 per week.

      The  Companys   principal   commitments  at  December  31,  1999
consisted of obligations under operating leases for facilities.

      The Company  believes  that its existing  cash , as  supplemented
by expected cash flow from operations and existing  credit  facilities,
will  be  sufficient  to  satisfy  its  currently  anticipated  working
capital  needs.  Management  acknowledges  that  failure  to renew  the
line of  credit  with  Crestar  Bank  could  significantly  affect  the
ability   of  the   Company   to  meet   short-term   working   capital
requirements,  and is exploring  other  options to provide  alternative
financing.

  Year 2000 Issues

      The  Company  has not been  adversely  affected  in any  material
respect because of Year 2000 issues.







F-1




Item 7.  Financial Statements and Supplementary Data


CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES


INDEX




Page

Independent Auditor's Report ...................................   F-2

Consolidated Balance Sheet as of December 31, 1999 .............   F-3.F-4

Consolidated Statements of Operations for the years ended
December 31, 1999 and 1998......................................   F-5

Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1999 and 1998......................................   F-6

Consolidated Statements of Cash Flows for the years ended
December 31, 1999 and 1998......................................   F-7.F-8

Notes to Consolidated Financial Statements .....................   F-9.F-18














F-8







                           INDEPENDENT AUDITORS REPORT


To the Board of Directors and Stockholders of
  CSI Computer Specialists, Inc.



            We  have  audited  the  accompanying  consolidated  balance
sheet  of  CSI  Computer  Specialists,  Inc.  and  Subsidiaries  as  of
December  31,  1999,  and  the  related   consolidated   statements  of
operations,  stockholders'  equity,  and cash flows for each of the two
years in the period  then ended.  These  financial  statements  are the
responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

            We  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  financial  statements  referred  to
above  present  fairly,  in  all  material   respects,   the  financial
position of CSI  Computer  Specialists,  Inc.  and  Subsidiaries  as of
December 31, 1999,  and the results of their  operations and their cash
flows  for  each  of  the  two  years  in the  period  then  ended,  in
conformity with generally accepted accounting principles.

            The  accompanying  financial  statements have been prepared
assuming the Company  will  continue as a going  concern.  As discussed
in  Note  2 to the  financial  statements,  the  Company  has  suffered
recurring  losses from  operations that raise  substantial  doubt about
its  ability to  continue  as a going  concern.  Management's  plans in
regard  to this  matter  are also  described  in Note 2. The  financial
statements  do not include any  adjustments  that might result from the
outcome of this uncertainty.







GOLDSTEIN GOLUB KESSLER LLP


New York, New York
February 11, 2000, except for Note 4,
 as to which the date is March 6, 2000

CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1999




Assets:
Current Assets:
  Cash and cash equivalents                                         $   151,717
  Accounts Receivable                                                 2,124,120
  Accounts Receivable - Related Party                                   170,400
  Net Investment in Sales-Type Leases - Current                          47,161
  Resale Inventory                                                       68,437
  Parts and Supplies                                                    865,961
  Prepaid Income Taxes                                                  440,000
  Prepaid Expenses                                                      159,664
  Miscellaneous Receivables                                              69,398

  Total Current Assets                                                4,096,858

Property and Equipment:
  Vehicles                                                               80,832
  Furniture and Fixtures                                                253,761
  Equipment                                                           1,251,073
  Leasehold Improvements                                                141,593

  Totals - At Cost                                                    1,727,259
  Less Accumulated Depreciation and Amortization                      1,287,783

  Property and Equipment - Net                                          439,476

Other Assets:
  Goodwill                                                              462,972
  Deferred Tax Asset (net of valuation allowance of $156,000)            73,000
  Net Investment in Sales-Type Leases - Noncurrent                       25,199
  Other Assets                                                           95,516

  Total Other Assets                                                    656,687

  Total AssetS                                                      $ 5,193,021



The  accompanying  notes and  independent  auditor's  report  should be
read in conjunction with the consolidated financial statements.



CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1999




Liabilities and Stockholders' Equity:
Current Liabilities:
  Accounts Payable                                                  $ 1,656,132
  Accounts Payable - Related Party                                      274,723
  Accrued Expenses                                                      418,009
  Bank Revolving Line of Credit                                       1,595,672

  Total Current Liabilities                                           3,944,536

Commitments
  --

Stockholders' Equity:
  Preferred Stock - Authorized, 10,000,000 Shares of $.001 Par Value;
   Issued, None                                                              --

  Common Stock - Authorized, 25,000,000 Shares of $.001 Par Value;
   Issued 4,029,614 Shares, Outstanding 3,715,888 Shares                  3,716

  Paid-in Capital                                                     5,182,739

  Accumulated Deficit                                               (3,894,124)

                                                                      1,292,331

  Less: treasury stock, 313,726 shares at cost                         (43,846)

  Total Stockholders' Equity                                          1,248,485

  Total Liabilities and Stockholders' Equity                        $ 5,193,021



The  accompanying  notes and  independent  auditor's  report  should be
read in conjunction with the consolidated financial statements.

CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


                                                        Years ended
                                                        December 31,
                                                         1 9 9 9   1 9 9 8

Revenue                                                $18,360,010 $18,598,620

Costs and Expenses:
  Cost of Sales                                         15,132,960  15,274,669
  Selling, General and Administrative                    3,325,332   6,484,247
  Asset Impairment                                              --     834,640

  Total Costs and Expenses                              18,458,292  22,593,556

  Operating [Loss]                                        (98,282)  (3,994,936)

Other Income [Expense]:
  Interest Income                                           69,876      99,108
  Interest Expense                                        (141,874)   (108,007)

  Total Other Income [Expense]                             (71,998)     (8,899)

  [Loss] Before Provision [Benefit] for Income Taxes      (170,280) (4,003,835)

Provision [Benefit] for Income Taxes:
  Current                                                               (9,019)
  Deferred                                                  72,000    (322,419)

  Total Provision [Benefit] for Income Taxes                72,000    (331,438)

  [Loss] from Continuing Operations                       (242,280) (3,672,397)

Discontinued Operations, Net of Income Taxes:
  Loss from Operations                                    (567,355)
(314,078)
  Gain on Sale of Discontinued Operations, net of tax      66,551          --

  Total [Loss] from Discontinued Operations               (500,804)   (314,078)

  Net [Loss]                                           $  (743,084)
$ (3,986,475)

   Earnings per Share:
     [Loss] from Continuing Operations per Share            $     (0.07)
$ (0.91)
     [Loss] from Discontinued Operations per Share          $     (0.15)
$ (0.08)
     Gain on Sale of Discontinued Operations per Share      $      0.02
$  --

  Net [Loss] per Share                                      $     (0.20)
$ (0.99)

  Weighted-Average Number of Shares Outstanding         3,715,888   4,029,614



The  accompanying  notes and  independent  auditor's  report  should be
read in conjunction with the consolidated financial statements.

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


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
-----------------------------------------------------------------------



                                       Retained
                                       Earnings                         Total
           Common Stock    Paid-in(Accumulated   Treasury Stock   Stockholders'
            Shares   Amount   Capital  Deficit)   Shares    Amount     Equity

Balance - December 31, 1997
        4,041,126 $4,041   $5,627,114 $835,435    - 0 -    - 0 -   $ 6,466,590

Issuance Pursuant to Stock
  Purchase Agreement -
  December 28, 1995
         75,000       75       (75)       --       --        --          --

   Redemption of Stock
       (86,512)     (86)     (109,914)       --       --     --      (110,000)

   Reclassification of
    Redeemable Common Stock
      (313,726)   (314)    (399,686)       --       --        --      (400,000)

Net [Loss]   --                     (3,986,475)         --          (3,986,475)

Balance - December 31, 1998
  3,715,888     3,716   5,117,439   (3,151,040)     --        --     1,970,115

Purchase of treasury stock--      --              313,726   (43,846)   (43,846)

Fair Value of Options Issued
    to Nonemployee          --       65,300        --       --          65,300

Net [Loss]                  --   -- (743,084)           --          --(743,084)

Balance - December 31, 1999

  3,715,888   $3,716   $5,182,739 $(3,894,124)  313,726 $ (43,846)  $ 1,248,485




The  accompanying  notes and  independent  auditor's  report  should be
read in conjunction with the consolidated financial statements.

CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                               Years ended
                                                               December 31,
                                                           1 9 9 9     1 9 9 8
Cash Flows from Operating Activities:
  Net [Loss]                                           $ (743,084)$ (3,986,475)
  Adjustments to Reconcile Net Loss to
   Net Cash Provided by Operating Activities:
   Depreciation and Amortization                            293,701     436,389
   Gain on Sale of Discontinued Operations                  (66,551)
--
   Fair Value of Options Issued to Nonemployee               65,300          --
   Asset Impairment                                              --   1,721,154
   Amortization of Parts and Supplies                       875,767   1,086,313
   Provision for Bad Debts                                   36,000     310,747
   Deferred Income Taxes                                     72,000    (327,835)

  Changes in Assets and Liabilities:
   [Increase] Decrease in:
   Accounts Receivable & Net Investment Sales-Type Leases 1,410,416    (196,249)
     Resale Inventory                                       444,742    (128,938)
     Parts and Supplies                                    (815,684)   (979,289)
     Prepaid Income Taxes                                  (96,338)     (20,118)
     Prepaid Expenses                                      (55,237)      68,604
     Miscellaneous Receivables                             (44,200)     (12,246)
     Other Assets                                           (2,433)         170

   Increase [Decrease] in:
     Accounts Payable and Accrued Expenses                 (708,874)  1,065,177

   Total Adjustments                                      1,408,609   3,023,879

  Net Cash Provided by [Used in] Operating Activities       665,525    (962,596)

Cash Flows from Investing Activities:
  (Increase) Decrease in Cash - Restricted                  443,846     (26,949)
  Acquisition of Property and Equipment                     (37,685)   (198,621)
  Proceeds from Sale of Discontinued Operations             200,000          --

  Net Cash Provided by [Used in] Investing Activities       606,161    (225,570)

Cash Flows from Financing Activities:
  Payments on Long-Term Debt                                (12,174)     (7,672)
  Redemption of Common Stock                                (443,846)  (110,000)
  (Payments) Proceeds on Revolving Line of Credit          (712,984)  1,161,817

  Net Cash [Used in] Provided by Financing Activities    (1,169,004)  1,044,145

  Net Increase [Decrease] in Cash and Cash Equivalents      102,682    (144,021)

Cash and Cash Equivalents - Beginning of Year                49,035     193,056

  Cash and Cash Equivalents - End of Year                $  151,717   $  49,035


The  accompanying  notes and  independent  auditor's  report  should be
read in conjunction with the consolidated financial statements.




CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                             Years ended
                                                              December 31,
                                                            1 9 9 9     1 9 9 8
Supplemental Disclosures of Cash Flow Information:

  Cash paid during the year for:
   Interest                                                 $192,924   174,752
   Income Taxes                                             $ 6,045   $ 10,394




The  accompanying  notes and  independent  auditor's  report  should be
read in conjunction with the consolidated financial statements.


F-24



CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


[1] Corporate Organization and Principles of Consolidation

The  consolidated  financial  statements  include  the  accounts of CSI
Computer Specialists,  Inc. and its wholly owned subsidiaries,  Capitol
Computer Services,  Inc. d/b/a CCS Systems,  Inc., and Cintronix,  Inc.
[the  "Company"].  All  intercompany  balances  and  transactions  have
been eliminated.

