SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    Form 10-Q

              QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
            THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED
                                 MARCH 31, 2001

                         COMMISSION FILE NO.: 000-22035

                        METRO INFORMATION SERVICES, INC.
             (Exact name of registrant as specified in its charter)

        VIRGINIA                                       54-1112301
(State of incorporation)                 (I.R.S. Employer Identification Number)

POST OFFICE BOX 8888, VIRGINIA BEACH, VIRGINIA         23450
(Address of principal executive office)                (Zip Code)

                                 (757) 486-1900
              (Registrant's telephone number, including area code)

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

     As of April 26, 2001 the registrant had issued and  outstanding  15,272,712
shares of Common Stock, $.01 par value.


                                       1
<PAGE>

                        METRO INFORMATION SERVICES, INC.
                                    FORM 10-Q

                                Table of Contents
<TABLE>
<CAPTION>
                                                                                            Page
                                                                                            Number
<S>                                                                                         <C>
PART I.    FINANCIAL INFORMATION:

 ITEM 1.   Consolidated Statements of Operations for the
           Three Months Ended March 31, 2000 and 2001 (unaudited)                           3

           Consolidated Balance Sheets as of
           December 31, 2000 and March 31, 2001 (unaudited)                                 4

           Consolidated Statement of Changes in Shareholders' Equity for the
           Three Months Ended March 31, 2001 (unaudited)                                    5

           Consolidated  Statements  of Cash  Flows for the Three  Months
           Ended March 31, 2000 and 2001 (unaudited)                                        6

           Notes to Consolidated Financial Statements (unaudited)                           7

 ITEM 2.   Management's Discussion and Analysis
           of Financial Condition and Results of Operations                                 10

 ITEM 3.   Quantitative and Qualitative Disclosures about Market Risk                       15

PART II.   OTHER INFORMATION                                                                16

SIGNATURES                                                                                  17
</TABLE>


                                       2
<PAGE>

PART I. FINANCIAL INFORMATION:

ITEM 1. Financial Statements

                 METRO INFORMATION SERVICES, INC. AND SUBSIDIARIES
                  Consolidated Statements of Operations (unaudited)


<TABLE>
<CAPTION>
                                                                      Three months
                                                                     ended March 31,
                                                          --------------------------------------
                                                              2000                      2001
                                                          ------------              ------------
<S>                                                       <C>                       <C>
Revenue                                                   $ 80,197,097              $ 78,767,443
Cost of revenue                                             57,785,612                56,555,213
                                                          ------------              ------------
Gross profit                                                22,411,485                22,212,230
                                                          ------------              ------------
Selling, general and administrative expenses (Note 7)       17,152,451                18,791,498
Depreciation expense                                           786,754                   862,142
Amortization expense (Note 4)                                1,170,224                 1,280,501
                                                          ------------              ------------
     Total operating expenses                               19,109,429                20,934,141
                                                          ------------              ------------
Operating income                                             3,302,056                 1,278,089
                                                          ------------              ------------
Interest income                                                 45,442                    24,706
Interest expense (Note 5)                                   (1,392,091)               (1,387,870)
                                                          ------------              ------------
     Net interest expense                                   (1,346,649)               (1,363,164)
                                                          ------------              ------------
Income (loss) before income taxes                            1,955,407                   (85,075)
Income taxes                                                   791,940                    81,539
                                                          ------------              ------------
Net income (loss)                                         $  1,163,467              $   (166,614)
                                                          ============              ============
Net income (loss) per share:
     Basic                                                $       0.08              $      (0.01)
                                                          ============              ============
     Diluted                                              $       0.08              $      (0.01)
                                                          ============              ============

Weighted average number of shares of common
   stock and potential dilutive
   securities outstanding:

     Basic                                                  15,033,886                15,223,268
                                                          ============              ============
     Diluted                                                15,262,607                15,300,846
                                                          ============              ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                       3
<PAGE>


                METRO INFORMATION SERVICES, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                  December 31,              March 31,
                                                                      2000                    2001
                                                                 ------------             ------------
                                                                                           (Unaudited)
<S>                                                               <C>                      <C>
Assets
Current assets:
     Cash and cash equivalents                                    $    603,699             $    205,959
     Accounts receivable, net (Notes 2, 5 and 7)                    54,923,035               56,412,254
     Prepaid expenses                                                2,378,173                2,368,888
     Other current assets, net (Note 3)                              1,044,095                  816,240
     Deferred income taxes                                           2,193,480                2,593,013
                                                                  ------------             ------------
        Total current assets                                        61,142,482               62,396,354
                                                                  ------------             ------------
Property and equipment, net                                         11,889,307               11,698,467
Goodwill and other intangibles, net  (Note 4)                      115,972,945              114,692,444
Other assets                                                           275,091                  257,010
                                                                  ------------             ------------
        Total assets                                              $189,279,825             $189,044,275
                                                                  ============             ============

Liabilities and Shareholders' Equity
Current liabilities:

