<PAGE>

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

                       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
                                  JUNE 30, 1999

                         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 July 20, 1999, the registrant had issued and outstanding 14,939,450
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 Income for the
           Three Months and Six Months Ended June 30, 1998 and 1999 (unaudited)      3

           Consolidated Balance Sheets as of
           December 31, 1998 and June 30, 1999 (unaudited)                           4

           Consolidated Statement of Changes in Shareholders' Equity for the
           Six Months Ended June 30, 1999 (unaudited)                                5

           Consolidated Statements of Cash Flows for the Six Months Ended
           June 30, 1998 and 1999 (unaudited)                                        6

           Notes to Consolidated Financial Statements (unaudited)                    7

  ITEM 2.  Management's Discussion and Analysis
           of Financial Condition and Results of Operations                         12

  ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk               23

PART II.    OTHER INFORMATION                                                       24

SIGNATURES                                                                          26
</TABLE>


                                       2
<PAGE>

PART I. FINANCIAL INFORMATION:

ITEM 1. FINANCIAL STATEMENTS

                METRO INFORMATION SERVICES, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    Three months                           Six months
                                                                   ended June 30,                        ended June 30,
                                                         -----------------------------------  -----------------------------------
                                                              1998               1999               1998               1999
                                                         ----------------  -----------------  ------------------ ----------------
<S>                                                         <C>                <C>                  <C>            <C>
Revenue                                                     $ 52,390,963       $ 78,309,273         $99,500,478    $ 150,782,111
Cost of revenue                                               36,015,581         55,286,088          68,779,218      106,788,457
                                                         ----------------  -----------------  ------------------ ----------------
Gross profit                                                  16,375,382         23,023,185          30,721,260       43,993,654
                                                         ----------------  -----------------  ------------------ ----------------
Selling, general and administrative expenses                  10,218,693         13,451,298          19,509,150       26,612,251
Depreciation expense                                             393,053            582,476             744,299        1,105,445
Amortization expense (Note 3)                                     48,436            596,645              89,878          974,591
                                                         ----------------  -----------------  ------------------ ----------------
     Total operating expenses                                 10,660,182         14,630,419          20,343,327       28,692,287
                                                         ----------------  -----------------  ------------------ ----------------
Operating income                                               5,715,200          8,392,766          10,377,933       15,301,367
                                                         ----------------  -----------------  ------------------ ----------------
Interest income                                                  216,214             16,821             394,974           74,932
Interest expense                                                       -           (673,779)            (10,557)        (849,723)
                                                         ----------------  -----------------  ------------------ ----------------
     Net interest income (expense)                               216,214           (656,958)            384,417         (774,791)
                                                         ----------------  -----------------  ------------------ ----------------
Income before income taxes                                     5,931,414          7,735,808          10,762,350       14,526,576
Income taxes                                                   2,372,566          3,133,002           4,304,940        5,883,263
                                                         ----------------  -----------------  ------------------ ----------------
Net income                                                    $3,558,848       $  4,602,806         $ 6,457,410      $ 8,643,313
                                                         ================  =================  ================== ================
Net income per share:
     Basic                                                        $ 0.24             $ 0.31              $ 0.44           $ 0.58
                                                         ================  =================  ================== ================
     Diluted                                                      $ 0.24             $ 0.31              $ 0.43           $ 0.58
                                                         ================  =================  ================== ================
Weighted average number of shares of common stock
   and potential dilutive securities outstanding:
     Basic                                                    14,840,325         14,913,921          14,831,858       14,900,541
                                                         ================  =================  ================== ================
     Diluted                                                  15,017,969         15,007,495          15,003,516       15,005,138
                                                         ================  =================  ================== ================
</TABLE>

See accompanying notes to consolidated financial statements


                                       3
<PAGE>

                METRO INFORMATION SERVICES, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                          December 31,              June 30,
                                                                              1998                    1999
                                                                        -----------------      -------------------
ASSETS                                                                                            (Unaudited)
Current assets:
<S>                                                                         <C>                     <C>
     Cash and cash equivalents (Note 2)                                     $ 18,495,580            $   4,219,900
     Accounts receivable, net                                                 35,994,170               49,510,189
     Prepaid expenses                                                            457,578                1,530,816
     Deferred income taxes                                                       851,653                1,013,863
                                                                        -----------------      -------------------
        Total current assets                                                  55,798,981               56,274,768
Property and equipment, net                                                    9,655,638               11,365,990
Goodwill, net (Notes 3 and 4)                                                 15,410,128               63,935,415
Other assets, net                                                                134,951                  765,122
                                                                        -----------------      -------------------
        Total assets                                                        $ 80,999,698            $ 132,341,295
                                                                        =================      ===================