CSI  Computer  Specialists,   Inc.,  a  Delaware  corporation,  is  the
successor  to  Computer  Specialists,   Inc.,  a  Maryland  corporation
["CSI-Maryland"],  which was  incorporated  in 1988.  The  Company  was
organized  by  CSI-Maryland  to enable  CSI-Maryland  to merge with and
into  the   Company   in  March   1994  in   order  to   effectuate   a
reincorporation in the State of Delaware.

The  Company  provides  computer  hardware  services,  which  primarily
consist  of  maintenance  and  repair  along  with   installation   and
de-installation  of  equipment,  and  sales of parts and  equipment  to
governmental and commercial  entities in Maryland,  Virginia,  District
of   Columbia,   Delaware,   Pennsylvania,   New   Jersey,   New  York,
Connecticut,   Illinois,  and  California.  The  Company  provides  its
services to  customers  primarily  pursuant to  maintenance  agreements
for terms of one to three years.

[2] Summary of Significant Accounting Policies

A summary of the  significant  accounting  policies in the  preparation
of the accompanying consolidated financial statements follows:

Cash and Cash  Equivalents - Cash  equivalents are comprised of certain
highly  liquid  investments  with a  maturity  of three  months or less
when purchased.

Parts and Supplies - Bulk  purchases of spare parts and supplies  which
are  utilized to support  maintenance  contracts  are  recorded at cost
and  are  amortized  to  operations  on a  straight-line  basis  over a
period  ranging  from  18 to 24  months.  The  Company  also  purchases
certain  parts for  immediate  use  which are  charged  to  expense  as
incurred.  Management  estimates that this  methodology  approximates a
lower  of  cost  or  market  inventory  valuation  on  an  average-cost
basis.

Property and  Equipment  and  Depreciation  - Property and equipment is
recorded  at  cost.   Depreciation  is  provided  for  using  declining
balance  methods  based  on  estimated  useful  lives  of five to seven
years.  Equipment  under  operating  leases  are  depreciated  over the
terms of the respective leases, usually two to three years.

Depreciation  for the  years  ended  December  31,  1999  and  1998 was
$255,784 and $262,068, respectively.

Expenditures  for normal repairs and  maintenance  are charged  against
income as incurred.

Net   Investment   in  Sales-Type   Leases  -  The  Company's   leasing
operations  consist  principally  of the leasing of computer  equipment
to existing  monthly  maintenance  customers.  The leases are for terms
of two to three  years and are  cancelable  at any time by the  lessee.
If the lease goes to term,  ownership  of the  equipment  passes to the
lessee.  The  Company's  leasing  operations  consist   principally  of
leasing  computer   equipment  under  sales-type   leases  expiring  in
various years through 2002.


CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #2


[2] Summary of Significant Accounting Policies [Continued]

Minimum lease payments to be received as of December 31, 1999 are:

 Year ending
December 31,
  2000                                 $  88,820
  2001                                    31,129

  Total                                 119,949
  Less: Interest Portion                (47,589)

   Total                               $ 72,360

  Current                              $ 47,161
  Noncurrent                           $ 25,199

Income  Taxes - The  provision  for income taxes  includes  federal and
state  income taxes  currently  payable and those  deferred  because of
temporary  differences  between the  financial  statement and tax bases
of assets  and  liabilities.  In 1997,  the  Company  elected to change
its  method  of  reporting  income  for  tax  purposes  to the  accrual
method.  Temporary  differences  between  financial  reporting  and tax
reporting  existing  as of  January 1, 1996 are being  recognized  over
the next five-year period [see Note 7].

Goodwill  Policy - Amortization  is provided on a  straight-line  basis
over  15  years.   Goodwill,   net  of  accumulated   amortization   of
approximately  $463,000,  represents  the  excess of cost over the fair
value of net assets  acquired.  Accumulated  amortization  at  December
31, 1999 was approximately $98,000.

Impairment  -  Management  evaluates  the  period  of  amortization  of
intangible   assets  to  determine  whether  events  and  circumstances
warrant  revised  estimates of useful lives.  Additionally,  management
reviews  long-lived  assets including  intangible assets for impairment
whenever  events  or  changes  in   circumstances   indicate  that  the
carrying  amount may not be  recoverable.  In 1998,  it was  determined
that the estimated  future cash flows were below the carrying  value of
the  Companys   goodwill.   Accordingly,   the  Company  adjusted  the
carrying  value of goodwill  to the  estimated  value of  approximately
$500,000  resulting  in a  noncash  impairment  loss  of  approximately
$1,721,000 ($0.43 per share).

Stock Options  Issued to Employees - The Company  adopted  Statement of
Financial  Accounting  Standards  ["SFAS"]  No.  123,  "Accounting  for
Stock-Based  Compensation,"  for  disclosure  purposes  and applies the
intrinsic value method of Accounting  Principles  Board ["APB"] Opinion
No. 25,  "Accounting  for Stock  Issued to  Employees,"  for  financial
reporting purposes.

Advertising  Costs -  Advertising  costs are  expensed  when  incurred.
Advertising  expense  was  $22,562  and  $50,841  for the  years  ended
December 31, 1999 and 1998, respectively.


CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #3


[2] Summary of Significant Accounting Policies [Continued]

Revenue  Recognition  - The Company  derives  its  revenue  principally
from fixed-price  maintenance  contracts,  which it recognizes  ratably
over the term of the contract.  Revenue from computer  equipment  sales
and  performance  under time and  materials  contracts  are  recognized
upon product shipment or the performance of the related work.

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  revenue  and  expenses   during  the  reporting
periods.  Actual results could differ from those estimates.

Earnings  per Share - Earnings  per share are  calculated  by  dividing
net  earnings  by  the  weighted-average   common  shares  outstanding.
Options and  warrants  did not result in  dilution  for the years ended
December 31, 1999 and 1998.