     Accounts payable                                             $  4,029,196             $  5,670,728
     Accrued compensation and benefits                              14,466,277               14,878,996
                                                                  ------------             ------------
        Total current liabilities                                   18,495,473               20,549,724
                                                                  ------------             ------------
Line of credit facilities (Note 5)                                  83,443,021               80,327,044
Deferred income taxes                                                2,404,451                3,131,616
                                                                  ------------             ------------
        Total liabilities                                          104,342,945              104,008,384
                                                                  ------------             ------------
Shareholders' equity:
        Preferred stock, $0.01 par value; authorized
          1,000,000 shares; none issued and outstanding                     --                       --
        Common stock, $0.01 par value; authorized
          50,000,000 shares; issued and outstanding
          15,222,712 shares at December 31, 2000,
          15,272,712 shares at March 31, 2001                          152,227                  152,727
        Paid in capital                                             40,995,597               41,260,722
        Retained earnings                                           43,789,056               43,622,442
                                                                  ------------             ------------
           Total shareholders' equity                               84,936,880               85,035,891
                                                                  ------------             ------------
              Total liabilities and shareholders' equity          $189,279,825             $189,044,275
                                                                  ============             ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                       4
<PAGE>


                METRO INFORMATION SERVICES, INC. AND SUBSIDIARIES
      Consolidated Statement of Changes in Shareholders' Equity (unaudited)


<TABLE>
<CAPTION>
                                                                        Shareholders' Equity
                                           ---------------------------------------------------------------------------------
                                                   Common Stock
                                           -----------------------------       Paid in          Retained
                                             Shares           Amount           Capital          Earnings            Total
                                           ------------     ------------     ------------     ------------      ------------
<S>                                          <C>            <C>              <C>              <C>               <C>
Balance as of December 31, 2000              15,222,712     $    152,227     $ 40,995,597     $ 43,789,056      $ 84,936,880

Net proceeds from issuance of
     shares of common stock under
     Employee Stock Purchase Plan                50,000              500          265,125               --           265,625

Net loss                                             --               --               --         (166,614)         (166,614)
                                           ------------     ------------     ------------     ------------      ------------

Balance as of March 31, 2001                 15,272,712     $    152,727     $ 41,260,722     $ 43,622,442      $ 85,035,891
                                           ============     ============     ============     ============      ============

</TABLE>


See accompanying notes to consolidated financial statements.


                                       5
<PAGE>

                METRO INFORMATION SERVICES, INC. AND SUBSIDIARIES
                Consolidated Statements of Cash Flows (unaudited)

<TABLE>
<CAPTION>

                                                                                             Three months
                                                                                            ended March 31,
                                                                                    --------------------------------
                                                                                        2000                2001
                                                                                    -----------          -----------
<S>                                                                                 <C>                  <C>
Cash flows from operating activities:
    Net income (loss)                                                               $ 1,163,467          $  (166,614)
    Adjustments to reconcile net income (loss) to net
         cash provided by operating activities:
      Depreciation and amortization - cost of revenue                                    12,626               10,594
      Depreciation and amortization - operating expenses                              1,956,978            2,142,643
      Net loss on sale of property and equipment                                         24,344                3,639
      Deferred income taxes                                                              (2,636)             327,630
      Provision for doubtful accounts                                                        --            1,515,394
      Changes in operating assets and liabilities increasing
            (decreasing) cash, net of the effects of acquisitions:
               Accounts receivable                                                   (5,079,475)          (3,004,994)
               Prepaid expenses                                                         349,656                9,285
               Other current assets                                                          --              228,236
               Other assets                                                              30,492               18,081
               Accounts payable                                                       1,343,863            1,641,532
               Accrued compensation and benefits                                      2,386,289              412,719
                                                                                    -----------          -----------
                  Net cash provided by operating activities                           2,185,604            3,138,145
                                                                                    -----------          -----------

Cash flows from investing activities:
    Acquisition of property and equipment                                              (687,929)            (255,080)
    Acquisition of computer software                                                   (323,741)            (430,452)
    Proceeds from sale of property and equipment                                            244                   --
                                                                                    -----------          -----------
                  Net cash used in investing activities                              (1,011,426)            (685,532)
                                                                                    -----------          -----------
Cash flows from financing activities:
    Net repayments under line of credit                                              (3,066,041)          (3,115,977)
    Proceeds from shares issued under Employee Stock Purchase Plan                      425,433              265,625
    Proceeds from shares issued under Employee Incentive Stock Option Plan              273,501                   --
                                                                                    -----------          -----------
                  Net cash used in financing activities                              (2,367,107)          (2,850,352)
                                                                                    -----------          -----------
Net decrease in cash and cash equivalents                                            (1,192,929)            (397,739)

Cash and cash equivalents at beginning of period                                      4,612,538              603,699
                                                                                    -----------          -----------
Cash and cash equivalents at end of period                                          $ 3,419,609          $   205,959
                                                                                    ===========          ===========
Supplemental disclosure of cash flow information:
    Cash paid for interest                                                          $ 1,149,427          $ 1,395,432
                                                                                    ===========          ===========
    Cash paid for income taxes                                                      $   105,676          $   237,218
                                                                                    ===========          ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                       6
<PAGE>


                METRO INFORMATION SERVICES, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)

1.   Basis of Presentation

     The  information  presented  as of March 31,  2000 and for the  three-month
periods ended March 31, 2000 and 2001, is unaudited,  but, in the opinion of the
Company's  management,   the  accompanying   unaudited   consolidated  financial
statements  contain  all  adjustments   (consisting  only  of  normal  recurring
adjustments) which the Company considers  necessary for the fair presentation of
the  Company's  financial  position  as of March 31, 2001 and the results of its
operations and its cash flows for the  three-month  periods ended March 31, 2000
and 2001.  The  consolidated  financial  statements  included  herein  have been
prepared in accordance  with generally  accepted  accounting  principles and the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain
information and footnote  disclosures  normally included in financial statements
prepared in accordance with generally accepted  accounting  principles have been
condensed or omitted.  These consolidated financial statements should be read in
conjunction with the Company's audited consolidated financial statements for the
year ended  December  31,  2000,  which were  included as part of the  Company's
Annual Report on Form 10-K (File No. 000-22035).  Certain 2000 amounts have been
reclassified for comparability with the 2001 financial statement presentation.