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Accounts payable (Note 2)                                              $  8,119,928            $   3,590,289
     Accrued compensation and benefits                                        10,902,482               15,498,096
                                                                        -----------------      -------------------
        Total current liabilities                                             19,022,410               19,088,385
Line of credit facilities (Note 5)                                                     -               41,453,764
Deferred income taxes                                                            732,195                1,093,372
                                                                        -----------------      -------------------
        Total liabilities                                                     19,754,605               61,635,521
                                                                        -----------------      -------------------
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
          14,884,160 shares at December 31, 1998,
          14,939,010 shares at June 30, 1999                                     148,842                  149,390
        Paid in capital                                                       37,585,480               38,402,300
        Retained earnings                                                     23,510,771               32,154,084
                                                                        -----------------      -------------------
           Total shareholders' equity                                         61,245,093               70,705,774
                                                                        -----------------      -------------------
              Total liabilities and shareholders' equity                    $ 80,999,698            $ 132,341,295
                                                                        =================      ===================
</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, 1998                      14,884,160       $148,842      $ 37,585,480      $ 23,510,771     $ 61,245,093

Net proceeds from issuance of
     50,000 shares of common stock to
     Employee Stock Purchase Plan                        50,000            500           739,268                 -          739,768

Net proceeds from issuance of 4,850
     shares of common stock to Employee
     Incentive Stock Option Plan                          4,850             48            77,552                 -           77,600

Net income                                                    -              -                 -         8,643,313        8,643,313
                                                  --------------  -------------  ----------------  ----------------  ---------------

BALANCE AS OF JUNE 30, 1999                          14,939,010       $149,390      $ 38,402,300      $ 32,154,084     $ 70,705,774
                                                  ==============  =============  ================  ================  ===============
</TABLE>

See accompanying notes to consolidated financial statements.


                                       5
<PAGE>

                METRO INFORMATION SERVICES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                         Six months
                                                                                                        ended June 30
                                                                                          ------------------------------------------
                                                                                                 1998                     1999
                                                                                          -------------------      -----------------
<S>                                                                                              <C>                    <C>
Cash flows from operating activities:
     Net income                                                                                  $ 6,457,410            $ 8,643,313
     Adjustments to reconcile net income to net
          cash provided by operating activities:
       Depreciation and amortization - cost of revenue                                                20,239                 21,557
       Depreciation and amortization - selling, general & administrative expenses                    834,177              2,080,036
       Net loss on sale of property and equipment                                                     14,412                 13,151
       Deferred income taxes                                                                         (12,939)               198,967
       Changes in operating assets and liabilities increasing (decreasing) cash,
             net of the effects of acquisitions:
                 Restricted cash (Note 2)                                                                  -               (967,459)
                 Accounts receivable                                                              (8,751,980)            (4,967,140)
                 Prepaid expenses                                                                   (128,211)            (1,019,648)
                 Other assets, net                                                                   119,607                (80,992)
                 Accounts payable                                                                   (359,855)            (4,393,586)
                 Accrued compensation and benefits                                                 3,028,952              3,200,077
                                                                                          -------------------      -----------------
                     Net cash provided by operating activities                                     1,221,812              2,728,276
                                                                                          -------------------      -----------------

Cash flows from investing activities:
     Acquisition of property and equipment                                                        (1,910,507)            (1,625,632)
     Acquisition of computer software                                                             (1,264,886)              (676,053)
     Acquisition of businesses                                                                    (1,284,024)           (56,977,630)
     Proceeds from sale of property and equipment                                                      3,094                  4,227
                                                                                          -------------------      -----------------
                     Net cash used in investing activities                                        (4,456,323)           (59,275,088)
                                                                                          -------------------      -----------------

Cash flows from financing activities:
     Net borrowings under line of credit                                                                   -             41,453,764
     Proceeds from issuance of shares to Employee Stock Purchase Plan                                567,595                739,768
     Proceeds from issuance of shares to Employee Incentive Stock Option Plan                        144,960                 77,600
                                                                                          -------------------      -----------------
                     Net cash provided by financing activities                                       712,555             42,271,132
                                                                                          -------------------      -----------------
Net decrease in cash and cash equivalents                                                         (2,521,956)           (14,275,680)