Going  Concern  -  The  accompanying  financial  statements  have  been
prepared  assuming that the Company will  continue as a going  concern.
The Company has  suffered  recurring  losses from its  operations  and,
effective  October 31,  1998,  the  Company's  line of credit  expired.
The  lender  has  decided  not to  renew  the line of  credit  with the
Company  (see Note 5) and the  Company is  currently  using the line to
fund its  operations  until it can  secure a new  source of  financing.
There is no  assurance  that the  Company  will be able to secure a new
source of financing,  but its  management is  aggressively  exploring a
number of  alternatives.  The  financial  statements do not include any
adjustments  relating  to  the  recoverability  and  classification  of
recorded  assets,  or the amounts  and  classification  of  liabilities
that might be necessary in the event the Company  cannot  continue as a
going concern.

[3] Accounts Receivable

Accounts receivable at December 31, 1999 consist of:

Receivables Under U. S. Government Contracts and Subcontracts:      232,732
Total Commercial & Other Receivables                              2,364,720
                                                                  2,597,452
Less:  Allowance for Doubtful Receivables                           233,534

  Total                                                         $ 2,363,918

[4] Revolving Line of Credit

The  Company  has a  line  of  credit  with  a  bank.  The  line  bears
interest  at the rate of 3.0% over  prime.  The prime rate at  December
31,  1999 was 8.5%.  The line is  secured by  substantially  all of the
Company's  assets.  The Company is required to maintain  certain ratios
and  $4,400,000  in  tangible  net  worth.   The  Company  was  not  in
compliance  with the ratios or the tangible net worth  requirements  at
December 31, 1999, and is currently in a workout  arrangement  with the
lender.  The  balance  due on the line of credit at  December  31, 1999
was  $1,595,672.  The line of credit  expired on October  31,  1998 and
the  lender  has  decided  not to  renew  the line of  credit  with the
Company.   The  Company  is  currently  using  the  line  to  fund  its
operations  until a new  source  of  financing  can be  obtained.  From
March 6, 2000 until  March 16,  2000,  the maximum  amount  outstanding
under  the  line was  $1,750,000.  From  March  17,  2000 to March  23,
2000, the maximum  amount  outstanding  under the line was  $1,500,000.
Beginning  March 24,  2000 the  maximum  amount  outstanding  under the
line will decrease by $100,000 per week.



CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #4


[5] Fair Value of Financial Instruments

SFAS No. 107,  "Disclosure  about Fair Value of Financial  Instruments"
requires the  disclosure  of the fair value of  financial  instruments.
The  carrying  amount of the  revolving  line of credit is estimated to
approximate  fair  value  because  of the  short  maturities  of  those
instruments.

[6] Commitments

The Company  leases  facilities  and vehicles  under  operating  leases
which  expire  at  various   dates   through   2007.   Facility   lease
agreements   provide  for  rent  increases  based  on  changes  in  the
Consumer  Price  Index and  adjustments  for a  proportionate  share of
real estate taxes and operating expenses.

Minimum rental  commitments  under all  noncancelable  operating leases
with a remaining term in excess of one year are as follows:

Year                                                    Amount

2000                                                 $  713,576
2001                                                    566,209
2002                                                    519,621
2003                                                    356,930
2004                                                    231,978
Thereafter                                              439,878

  Total                                              $2,828,192

Total rent  expense  for the years  ended  December  31,  1999 and 1998
approximated $807,700 and $860,100, respectively.

In April 1995,  the Company  entered into  employment  agreements  with
its  Chief  Executive  Officer,   Chief  Financial  Officer,   and  its
President for an initial period  through 1999 with  automatic  renewals
for successive  one-year  periods,  unless terminated by the Company or
the  executive.  The Chief  Financial  Officer left the Company  during
1999.  His  successor  is under a one-year  consulting  agreement  that
expires  August 15, 2000.  The  remaining  agreements  provide for base
compensation  aggregating  $443,000  subject  to annual  cost-of-living
increases,  as well as a bonus to the Chief Executive  Officer equal to
5.5% of the Company's earnings before income taxes.  [See Note 11].


CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #5


[7] Income Taxes

The components of provision [benefit] for income taxes are as follows:

                                                      December 31,
                                                   1 9 9 9    1 9 9 8

Current:
  Federal                                         $   - 0 -  $116,385
  State                                               - 0 -  (132,679)

  Total Current Provision [Benefit]                   - 0 -   (16,294)

Deferred:
  Federal                                          57,744    (298,504)
  State                                            14,256     (29,331)

  Total Deferred Provision [Benefit]               72,000    (327,835)

   Total                                          $ 72,000   $(344,129)


The following  table  reconciles  the U.S.  federal  income tax rate to
the Company's effective tax rate:

                                                 1 9 9 9      1 9 9 8

U.S. Statutory Rate                                (34.0)%      (34.0)%

Increases [Decreases] Resulting from:
  State Income Taxes                                (7.0)%       (7.0)%
  Surtax Exemption                                   5.0 %        5.0 %
  Adjustment for nondeductible goodwill expense                   28.0 %
  Valuation allowance                               78.0 %

  Totals                                            42.0 %       (8.0)%


The tax effects of temporary  differences,  loss  carryforwards and the
valuation   allowance  that  gives  rise  to  deferred  tax  assets  at
December 31, 1999 were as follows:

Temporary Difference - Inventory Adjustment          $   73,000
Net Operating Losses                                  1,160,000
Less:  Valuation Allowance                           (1,160,000)

  Deferred Tax Asset                                 $   73,000

The Company has  approximately  $2,976,000 of loss  carryforwards  that
may  be  offset  against  future  taxable  income.  If  not  used,  the
carryforwards will expire in 2019.

[8] Related Party Transactions

For  the  years  ended   December  31,  1999  and  1998,   the  Company
recognized  revenue   approximating   $1,165,000  [including  equipment
sales  of  $52,000],  and  $1,061,000  [including  equipment  sales  of
$518,400],  respectively,  from a  corporation  owned by the  Company's
majority  stockholder.  At December 31,  1999,  accounts receivable and
accounts  payable  include  $170,400 and $274,723,  respectively,  from
the related party.

CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #6


[9] Major Customers

Revenue  under U. S.  government  contracts  approximated  19% and 18%,
respectively,  of total  maintenance  contract  revenue  for the  years
ended December 31, 1999 and 1998.

[10] Concentrations of Credit Risk

Financial   instruments  which  potentially   subject  the  Company  to
concentrations  of credit  risk  consist  of cash and cash  equivalents
and  accounts  receivable.  Concentrations  of credit risk with respect
to accounts  receivable  are limited as a result of the  dispersion  of
the Company's  customer  base among both  governmental  and  commercial
entities in the  Mid-Atlantic  area.  Generally,  the Company  does not
require    collateral   or   other   security   to   support   customer
receivables.  The Company  routinely  assesses the  financial  strength
of its customers  and, based upon factors  surrounding  the credit risk
of its customers,  establishes an allowance for uncollectible  accounts
receivable   and,  as  a   consequence,   believes  that  its  accounts
receivable  credit risk  exposure  beyond such  allowances  is limited.
The  Company  places  its cash with what it  believes  are high  credit
quality  financial  institutions.  The  amount  on  deposit  in any one
institution  that  exceeds  federally  insured  limits  is  subject  to
credit risk.  The Company has $74,000 in financial  institutions  which
are subject to such risk.

[11] Acquisition of Subsidiary and Divisions

The Company  acquired 100% of the outstanding  capital stock of Capitol
Computer  Services,  Inc.  d/b/a CCS Systems on  December  28, 1995 for
$1,128,750 in a business  combination  accounted for under the purchase
method  of   accounting.   The  Company  paid  $585,000  in  cash.  The
balance of the purchase  price,  $543,750,  was payable in January 1998
in shares of the  Company's  common stock based on a formula  providing
for the  issuance  of a minimum  of  75,000  shares  and a  maximum  of
150,000 shares and calculated  using the  then-closing bid price of the
common  stock.  In January  1998,  the Company  issued 75,000 shares of
common  stock  pursuant to this  agreement.  The issuance of the shares
did not change the recorded amount of the acquired company.

The purchase price of this  acquisition  exceeded the fair value of the
net assets of CCS Systems by $800,969  which was being  amortized  over
fifteen  years under the  straight-line  method.  As a result of severe
changes in market  conditions,  Capitol  Computer  Services,  Inc.  has
continued  to  operate at a loss and is  expected  to operate at a loss
in the future.  This has  triggered an  impairment of the goodwill (see
Note 2). The  Company  prepared  revised  projections  by product  line
which  provided  the basis  for  measurement  of the  asset  impairment
charge.  Accordingly,  the  Company  has  charged  operations  for  the
remaining  balance of goodwill of  $652,371  during the fourth  quarter
of 1998.

The  Company  acquired  100%  of  the  outstanding   capital  stock  of
Cintronix,  Inc.,  on January  10,  1997 for  $1,300,000  in a business
combination  accounted  for under the  purchase  method of  accounting.
The Company paid the purchase  price at closing with  $900,000 cash and
the balance of the  purchase  price,  $400,000,  was paid with  313,726
shares   of  the   Company's   common   stock   calculated   using  the
then-closing  bid  price of the  common  stock.  The  Company  set up a
$400,000  escrow  account  to  redeem  these  shares  at  the  seller's
option.  This  option  was  exercised  in January  1999,  at which time
these  shares were  redeemed by the Company in exchange for the balance
of the escrow account which included accrued interest of $43,846.

The purchase price of this  acquisition  exceeded the fair value of the
net assets of Cintronix,  Inc. by $1,022,901  which was being amortized
over  fifteen  years  under the  straight-line  method.  As a result of
severe changes in market conditions,  Cintronix,  Inc. has continued to
operate  at a  loss  and  is  expected  to  operate  at a  loss  in the
future.  This has  triggered an  impairment  of the goodwill  (see Note
2). The Company  prepared  revised  projections  by product  line which
provided  the basis for  measurement  of the asset  impairment  charge.
Accordingly,  the  Company  has charged  operations  for the  remaining
balance of goodwill  of  $886,514,  during the fourth  quarter of 1998.
On  June  30,  1999,  a  majority  of the  assets  and  liabilities  of
Cintronix, Inc. were sold to Interactive Systems, Inc.


CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #7


[11] Acquisition of Subsidiary and Divisions [Continued]

["ISI"],  a corporation  owned by the Company's  majority  stockholder,
for  $200,000.  ISI also has the option to  purchase  the common  stock
of  Cintronix,  Inc. for the sum of $10. In  addition,  ISI will assume
responsibility  of  Cintronix,  Inc.'s office  sublease and  employment
agreements.

The  Company   acquired  the  book  of  business  of  Advanced  Network
Systems,   a  division  of   American   Bankers   Corporation   Service
Corporation,   on  February   28,  1997  for  $200,000  in  a  business
combination  accounted  for under the  purchase  method of  accounting.
The  acquired  business is operated as a division of the  Company.  The
Company paid the purchase price at closing with $200,000 cash.

The  purchase  price of this  acquisition  was recorded as goodwill and
was  being  amortized  over  fifteen  years  under  the   straight-line
method.  As a result of severe changes in market  conditions,  Advanced
Network  Systems has  continued to operate at a loss and is expected to
operate at a loss in the future.  This  triggered an  impairment of the
goodwill  (see Note 2). The Company  prepared  revised  projections  by
product  line which  provided  the basis for  measurement  of the asset
impairment  charge.  Accordingly,  the Company  has charged  operations
for the  remaining  balance of goodwill  of $182,269  during the fourth
quarter of 1998.

Certain key  employees  entered  into  employment  agreements  with the
Company in  conjunction  with the closing on  February  28,  1997.  The
employment  agreements  provide  that the  Company  will employ each of
such  persons  for  varying  terms  of two or three  years at  salaries
commensurate  with their  positions and duties.  Each of the employment
agreements contain noncompete and confidentiality provisions.