     Results for the interim periods presented are not necessarily indicative of
results that may be expected for the entire year.

     The consolidated  financial  statements include the accounts of the Company
and its wholly owned  subsidiaries.  All intercompany  balances and transactions
have been  eliminated.  Results of operations of the Company include the results
of operations of the subsidiaries since the acquisitions as follows:

<TABLE>
<CAPTION>
Name of Subsidiary                                              D/B/A                          Date of Acquisition
------------------                                              -----                          -------------------
<S>                                                             <C>                            <C>
Metro Information Services of Northern California, Inc.         The Avery Group                December 2, 1998

Metro Information Services of Los Angeles, Inc.                 D.P. Specialists               January 1, 1999

Metro Information Services of Orange County, Inc.               The Professionals              February 1, 1999
                                                                Krystal Solutions

Metro Information Services of Pennsylvania, Inc.                Solution Technologies          March 1, 1999

Metro Information Services - ATS, Inc.                          Acuity Technology Services     August 13, 1999
</TABLE>

2.   Accounts Receivable

     At December 31, 2000 and March 31, 2001 accounts receivable consists of the
following:

                                         December 31, 2000   March 31, 2001
                                         -----------------   --------------
Billed revenue .........................     $57,264,101      $58,600,887
Unbilled revenue .......................         128,239          982,997
                                             -----------      -----------
                                              57,392,340       59,583,884
Less allowance for doubtful accounts ...       2,469,305        3,171,630
                                             -----------      -----------
                                             $54,923,035      $56,412,254
                                             ===========      ===========

On April 18, 2001, Winstar  Communications Inc., a telecom company client, filed
for Chapter 11 bankruptcy  protection.  Winstar's  outstanding  receivables were
approximately  $1.5  million  at March 31,  2001.  The  allowance  for  doubtful
accounts at March 31, 2001 includes a full reserve for this receivable. See also
Note 7, "Contingencies".


                                       7
<PAGE>

3.   Other Current Assets

     The Tennessee  Department of Revenue completed a tax audit during 2000. The
audit  resulted in the Company's  receipt of a Notice of Assessment on September
29, 2000 that  proposed the  imposition of  additional  Tennessee  sales and use
taxes and  related  interest  and penalty  attributable  to the  performance  by
Company  employees of services in the State of Tennessee,  which the  Department
determined to be taxable as "computer  software." In the Notice,  the Department
assessed  sales and use tax of  $2,357,147,  which the  Company  paid in October
2000.  Under Tennessee law, the ultimate  consumer is responsible for paying the
assessed  sales and use tax.  Accordingly,  the Company has billed the  assessed
amount to its customers.  A portion of this amount may be uncollectible  and the
Company has recorded a reserve.  At December 31, 2000 and March 31, 2001,  other
current assets consist of the following:

                                         December 31, 2000   March 31, 2001
                                         -----------------   --------------

Gross sales and use tax receivable ......    $1,630,381       $1,303,787
Less allowance for doubtful accounts ....       586,286          585,905
                                             ----------       ----------
Net sales and use tax receivable ........    $1,044,095       $  717,882
Other taxes receivable ..................            --           98,358
                                             ----------       ----------
   Total other current assets ...........    $1,044,095       $  816,240
                                             ==========       ==========

4.   Goodwill and Other Intangible Assets

     Goodwill and other intangible assets represent the excess of cost over fair
value of net tangible assets acquired through  acquisitions and are amortized on
a straight-line basis over their estimated useful lives,  generally 30 years and
3 to 20 years, respectively.  Management periodically assesses whether there has
been a  permanent  impairment  in the value of  goodwill  and  other  intangible
assets.  Impairment is determined by comparing  anticipated  undiscounted future
cash flows to the carrying  value of the related  goodwill and other  intangible
assets.  If such assets are considered  impaired,  the impairment is measured as
the amount by which the carrying  amount of the assets exceeds the fair value of
the assets.

5.   Credit Facilities

     The Company maintains credit facilities of $125,000,000. The facilities are
provided in equal amounts of  $35,000,000  by three banks and  $20,000,000  by a
fourth bank. The  outstanding  balance on these  facilities as of March 31, 2001
was  $80,327,044.  The  facilities  mature in June 2005 and may be extended each
year for an additional year. Until June 2005,  interest,  but not principal,  is
payable monthly. The interest rates on the Company's facilities change from time
to time. Two of the facilities  allow the Company to select among prime rate and
London  Interbank  Offered Rate (LIBOR) based interest rates while the other two
have only LIBOR based interest rates.  All of the facilities have interest rates
that increase as the balance  outstanding  under the facilities  increases.  The
Company has selected a variety of LIBOR based rates for the first  quarter 2001,
and the rates on such  borrowings  ranged from 6.43% to 6.53% on March 31, 2001.
The facilities also contain fees, ranging from 0.125% to 0.380% annually,  which
are  charged  on the  unused  portion  of the  facilities.  The  facilities  are
collateralized by accounts receivable of the Company.