Cash and cash equivalents at beginning of period                                                  22,028,594             18,495,580
                                                                                          -------------------      -----------------

Cash and cash equivalents at end of period                                                      $ 19,506,638            $ 4,219,900
                                                                                          ===================      =================

Supplemental disclosure of cash flow information:
     Cash paid for interest                                                                     $     10,557            $   791,948
                                                                                          ===================      =================
     Cash paid for income taxes                                                                 $  3,441,679            $ 6,728,902
                                                                                          ===================      =================
</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 for June 30, 1998 and 1999, and for the
three-month and six-month periods then ended, 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 June 30, 1999 and the results of its
operations and its cash flows for the three-month and six-month periods ended
June 30, 1998 and 1999. 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, 1998, which were included as part of
the Company's Annual Report on Form 10-K (File No. 000-22035). Certain 1998
amounts have been reclassified for comparability with the 1999 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. The subsidiaries were formed in conjunction
with the acquisitions discussed in Note 3. 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 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
</TABLE>

2.       Restricted Cash

         Metro has agreed to act as payment agent for a client on an information
technology project. As of June 30, 1999, the Company held $297,065 of restricted
cash for this client. This amount is included in cash and cash equivalents and
accounts payable presented in the consolidated balance sheets. Client approved
invoices will be paid out of the restricted cash held and Metro will remit any
remaining restricted cash to the client at the end of the project. Metro is not
obligated to pay invoices that exceed the amount of the restricted cash held.

3.       Acquisitions

         On December 2, 1998, the Company completed the acquisition of The Avery
Group ("Avery"), an information technology services company with one office in
the Palo Alto/Silicon Valley area of California. The purchase price was
$11,754,000, of which $11 million was paid at closing and $754,000 was paid in
February 1999 based on a net worth adjustment calculation performed in February
1999.

         On January 1, 1999, the Company acquired D.P. Specialists, Inc. and
D.P. Specialists Learning Center, LLC ("DPS" collectively), an information
technology consulting services and personnel staffing business located in El
Segundo, California and Woodbridge, New Jersey for a purchase price of
approximately $10,070,000, including direct costs of the acquisition of
approximately $90,000. A portion of the purchase price was preliminarily
allocated to net


                                       7
<PAGE>

tangible and intangible assets acquired based on their estimated fair values at
the date of acquisition, with the excess purchase price over the fair value
assigned to goodwill. The following summarizes the preliminary allocation of the
purchase price based on January 1, 1999 asset and liability balances:

<TABLE>
<S>                                                                  <C>
Assets purchased:
      Accounts receivable                                            $ 1,880,710
      Prepaid expenses                                                     6,622
      Property and equipment                                             303,771
      Goodwill                                                         8,992,251
      Non-compete agreement                                               25,000
      Other assets                                                        50,246
                                                                     -----------
          Total assets purchased                                     $11,258,600
                                                                     -----------

Liabilities assumed:
      Note payable                                                   $   514,977
      Accounts payable                                                   132,491
      Accrued compensation and benefits                                  541,220
                                                                     -----------
          Total liabilities assumed                                    1,188,688
                                                                     -----------
          Purchase price                                             $10,069,912
                                                                     ===========
</TABLE>

         On February 1, 1999, the Company acquired The Professionals - Computer
Management & Consulting, Inc. ("PCM") and Krystal Solutions, Inc. ("KSC"), both
of which are information technology consulting services and personnel staffing
businesses located in Irvine, California and San Bruno, California for a
purchase price of approximately $18,511,000, of which $17,976,000 was paid at
closing, $352,000 was paid in April 1999 based on a net worth adjustment
calculation performed in April 1999 and approximately $183,000 represents direct
costs related to the acquisition. A portion of the purchase price was
preliminarily allocated to net tangible and intangible assets acquired based on
their estimated fair values at the date of acquisition, with the excess purchase
price over the fair value assigned to goodwill. The following summarizes the
preliminary allocation of the purchase price based on February 1, 1999 asset and
liability balances:

<TABLE>
<S>                                                                  <C>
Assets purchased:
      Accounts receivable                                            $ 2,968,910
      Prepaid expenses                                                     6,562
      Property and equipment                                              22,291
      Goodwill                                                        15,608,671
      Non-compete agreement                                               50,000
      Other assets                                                         8,586
                                                                     -----------
          Total assets purchased                                     $18,665,020
                                                                     -----------