The Company  acquired 100% of the business  assets of Phoenix  Service,
Inc.,  on  May  28,  1997  for  $793,579  in  a  business   combination
accounted   for  under  the   purchase   method  of   accounting.   The
acquisition  is  operated  as a division  of the  Company.  The Company
paid the purchase price at closing in cash.

The purchase price of this  acquisition  exceeded the fair value of the
net  assets  of  Phoenix  Service,  Inc.  by  $568,797  which  is being
amortized over fifteen years under the straight-line method.

Certain  key   employees  of  Phoenix   Service,   Inc.   entered  into
employment   agreements  with  the  Company  in  conjunction  with  the
closing on May 28, 1997.  The  employment  agreements  provide that the
Company  will employ each of such  persons for varying  terms of two or
three  years  at  salaries   commensurate   with  their  positions  and
duties.  Each  of the  employment  agreements  contain  noncompete  and
confidentiality provisions.


CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #8


[12] Discontinued Operations

On June 30, 1999,  the Company sold a majority of the operating  assets
and  liabilities  of  Cintronix,  Inc.,  a wholly owned  subsidiary  to
Interactive   Systems,   Inc.  ["ISI"],  a  corporation  owned  by  the
Company's   majority   stockholder.    Cintronix,   Inc.'s   operations
involved the sale and service of computer  equipment.  The  transaction
resulted  in the Company  realizing  cash  proceeds  of $200,000  and a
gain  on  the  sale  of  the  discontinued  operations,   approximating
$67,000.  No  significant  income taxes  resulted  from the gain on the
sale of the Company's  discontinued  operations.  Accordingly,  results
from  Cintronix,  Inc. are shown as  discontinued  operations  with the
prior year  restated.  Components  of amounts  reflected  in the income
statements are presented in the following table:

                                                      Year ended
                                                      December 31,
                                                   1 9 9 9     1 9 9 8

Revenue                                         $5,368,345   $10,356,219

Costs and Expenses                              5,918,049     10,609,417

Loss before Other Expense and Income Taxes       (549,704)      (253,198)

Other Expense                                     (17,651)       (73,571)

Income Taxes                                           --         12,691

Gain on Sale of Discontinued Operations, Net of Tax               66,551
--

   Total                                        $(500,804)   $  (314,078)

[13] Stock Options

The  Company  adopted the CSI  Computer  Specialists,  Inc.  1994 Stock
Option  Plan in 1994  which  provides  for the grant of both  qualified
and nonqualified  stock options to officers,  directors,  employees and
consultants.  The Stock Option Plan has  authorized  the  granting,  in
the  aggregate,  of options to purchase up to 200,000  shares of stock.
Options granted under the Plan vest immediately.

Following is a summary of the status of fixed  options  outstanding  at
December 31, 1999:

                                                                 Exercisable
                          Outstanding Stock Options            Stock Options
                         Weighted-Average
   Range of                  Remaining     Weighted-Average    Weighted-Average
Exercise Prices  Shares  Contractual Life Exercise Price  Shares Exercise Price

$0.87 - $1.50    11,050           6         $0.93       11,050       $0.93
$5.38           119,750           6         $5.38       119,750      $5.38


CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #9


[13] Stock Options [Continued]

A summary of stock options activity under all plans is as follows:

                                          1 9 9 9                1 9 9 8
                                           Weighted-Average    Weighted-Average
                                   Shares  Exercise Price Shares Exercise Price

Outstanding - January 1,           130,800   $ 5.00        139,350       $4.99

Granted                                 --          --          --         --
Exercised                               --          --          --         --
Forfeited/Expired                       --          --      (8,550)      (4.69)

  Outstanding - December 31,       130,800   $       5.00  130,800       $ 5.00

  Exercisable - December 31,       130,800   $       5.00  130,800       $ 5.00

  Shares Available on December 31,
   for Options that May Be Granted           169,200                  169,200

The Company  also adopted an  incentive  compensation  plan in 1995 for
the majority  stockholder  whereby the  stockholder  has been granted a
ten-year  option to  purchase up to 200,000  shares of common  stock at
an exercise  price of $1.95 per share.  The options are  exercisable if
the Company achieves certain earnings levels as follows:

  Earnings Before
 Interest and Taxes                 Number of Shares

   $1,200,000                           100,000
   $2,000,000                           100,000

If  it  becomes  probable  that  the  above  earnings  levels  will  be
achieved,  the Company will  recognize  compensation  expense  equal to
the  difference  between  the fair  market  value at the grant date and
the  exercise  price  pursuant to APB Opinion  No. 25.  Achievement  of
the  above   earnings   levels  is  likely  to  result  in  substantial
compensation expense to the Company in future years.

Had  compensation  cost  for the  Company's  stock  options  issued  to
employees been  determined  based upon the fair value at the grant date
for  stock   options   issued   under  these  plans   pursuant  to  the
methodology   prescribed   under  Statement  of  Financial   Accounting
Standards  ("SFAS") No. 123,  Accounting for Stock-Based  Compensation,
the Company's net loss and loss per share would have been unchanged.



CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #11


[14] Segment Information

In 1998, the Company adopted SFAS No. 131,  "Disclosure  about Segments
of an  Enterprise  and  Related  Information."  The  Company  evaluates
performance  of its segments and  allocates  resources to them based on
sales and operating  profit/(loss).  The Company operates  primarily in
two industry  segments,  Maintenance  Services and Parts and  Equipment
Sales.  The tables below present information about reported segments:

                                      Maintenance     Parts And    Consolidated
Year Ended December 31, 1999           Services    Equipment Sales     Total
-----------------------------------------------------------------------

Revenue                               12,901,125      5,458,885     18,360,010

Cost of Goods Sold and Services
Performed                             10,288,414      4,844,546     15,132,960

                                      Maintenance     Parts And    Consolidated
Year Ended December 31, 1998           Services    Equipment Sales     Total
-----------------------------------------------------------------------

Revenue                               12,788,646      5,809,974     18,598,620

Cost of Goods Sold and Services
Performed                             10,011,107      5,263,560     15,274,669

Asset Impairment                         834,640             --        834,640

Segment  information on the Company's  interest  expense,  depreciation
and   amortization   expense,   income   tax   expense,   fixed   asset
acquisitions, goodwill and deferred tax asset is unavailable.