     The Company  entered into interest rate hedges on $50,000,000 of the credit
facilities  effective  April 2, 2001.  The purpose of these hedges is to control
the  Company's  exposure to interest  rate  increases  associated  with variable
interest  rates by fixing a portion of the rate paid by the  Company.  The first
measurement  date for the fair value of the interest rate hedge  instruments  is
June 30, 2001. See "Recent Accounting Pronouncements" below.

     The credit facilities  contain several  covenants,  including one requiring
the maintenance of a certain  tangible net worth ratio,  which limits the amount
of dividends  that can be paid.  The  covenants  also impose limits on incurring
other debt, limit the amount borrowed to a multiple of adjusted  earnings before
interest,  taxes,  depreciation  and  amortization  and  require a certain  debt
service  coverage ratio to be maintained.  Amounts advanced under the facilities
can be used for  acquisitions  and general working capital  purposes.  Quarterly
testing dates are required for these covenants.  These covenants may prevent the
Company from  borrowing  the full amount of the credit  facilities  or trigger a
default under the credit facilities.


                                       8
<PAGE>

     The Maximum Funded Debt to EBITDA ratio under our credit  facilities is 4.0
to 1.0 through  September 30, 2001. At March 31, 2001, our Funded Debt to EBITDA
ratio stood at 3.3 to 1.0. As earnings  fall this ratio  increases.  On December
31,  2001 our credit  facilities  require us to reduce our Funded Debt to EBITDA
ratio to 3.0 to 1.0 or less. The Company plans to reduce its debt level,  reduce
expenses  and  negotiate a more  favorable  ratio by December  31, 2001 to avoid
default under its credit facilities at December 31, 2001. A default could have a
material  adverse  effect  on the  Company's  business.  As of March  31,  2001,
approximately  $13.9  million was  available for  additional  borrowing  without
default.

6.   Earnings (Loss) Per Share

     The following  reconciles the numerators and  denominators of the basic and
diluted earnings (loss) per share computations of net income (loss):

<TABLE>
<CAPTION>
                                                              Net Income                                   Earnings
                                                                (Loss)           Shares Outstanding         (Loss)
For the Three Months Ended March 31, 2000                    (Numerator)            (Denominator)          Per Share
-----------------------------------------                    -----------            -------------          ---------
<S>                                                          <C>                      <C>                   <C>
Basic Earnings (Loss) Per Share ..................           $ 1,163,467              15,033,886            $   0.08
                                                             ===========                                    ========
Effect of Dilutive Securities -- Incentive
  Stock Options deemed outstanding ...............                                       228,721
                                                                                     -----------
Diluted Earnings (Loss) Per Share ................           $ 1,163,467              15,262,607            $   0.08
                                                             ===========             ===========            ========
</TABLE>

<TABLE>
<CAPTION>
                                                              Net Income                                    Earnings
                                                                (Loss)           Shares Outstanding          (Loss)
For the Three Months Ended March 31, 2001                    (Numerator)            (Denominator)           Per Share
-----------------------------------------                    -----------            -------------           ---------
<S>                                                          <C>                      <C>                   <C>
Basic Earnings (Loss) Per Share ..................           $  (166,614)             15,223,268            $  (0.01)
                                                                                     ===========            =========
Effect of Dilutive Securities -- Incentive
  Stock Options deemed outstanding ...............                                        77,578
                                                                                     -----------
Diluted Earnings (Loss) Per Share ................           $  (166,614)             15,300,846            $  (0.01)
                                                             ===========             ===========            =========
</TABLE>

7.   Contingencies

     On April 18,  2001,  one of the  Company's  clients  voluntarily  filed for
protection under Chapter 11 of the U.S. Bankruptcy Code. At March 31, 2001, $1.5
million was due from this client.  First quarter earnings include a full reserve
of this receivable. Due to current economic conditions, additional accounts that
are  current  and  considered   collectible  may  become  doubtful.   When  more
information becomes available our estimates will be adjusted accordingly.


                                       9
<PAGE>

PART I
ITEM 2:

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

     Cautionary  statement  under the  "Safe-Harbor"  provisions  of the Private
Securities  Litigation  Reform Act of 1995:  Included  in this  report and other
information  presented  by  management  from  time to time,  including,  but not
limited to,  annual  reports to  shareholders,  quarterly  shareholder  letters,
filings with the Securities and Exchange  Commission,  news releases,  analysts'
conference  calls and investor  presentations,  are  forward-looking  statements
about business strategies,  market potential,  future financial  performance and
other  matters  which  reflect  management's  expectations  as of the date made.
Without limiting the foregoing,  the words "believes,"  "anticipates,"  "plans,"
"expects,"   "seeks"  and   similar   expressions   are   intended  to  identify
forward-looking statements. Future events and the Company's actual results could
differ   materially  from  the  results   reflected  in  these   forward-looking
statements.  There  are a number  of  important  factors  that  could  cause the
Company's  actual  results to differ  materially  from those  indicated  by such
forward-looking  statements.  These factors  include,  without  limitation:  the
Company's  ability to attract,  develop and retain  qualified  consultants,  the
Company's ability to effectively  identify,  manage and integrate  acquisitions,
changes in consultant  utilization and productivity rates, the Company's ability
to acquire or develop additional  service offerings,  client decisions to reduce
or increase IT  services  outsourcing,  early  termination  of client  contracts
without  penalty,  changes in the Company's  dependence on significant  clients,
changes in gross margins due to a variety of factors  (including  increased wage
and  benefit  costs  that are not offset by bill rate  increases),  the types of
services  performed by the Company during a particular  period and  competition.
Please refer to a discussion of these and other factors in the Company's  Annual
Report  on Form 10-K for the  fiscal  year  ended  December  31,  2000 and other
Securities and Exchange Commission filings.  The Company disclaims any intent or
obligation to update  publicly these  forward-looking  statements,  whether as a
result of new information, future events or otherwise.