Liabilities assumed:
      Accounts payable                                               $   144,069
      Accrued compensation and benefits                                   10,304
                                                                     -----------
          Total liabilities assumed                                      154,373
                                                                     -----------
          Purchase price                                             $18,510,647
                                                                     ===========
</TABLE>

         On March 1, 1999, the Company acquired Solution Technologies, Inc.
("STI"), an information technology consulting services and personnel staffing
business located in Camp Hill (Harrisburg), Altoona and Pittsburgh,
Pennsylvania, Charlotte, North Carolina, Hagerstown, Maryland and Kansas City,
Missouri, for a purchase price of approximately $28,397,000, of which
$24,046,000 was paid at closing, $3,654,000 was paid in March 1999 based on a
consultant count adjustment on March 8, 1999, $591,000 was paid in April 1999
based on a net worth adjustment calculation performed in April 1999 and
approximately $106,000 represents direct costs of the acquisition. A portion of
the purchase price was preliminarily allocated to net tangible and intangible
assets acquired based on their estimated fair values at the date of acquisition,
with the excess purchase price over the fair value assigned to goodwill. The
following


                                       8
<PAGE>

summarizes the preliminary allocation of the purchase price based on March 1,
1999 asset and liability balances:

<TABLE>
<S>                                                                  <C>
Assets purchased:
      Accounts receivable                                            $ 3,699,259
      Prepaid expenses                                                    40,406
      Property and equipment                                             217,107
      Goodwill                                                        24,826,233
      Non-compete agreement                                              480,000
      Other assets                                                        17,948
                                                                     -----------
          Total assets purchased                                     $29,280,953
                                                                     -----------

Liabilities assumed:
      Accounts payable                                               $    39,869
      Accrued compensation and benefits                                  844,013
                                                                     -----------
          Total liabilities assumed                                      883,882
                                                                     -----------
          Purchase price                                             $28,397,071
                                                                     ===========
</TABLE>

         For each of these acquisitions, if the acquired company achieves
certain predetermined financial results during a twelve month measurement
period, the Company will make an additional payment which will be recorded as
additional goodwill. The measurement periods for the acquired companies end as
follows:

<TABLE>
<CAPTION>
Acquired Company:                                                                          Twelve Months Ended:
-----------------                                                                          --------------------
<S>                                                                                        <C>
The Avery Group                                                                            December 31, 1999

D.P. Specialists, Inc. and D.P. Specialists Learning Center, LLC                           December 31, 1999

The Professionals - Computer Management & Consulting, Inc. and Krystal Solutions, Inc.     January 31, 2000

Solution Technologies, Inc.                                                                February 29, 2000
</TABLE>

Each of these acquisitions is accounted for as a purchase. The acquisitions were
financed partially with proceeds remaining from the Company's initial public
offering of common stock on January 29, 1997. The remainder of the purchase
price was financed with the Company's cash on hand and borrowings from the
Company's line of credit. In connection with these acquisitions, the Company has
recorded approximately $59,387,000 of goodwill which is being amortized on a
straight-line basis over 30 years.

         Unaudited pro forma consolidated results of operations for the six
months ended June 30, 1998 and 1999 would have been as follows had the
acquisitions of Avery, DPS, PCM, KSC and STI occurred as of the beginning of the
period:

<TABLE>
<CAPTION>
                                                                       SIX MONTHS
                                                                     ENDED JUNE 30,
                                                        -----------------------------------------
                                                               1998                    1999
                                                        ------------------       ----------------
                                                          (In thousands, except per share data)
<S>                                                            <C>                    <C>
   Revenue............................................         $133,265               $156,501
   Net income.........................................            7,035                  8,676
   Net income per share - basic.......................          $  0.47                $  0.58
   Net income per share - diluted.....................          $  0.47                $  0.58
   Weighted average number of shares of common stock
        and potential dilutive securities outstanding:
        Basic.........................................           14,832                 14,901
        Diluted.......................................           15,022                 15,005
</TABLE>


                                       9
<PAGE>

4.       Goodwill

         Goodwill represents the excess of cost over fair value of net tangible
assets acquired through acquisitions and is amortized on a straight-line basis
over its estimated useful life, generally 30 years. Management periodically
assesses whether there has been a permanent impairment in the value of goodwill.
The amount of such impairment is determined by comparing anticipated
undiscounted future cash flows to the carrying value of the related goodwill.