[15] New Authoritative Pronouncements

Management  does not  believe  that any  recently  issued,  but not yet
effective,  accounting  standards  if  currently  adopted  would have a
material effect on the accompanying financial statements.

[16] Effect of Year-end Adjustments

In  the  financial  statements  included  in  the  Company's  quarterly
filings  on Form  10QSB  for the year  ended  December  31,  1999,  the
Company did not account for its  inventory  and  allowance for doubtful
accounts  properly.  The fourth quarter includes an additional  expense
of   approximately   $275,000   related  to  the  Company's   inventory
valuation  and   approximately   $200,000   related  to  the  Company's
write-offs of doubtful accounts.

The  Company  is in  the  process  of  determining  the  impact  on the
previous quarters and amending the quarterly filings.




                               PART III


Item 8.  Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure

None.

Item 9.  Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act

Directors and Executive Officers of Registrant

Donald C. Weymer
Chairman of the Board of Directors
Chief Executive Officer
Secretary

Donald C. Weymer has been the Chief  Executive  Officer and Chairman of
the  Board of  Directors  of the  Company  since  1988 and has been the
Secretary  of  the  Company  since  March,   1994.  He  was  the  Chief
Financial  Officer from March,  1994 until  October,  1995. In 1991 Mr.
Weymer  founded  ISI,  a  Virginia   corporation  which  provides  data
processing  outsourcing,  timesharing  and  fundraising  assistance  to
agencies  of  the  federal  government,  non-profit  organizations  and
commercial  clients.  Mr.  Weymer  has  served as the  Chief  Executive
Officer and the President of ISI since 1991.
      Term of Office:  Mr.  Weymer's  term as director is three  years,
      expiring   in  2000  or  until  a   successor   is  elected   and
      qualified.
      Age: 55


William F. Pershin
Director
President
Chief Accounting Officer

William  F.  Pershin  has  been the  President  and a  director  of the
Company  since  1988 and has been the Chief  Accounting  Officer of the
Company since March, 1994.
      Term of Office:  Mr.  Pershin's  term as director is three years,
      expiring   in  1999  or  until  a   successor   is  elected   and
      qualified.
      Age: 45


David A. Chappell
Director

David  A.  Chappell  has  been an  insurance  agent  with  Northwestern
Mutual  Life  since  1984.   In  addition,   he  has  been  an  account
representative  with  Jacksonville  Specialty  Advertising  since 1997.
Mr.  Chappell was  appointed  to the Board of Directors in March,  1998
to fill a vacancy.
      Term of Office:  Mr.  Chappell's term as director expires in 2001
      or until a successor is elected and qualified.
      Age: 45



Section 16(a) Beneficial Ownership Reporting Compliance

Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
the   Exchange   Act,   requires  that  the  Companys   directors,
executive  officers,  and persons who own more than 10% of a registered
class of the equity  securities  of the Company  reporting  persons
file with the Securities  and Exchange  Commission  the  Commission
initial reports of ownership,  and reports of changes in ownership,  of
shares  of  stock,  and  options  to  purchase  such  shares,   of  the
Company.   Reporting  persons  are  required  by  Commission  rules  to
furnish the  Company  with copies of all  Section  16(a)  reports  they
file.

Based  solely on a review of Section  16(a)  reports  furnished  to the
Company  for the  fiscal  year  ended  December  31,  1999,  the 1999
fiscal year and  representations  by reporting  persons that no other
reports  were  required  for the 1999 fiscal  year,  all Section  16(a)
reporting requirements were met.


Item 10.  Executive Compensation


SUMMARY COMPENSATION TABLE


The following  table  summarizes  the  compensation  paid or accrued by
the Company  during the three fiscal years ended  December 31, 1998, to
the Companys executive officers:


          Annual Compensation                     Awards
_______________________________________________________________________________
Name                          Other    Number of
and                           Annual   Under-
Principal                     Comp.    lying
Position     Year          Salary          Bonus  Options   Options
_______________________________________________________________________________
Donald    C. 1999  $191,439 0           0             0
Weymer
Chief
Executive
Officer,
Chairman  of
the   Board,
Secretary
             1998  $180152  0           0             0

             1997  $178,464             0             0

William   F. 1999  $159,527 0           0             0
Pershin
President
and Director
             1998  $150,122 0           0             0
             1997  $142,974 0           0             0




Item  11.  Security   Ownership  of  Certain   Beneficial   Owners  and
Management

The  following  table sets forth,  as of December 31, 1999,  the number
and  percentage  of  outstanding  shares of Common  Stock  beneficially
owned by (i) all  persons  known by the  Company to own more than 5% of
such shares,  (ii) each  director,  (iii) each executive  officer,  and
(iv)  all  executive   officers  and  directors  as  a  group.   Unless
otherwise  noted below,  each person named in the table has sole voting
and  sole  investment   power  with  respect  to  each  of  the  shares
beneficially owned by such person.