     The following should be read in conjunction with the Consolidated Financial
Statements and Notes thereto  included  elsewhere in this report.  The Company's
fiscal year ends on December 31.

                                    Overview

     Metro  Information  Services,  Inc.  provides a wide  range of  information
technology  ("IT")  consulting  and custom  software  development  services  and
solutions in 35  metropolitan  markets in the United States and Puerto Rico. The
Company's 2,311  consultants,  61% of whom were salaried on March 31, 2001, work
on all aspects of computer  systems and applications  development.  Services and
solutions  performed  by  Metro  include  application  systems  development  and
maintenance,  IT  architecture  and  engineering,  systems  consulting,  project
outsourcing  (including  managed  services) and general  support  services.  The
Company  supports  all  major  computer  technology  platforms   (client/server,
network,  mainframe,  Internet and mid-range  environments)  and supports client
projects using a broad range of software applications.  For example, the Company
custom develops  applications in Java, HTML, ASP and other Web-related languages
as well as Visual  Basic,  C++,  Oracle,  Informix  and DB2.  The  Company  also
implements and supports Windows 2000,  Windows NT, Novell and UNIX based network
environments and supports numerous other application environments.

     Metro's  clients  operate  in  a  wide  variety  of  industries   including
communications,  distribution,  retail, financial services,  government,  health
care,  information  technology,  manufacturing,   transportation,   leisure  and
utilities.  The  Company  emphasizes  long-term  relationships  with its clients
rather than one-time  projects or assignments.  During the 12 months ended March
31, 2001, the Company performed IT services for 690 clients  (excluding  clients
that generated less than $25,000 in revenue during such period).

     IT services are primarily  provided by the Company through  supplemental IT
services  arrangements  and, to a lesser  extent,  through  project  outsourcing
arrangements.  Substantially  all  services  are billed on a time and  materials
basis.  During the three months ended March 31, 2001, the Company estimates that
supplemental  IT services  accounted  for more than 85% and project  outsourcing
accounted for less than 15% of the Company's revenue, although the Company wants
to increase the percentage of project outsourcing it performs.

     Between  March  31,  2000 and  March  31,  2001,  the  number  of full time
consultants  decreased by 10.8%


                                       10
<PAGE>

from 2,592 to 2,311. This decline has continued through the date of this report.
Management believes that second quarter 2001 revenue will decline from the first
quarter  level  by 6-8%  and by a  similar  percent  in the  third  quarter.  In
addition,  between March 31, 2000 and March 31, 2001, the Company  increased the
average  billing rates charged to clients for  consultants in an attempt to keep
pace with the increased costs of consultants. Bill rates have not kept pace with
the increased cost of pay rates.

     The  Company's  past  financial  performance  should not be relied on as an
indication of future performance.  Period-to-period comparisons of the Company's
financial   results  are  not  necessarily   meaningful   indicators  of  future
performance.

                              Results of Operations

     The following table sets forth the percentage of revenue and the percentage
change from the prior period of certain  items  reflected in the  statements  of
operations for the:

<TABLE>
<CAPTION>
                                                           Three Months Ended
                                                               March 31,         Percentage Change
                                                         Percentage of Revenue    2001 over 2000
                                                        ----------------------   -----------------
                                                           2000       2001
                                                           ----       ----
<S>                                                        <C>         <C>           <C>
Revenue ...........................................        100.0%      100.0%        (1.8)%
Cost of revenue ...................................         72.0        71.8         (2.1)
                                                        --------    --------
Gross profit ......................................         28.0        28.2         (0.9)
                                                        --------    --------
Selling, general and administrative expenses ......         21.4        23.9          9.6
Depreciation expense ..............................          1.0         1.1          9.6
Amortization expense ..............................          1.5         1.6          9.4
                                                        --------    --------
Total operating expenses ..........................         23.9        26.6          9.6
                                                        --------    --------
Operating income ..................................          4.1         1.6        (61.3)
                                                        --------    --------
Net interest expense ..............................         (1.7)       (1.7)         N/M
                                                        --------    --------
Income (loss) before income taxes .................          2.4        (0.1)      (104.4)
Income taxes ......................................          1.0         0.1        (89.7)
                                                        --------    --------
Net income (loss) .................................          1.4%       (0.2)%      (34.3)
                                                        ========    ========
N/M - Not Meaningful
</TABLE>

 Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000

     Revenue.  Revenue decreased $1.4 million, or 1.8%, to $78.8 million for the
three months ended March 31, 2001 from $80.2  million for the three months ended
March 31,  2000.  This  decline  is the  result  of a  slow-down  in demand  for
information technology services and a decrease in the number of consultants.

     Cost of revenue.  Cost of revenue decreased $1.2 million, or 2.1%, to $56.6
million for the three  months  ended  March 31, 2001 from $57.8  million for the
three months ended March 31, 2000. As a percentage  of revenue,  cost of revenue
decreased  to 71.8% for the three months ended March 31, 2001 from 72.0% for the
three months ended March 31, 2000.  This  decrease is primarily  due to a higher
utilization  rate for salaried  consultants  during the quarter  ended March 31,
2001. A higher  utilization rate means a higher  percentage of the hours paid to
salaried consultants were billed to clients.

     Gross profit.  Gross profit decreased  $199,000,  or 0.9%, to $22.2 million
for the three  months  ended  March 31,  2001 from $22.4  million  for the three
months ended March 31, 2000. As a percentage of revenue,  gross profit increased
to 28.2% for the three  months  ended  March 31,  2001 from  28.0% for the three
months  ended  March 31,  2000.  This  increase is due  primarily  to the higher
utilization for salaried consultants.


                                       11
<PAGE>

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative  expenses  increased $1.6 million,  or 9.6%, to $18.8 million for
the three  months  ended March 31, 2001 from $17.2  million for the three months
ended  March  31,  2000.  As a  percentage  of  revenue,  selling,  general  and
administrative  expenses increased to 23.9% for the three months ended March 31,
2001 from 21.4% for the three  months  ended March 31,  2000.  This  increase is
primarily due to an increase in bad debt expense.  An additional $1.5 million of
bad debt expense was recorded for the three months ended March 31, 2001,  due to
the  April 18,  2001  bankruptcy  filing  by  Winstar  Communications  Inc.  The
Company's business development  initiatives also increased selling,  general and
administrative expenses.

     Depreciation  expense.  Depreciation expense increased $75,000, or 9.6%, to
$862,000 for the three  months ended March 31, 2001 from  $787,000 for the three
months  ended  March 31,  2000.  This  increase  is  primarily  attributable  to
depreciation on additions to computer equipment and software. As a percentage of
revenue, depreciation expense increased to 1.1% for the three months ended March
31, 2001, as compared to 1.0% for the three months ended March 31, 2000.

     Amortization  expense.  Amortization  expense  increased  $110,000  to $1.3
million for the three  months  ended  March 31,  2001 from $1.2  million for the
three months ended March 31, 2000. This increase is attributable to amortization
of goodwill and other  intangible  assets related to the Company's  acquisitions
completed during 1999 and related earnout payments made in 2000. As a percentage
of revenue,  amortization  expense  increased to 1.6% for the three months ended
March 31, 2001 from 1.5% for the three months ended March 31, 2000.

     Operating  income.  Operating income  decreased $2.0 million,  or 61.3%, to
$1.3 million for the three months ended March 31, 2001 from $3.3 million for the
three months ended March 31, 2000. As a percentage of revenue,  operating income
decreased  to 1.6% for the three  months  ended March 31, 2001 from 4.1% for the
three months ended March 31, 2000.  The decline in operating  income margin is a
result of the decline in revenue,  higher  selling,  general and  administrative
expenses and higher depreciation and amortization expenses.

     Interest income. Interest income decreased by $20,000, or 45.6%, to $25,000
for the three  months  ended  March 31, 2001 from  $45,000 for the three  months
ended March 31, 2000.

     Interest  expense.  Interest expense remained at $1.4 million for the three
months  ended March 31, 2001 as  compared  to the three  months  ended March 31,
2000. The average level of borrowings  remained  consistent with the prior year.
The  Company's  interest  expense  varies  according  to the  average  level  of
borrowings during the quarter and the current interest rates. See "Liquidity and
Capital Resources" below.

     Income (loss) before  income  taxes.  Income before income taxes  decreased
$2.0  million to  $(85,000)  for the three months ended March 31, 2001 from $1.9
million for the three months ended March 31, 2000.  As a percentage  of revenue,
income before income taxes  decreased to (0.1)% for the three months ended March
31, 2001 from 2.4% for the three months ended March 31, 2000.

     Income  taxes.  The Company's  effective tax rate  increased to 46% for the
three  months  ended March 31,  2001 as  compared to 40.5% for the three  months
ended March 31, 2000.  The rate increase is the result of higher  non-deductible
expenses for business  development  and non-federal  income taxes.  Income taxes
decreased  $710,000,  or 89.7%,  to $82,000 for the three months ended March 31,
2001 from $792,000 for the three months ended March 31, 2000. As a percentage of
revenue,  income  taxes  decreased  to 0.1% for the three months ended March 31,
2001 from  1.0% for the three  months  ended  March 31,  2000 as a result of the
decline in income  before income  taxes.  These  decreases are the result of the
decline in income before income taxes.

     Net income (loss).  Net income decreased $1.3 million to $(167,000) for the
three  months  ended March 31, 2001 from $1.2 million for the three months ended
March 31, 2000. As a percentage of revenue,  net income  decreased to (0.2)% for
the three months ended March 31, 2001 from 1.4% for the three months ended March
31, 2000. The decrease in net income is due to a decrease in gross profit and an
increase  in  selling,  general  and  administrative  expenses,  an  increase in
depreciation and amortization expenses and a decrease in income taxes.

     Net income (loss) per share.  Diluted earnings per share decreased $0.09 to
$(0.01)  for the three  months  ended  March 31,  2001 from  $0.08 for the three
months ended March 31, 2000.


                                       12
<PAGE>

Selected Quarterly Results and Seasonality

     The following table sets forth certain quarterly operating  information for
each of the 13 quarters  ending with the quarter  ended March 31, 2001,  both in
dollars and as a percentage of revenue.  This  information  was derived from the
unaudited consolidated financial statements of the Company which, in the opinion
of  management,  were prepared on the same basis as the  consolidated  financial
statements  contained  elsewhere  in this report and  include  all  adjustments,
consisting of normal recurring adjustments, which management considers necessary
for the fair  presentation  of the information  for the periods  presented.  The
financial data shown below should be read in conjunction  with the  consolidated
financial statements and notes thereto included in this report.  Results for any
fiscal  quarter are not  necessarily  indicative of results for the full year or
for any future quarter.