Name and Address              Amount of
of Beneficial Owner           Beneficial
                              Ownership            Percent
______________________________________________________________________________
Donald C Weymer               1,165,000            31.3%
1013 Parrs Ridge Road
Spencerville,
Maryland  20868

William F Pershin             640,000              17.2%
11616 Morning Star Drive
Germantown,
Maryland  20876



All executive                 1,805,,000           48.5%
officers and
directors as a group
(2 persons)

Item 12.  Certain Relationships and Related Transactions

Donald C. Weymer

The Company  provides  computer  maintenance  services to ISI, which is
owned by Donald C. Weymer,  a stockholder,  director and officer of the
Company,  pursuant to the terms of maintenance  agreements.  Mr. Weymer
is also the owner and chief  executive  officer  of ISI.  For the years
ended  December  31,  1999 and 1998,  the  Company  recognized  revenue
approximating  $1,571,690  [including equipment sales of $52,087],  and
$1,571,690  [including  equipment  sales  of  $669,700],  respectively,
from a corporation  owned by the Company's  majority  stockholder.  See
Note 9 of the Financial Statements included in Item 7 hereof.


Item 13.  Exhibits,  Financial  Statement  Schedules,  and  Reports  on
Form 8-K

(a)   Exhibits

Exhibit
Number            Title of Exhibit

3.4 **      Agreement   and  Plan  of  Merger   between  CSI   Computer
            Specialists,  Inc.  (Delaware)  and  Computer  Specialists,
            Inc.  (Maryland)  filed with the  Securities  and  Exchange
            Commission  as an  exhibit  to the  Registration  Statement
            filed on July 19, 1995 the  Registration  Statement and
            incorporated herein by reference.

3.5 **      Bylaws  of  CSI  Computer  Specialists,  Inc.  (Registrant)
            filed with the  Securities  and Exchange  Commission  as an
            exhibit  to the  Registration  Statement  and  incorporated
            herein by reference.

 3.7 **     Certificate of Amendment of  Certificate  of  Incorporation
            of CSI  Computer  Specialists,  Inc.  (Delaware)  as  filed
            with the  Secretary  of State of the State of  Delaware  on
            August 5, 1994,  filed  with the  Securities  and  Exchange
            Commission  as an  exhibit  to the  Registration  Statement
            and incorporated herein by reference.

 4.1 **     Specimen   Common   Stock   Certificate,   filed  with  the
            Securities  and  Exchange  Commission  as an exhibit to the
            Registration   Statement   and   incorporated   herein   by
            reference.

 4.2 **     Specimen  Warrant  Certificate,  filed with the  Securities
            and Exchange  Commission as an exhibit to the  Registration
            Statement and incorporated herein by reference.

 4.3 **     Form of  Underwriters  Unit  Purchase  Option,  filed with
            the  Securities  and Exchange  Commission  as an exhibit to
            the  Registration  Statement  and  incorporated  herein  by
            reference.

 4.4 **     Form  of  Warrant  Agreement  by  and  among  the  Company,
            Biltmore  Securities,  Inc. and Continental  Stock Transfer
            & Trust  Company,  amended  from that  which was filed with
            the  Securities  and Exchange  Commission  as an exhibit to
            the  Registration  Statement  and  incorporated  herein  by
            reference.

 10.1 **    Form of  Maintenance  Agreement  filed with the  Securities
            and Exchange  Commission as an exhibit to the  Registration
            Statement and incorporated herein by reference.

 10.2 **    Form of Subcontracting  (Microcomputer  Service)  Agreement
            filed with the  Securities  and Exchange  Commission  as an
            exhibit  to the  Registration  Statement  and  incorporated
            herein by reference.

 10.3 **    Form  of   Equipment   Sales   Agreement   filed  with  the
            Securities  and  Exchange  Commission  as an exhibit to the
            Registration   Statement   and   incorporated   herein   by
            reference.

 10.6 **    Employment  Agreement,  dated April 7, 1994, by and between
            the   Company   and  Donald  C.   Weymer   filed  with  the
            Securities  and  Exchange  Commission  as an exhibit to the
            Registration   Statement   and   incorporated   herein   by
            reference.

 10.7 **    Employment  Agreement,  dated April 7, 1994, by and between
            the Company and William  Pershin filed with the  Securities
            and Exchange  Commission as an exhibit to the  Registration
            Statement and incorporated herein by reference.

 10.8 **    CSI  Computer  Specialists,  Inc.  1994 Stock  Option  Plan
            filed with the  Securities  and Exchange  Commission  as an
            exhibit  to the  Registration  Statement  and  incorporated
            herein by reference.

 10.9 **    Plan for Incentive  Compensation  of Donald C. Weymer filed
            with the Securities  and Exchange  Commission as an exhibit
            to the Registration  Statement and  incorporated  herein by
            reference.

 10.10 **   Revolving  Commercial  Loan Note,  dated May 27,  1994,  in
            favor  of  Citizens  Bank  of  Maryland  in  the  principal
            amount of $750,000  filed with the  Securities and Exchange
            Commission  as an  exhibit  to the  Registration  Statement
            and incorporated herein by reference.

 10.11 **   Security  Agreement,  dated  May  27,  1994,  in  favor  of
            Citizens  Bank  of  Maryland  and  corresponding  Financing
            Statement   filed   with  the   Securities   and   Exchange
            Commission  as an  exhibit  to the  Registration  Statement
            and incorporated herein by reference.

11.   Computation  of Net  Income  per Common  Share  (included  in the
            Financial Statements in Item 7).

 21.        Subsidiaries of the Company

27.          Financial Data Schedule.

**    Previously filed as noted.


(b)   Reports on Form 8-K       None


     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.

                       CSI Computer Specialists, Inc.

March 28, 2000           By:   /s/  Donald C. Weymer
Date                        Donald C. Weymer
                            Chief Executive Officer



March 28, 2000           By:  /s/ William F. Pershin
Date                          William F. Pershin







      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.

March 28, 2000           By:   /s/  Donald C. Weymer
Date                        Donald C. Weymer
                            Chairman of the Board, Chief Executive
                            Officer and Director



March 28, 2000           By:   /s/  William F. Pershin
Date                        William F. Pershin
                             President and Director









                                   Exhibit 21


Subsidiaries of the Company

            Subsidiary (Year Acquired)          State of Incorporation

            CCS Systems, Inc. 1995              Virginia

            Cintronix, Inc.   1997              Maryland