                                              Gross Profit     Operating Income
                                            ----------------   -----------------
                                     $         $      % of        $       % of
Statements of Operations Data     Revenue   Amount   Revenue   Amount    Revenue
-----------------------------     -------   ------   -------   ------    -------
                                             (Dollars in thousands)
1998:

         March ..............     47,110     14,346    30.5    4,663        9.9
         June ...............     52,391     16,375    31.3    5,715       10.9
         September ..........     56,593     17,296    30.6    6,538       11.6
         December ...........     57,799     17,553    30.4    6,454       11.2
1999:

         March ..............     72,473     20,970    28.9    6,909        9.5
         June ...............     78,309     23,023    29.4    8,393       10.7
         September ..........     81,253     24,020    29.6    7,066        8.7
         December ...........     82,611     23,951    29.0    5,874        7.1
2000:

         March ..............     80,197     22,411    28.0    3,302        4.1
         June ...............     77,812     22,864    29.4    3,370        4.3
         September ..........     77,880     23,614    30.3    4,685        6.0
         December ...........     77,702     23,135    29.8    4,799        6.2
2001:

         March ..............     78,767     22,212    28.2    1,278        1.6


     Metro's  operating  results are adversely  affected when client  facilities
close due to holidays or inclement weather. The Company generally  experiences a
certain  amount  of  seasonality  in the  fourth  quarter  due to the  number of
holidays and closings of client  facilities  during that quarter.  Further,  the
Company  generally  experiences lower operating results in the first quarter due
in part to the  timing  of  unemployment  and FICA tax  accruals  and  delays in
clients' contract renewals related to clients' budget approval processes.

                         Liquidity and Capital Resources

     The  Company  funds  its  operations   primarily  from  cash  generated  by
operations.  Net cash provided by operations was $3,138,145 for the three months
ended March 31, 2001 and consisted  primarily of non-cash  items of  $3,999,900,
increases  in  accounts  payable  and  accrued   compensation  and  benefits  of
$1,641,532  and  $412,719,   respectively,   offset  by  increases  in  accounts
receivable of  $3,004,994.  The Company had working  capital of  $41,846,630  at
March 31, 2001 compared to $42,647,000 at December 31, 2000.

     Net cash used in  investing  activities  was  $685,532 for the three months
ended March 31,  2001.  The Company  spent  $685,532 on normal  acquisitions  of
property and equipment used in operations.

     The Company maintains credit facilities of $125,000,000. The facilities are
provided in equal amounts of  $35,000,000  by three banks and  $20,000,000  by a
fourth bank. The  outstanding  balance on these  facilities as of March 31, 2001
was  $80,327,044,  a reduction  of  $3,115,977  from the balance at December 31,
2000.  The  facilities


                                       13
<PAGE>

mature in June 2005 and may be extended each year for an additional  year. Until
June 2005, interest,  but not principal,  is payable monthly. The interest rates
on the  Company's  facilities  change from time to time.  Two of the  facilities
allow the Company to select among prime rate and London  Interbank  Offered Rate
(LIBOR) based  interest rates while the other two have only LIBOR based interest
rates.  All of the  facilities  have interest rates that increase as the balance
outstanding under the facilities  increases.  The Company has selected a variety
of  LIBOR  based  rates  for the  first  quarter  2001,  and the  rates  on such
borrowings  ranged from 6.43% to 6.53% on March 31, 2001.  The  facilities  also
contain fees,  ranging from 0.125% to 0.380% annually,  which are charged on the
unused portion of the facilities.  The facilities are collateralized by accounts
receivable of the Company.

     The Company  entered into interest rate hedges on $50,000,000 of the credit
facilities  effective  April 2, 2001.  The purpose of these hedges is to control
the  Company's  exposure to interest  rate  increases  associated  with variable
interest  rates by fixing a portion of the rate paid by the  Company.  The first
measurement  date for the fair value of the interest rate hedge  instruments  is
June 30, 2001. See "Recent Accounting Pronouncements" below.

     The credit facilities  contain several  covenants,  including one requiring
the maintenance of a certain  tangible net worth ratio,  which limits the amount
of dividends  that can be paid.  The  covenants  also impose limits on incurring
other debt, limit the amount borrowed to a multiple of adjusted  earnings before
interest,  taxes,  depreciation  and  amortization  and  require a certain  debt
service  coverage ratio to be maintained.  Amounts advanced under the facilities
can be used for  acquisitions  and general working capital  purposes.  Quarterly
testing dates are required for these covenants.  These covenants may prevent the
Company from  borrowing  the full amount of the credit  facilities  or trigger a
default under the credit facilities.

     The Maximum Funded Debt to EBITDA ratio under our credit  facilities is 4.0
to 1.0 through  September 30, 2001. At March 31, 2001, our Funded Debt to EBITDA
ratio stood at 3.3 to 1.0. As earnings  fall this ratio  increases.  On December
31,  2001 our credit  facilities  require us to reduce our Funded Debt to EBITDA
ratio to 3.0 to 1.0 or less. The Company plans to reduce its debt level,  reduce
expenses  and  negotiate a more  favorable  ratio by December  31, 2001 to avoid
default under its credit facilities at December 31, 2001. A default could have a
material  adverse  effect  on the  Company's  business.  As of March  31,  2001,
approximately  $13.9  million was  available for  additional  borrowing  without
default.

     The  Company  sold  50,000  shares of stock  under  the  Metro  Information
Services,  Inc. Employee Stock Purchase Plan for an aggregate  purchase price of
$265,625  during the three  months  ended March 31,  2001 and 34,818  shares for
$425,433 during the three months ended March 31, 2000.

     During 2000,  certain  employees  exercised  stock  options which vested on
December  31, 1997,  December 31, 1998 and March 18, 2000,  pursuant to the 1997
Employee Stock Option Plan. No shares of stock for option  exercises were issued
during the three  months  ended March 31,  2001.  During the three  months ended
March 31, 2000,  16,800 shares of stock for option exercises were issued.  Total
proceeds  from the issuance of stock for option  exercises  were $0 and $273,501
for the quarters ended March 31, 2001 and March 31, 2000, respectively.

Recent Accounting Pronouncements

     Accounting for the interest rate hedges on the Company's credit  facilities
must follow the guidance in Statement of Financial  Accounting  Standards Number
133  ("SFAS  No.  133"),  Accounting  for  Derivative  Instruments  and  Hedging
Activities.  SFAS No. 133  establishes  accounting  and reporting  standards for
derivative instruments,  including instruments embedded in other contracts,  and
for hedging  activities.  This  statement  became  effective  for calendar  year
companies on January 1, 2001. The Statement has not had a material effect on the
Company's financial statements.

     In  1999,  the  Financial  Accounting  Standards  Board  ("FASB")  issued a
proposed  statement,  Business  Combinations and Intangible Assets. The proposed
statement has been revised  several  times and  additional  deliberations  began
April 11,  2001.  The two  major  issues  addressed  in the  proposed  statement
included  prohibiting the pooling method of accounting in a business combination
and the accounting for goodwill. The implementation of this statement would have
a  material  effect  on  the  Company's   financial  condition  and  results  of
operations.  If the new accounting approach were adopted,  goodwill amortization
expense would  decrease to zero and only  impairments  would


                                       14
<PAGE>

be charged against earnings.  According to the revised draft, goodwill should be
initially recognized as an asset in the financial statements and measured as the
excess  of the cost of an  acquired  entity  over the net  amounts  assigned  to
identified assets acquired and liabilities assumed in the business  combination.
Goodwill should not be amortized,  but instead it should be periodically  tested
for impairment when events or circumstances  occur indicating that an impairment
might exist.  Goodwill  should be  considered  impaired and an  impairment  loss
recognized,  if the fair value of the goodwill is less than the carrying  amount
reported  as an  asset.  The FASB  plans to issue a final  statement  that  will
incorporate its decisions on the pooling method, the accounting for goodwill and
any other issues addressed in the proposed statement in June 2001.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

     The Company is exposed to market risk due to variable interest rates on the
Company's credit  facilities.  Actions taken during 1999 and 2000 by the Federal
Reserve to increase interest rates increased the Company's  interest rate costs.
In 2001,  the Federal  Reserve has  decreased  interest  rates.  The Company has
entered  into  interest  rate hedges on  $50,000,000  of the credit  facilities,
effective  April 2, 2001, to reduce the  variability of the Company's cash flows
due to fluctuations in interest rates.  The first  measurement date for the fair
value of the interest rate hedge instruments is June 30, 2001.

     The Company  experienced  slower  demand for its services  during the first
quarter of 2001,  especially in the telecom and financial  services  industries.
During economic slowdowns the risk of bad debts increases.  Multiple  bankruptcy
filings by the Company's  clients could have a material  effect on the Company's
ability to collect accounts  receivables  outstanding.  Additional  amounts have
been reserved in the allowance for doubtful accounts for uncollectible  accounts
during the quarter ended March 31, 2001. Due to the Winstar  Communications Inc.
bankruptcy  filing on April 18,  2001,  the March 31, 2001  reserve for doubtful
accounts  increased $1.5 million.  Current  economic  conditions could result in
additional   accounts   becoming   doubtful  that  are  current  and  considered
collectible as of March 31, 2001.  Accounts receivable will be monitored closely
during 2001 to determine if  additional  increases to the allowance for doubtful
accounts are necessary.

     The  Company's  exposure  to market  risk  from  other  types of  financial
instruments, such as accounts payable, is not material.


                                       15
<PAGE>


PART II. OTHER INFORMATION:


ITEM 1.  LEGAL PROCEEDINGS

         None

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not applicable

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

         None

ITEM 5.  OTHER INFORMATION

         None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


     (a) Exhibits required by Item 601 of Regulation S-K:

             None

     (b) Reports on Form 8-K during first quarter of 2001:

         Press release  dated March 8, 2001,  reporting Mr. John R. Turbyfill as
         the third independent director.


                                       16
<PAGE>


                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Company  has duly  caused  this  Form  10-Q to be  signed  on its  behalf by the
undersigned,   thereunto  duly  authorized,  in  the  City  of  Virginia  Beach,
Commonwealth of Virginia on the 14th day of May, 2001.

                                     Metro Information Services, Inc.

                                By              /s/  John H. Fain
                                  -------------------------------
                                                     John H. Fain
                                             Principal Executive Officer

                                By            /s/  Robert J. Eveleigh
                                  -----------------------------------
                                                   Robert J. Eveleigh
                                             Principal Financial Officer


                                       17