5.       Credit Facilities

         The Company maintains credit facilities of $90,000,000. The facilities,
which are provided in equal amounts by three banks, mature on June 20, 2004 and
may be extended each year for an additional year. If the facilities are not
extended, principal repayment is required. Until that time, interest only is
payable monthly. Two of the facilities allow the Company to select among prime
rate and London Interbank Offered Rate (LIBOR) based interest rates while the
third has only LIBOR based interest rates. All of the facilities have interest
rates that increase as the balance outstanding under the facilities increases.
At June 30, 1999, $41,453,764 was outstanding under the facilities. No amount
was outstanding at December 31, 1998. The Company has selected a 30-day LIBOR
based rate and the rate on borrowings was 5.5% as of June 30, 1999. The
facilities also contain fees, ranging from 0.125% to 0.3125% annually, which are
charged on the unused portion of the facilities. The facilities are
collateralized by accounts receivable of the Company.

         The credit facilities include 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 additional debt 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.

6.       Earnings Per Share

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

<TABLE>
<CAPTION>
                                                                                  SHARES
                                                           NET INCOME           OUTSTANDING          EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 1998                   (NUMERATOR)         (DENOMINATOR)         PER SHARE
----------------------------------------                   -----------         -------------         ---------
<S>                                                         <C>                 <C>                   <C>
Basic Earnings Per Share...........................         $3,558,848          14,840,325            $   0.24
                                                                                                      ========
Effect of Dilutive Securities - Incentive
  Stock Options deemed outstanding.................             --                 177,644
                                                            ----------          ----------

Diluted Earnings Per Share.........................         $3,558,848          15,017,969            $   0.24
                                                            ==========          ==========            ========
</TABLE>

<TABLE>
<CAPTION>
                                                                                  SHARES
                                                           NET INCOME           OUTSTANDING          EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 1999                   (NUMERATOR)         (DENOMINATOR)         PER SHARE
----------------------------------------                   -----------         -------------         ---------
<S>                                                         <C>                 <C>                   <C>
Basic Earnings Per Share...........................         $4,602,806          14,913,921            $   0.31
                                                                                                      ========
Effect of Dilutive Securities - Incentive
  Stock Options deemed outstanding.................             --                  93,574
                                                            ----------          ----------

Diluted Earnings Per Share.........................         $4,602,806          15,007,495            $   0.31
                                                            ==========          ==========            ========
</TABLE>


                                       10
<PAGE>

<TABLE>
<CAPTION>
                                                                                  SHARES
                                                           NET INCOME           OUTSTANDING          EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1998                     (NUMERATOR)         (DENOMINATOR)         PER SHARE
----------------------------------------                   -----------         -------------         ---------
<S>                                                         <C>                 <C>                   <C>
Basic Earnings Per Share...........................         $6,457,410          14,831,858            $   0.44
                                                                                                      ========
Effect of Dilutive Securities - Incentive
  Stock Options deemed outstanding.................             --                 171,658
                                                            ----------          ----------

Diluted Earnings Per Share.........................         $6,457,410          15,003,516            $   0.43
                                                            ==========          ==========            ========
</TABLE>

<TABLE>
<CAPTION>
                                                                                  SHARES
                                                           NET INCOME           OUTSTANDING          EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1999                     (NUMERATOR)         (DENOMINATOR)         PER SHARE
----------------------------------------                   -----------         -------------         ---------
<S>                                                         <C>                 <C>                   <C>
Basic Earnings Per Share...........................         $8,643,313          14,900,541            $   0.58
                                                                                                      ========
Effect of Dilutive Securities - Incentive
  Stock Options deemed outstanding.................             --                 104,597
                                                            ----------          ----------

Diluted Earnings Per Share.........................         $8,643,313          15,005,138            $   0.58
                                                            ==========          ==========            ========
</TABLE>


                                       11
<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 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 OPEN NEW OFFICES, 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, 1998 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. ("Metro" or the "Company") provides a
wide range of information technology ("IT") consulting and custom software
development services through 45 offices in 42 metropolitan markets in the United
States and Puerto Rico. The Company's more than 2,500 consultants, 55% of whom
are salaried, work with clients' internal IT departments on all aspects of
computer systems and applications development. Services performed by Metro
include application systems development and maintenance, IT architecture and
engineering, systems consulting, project outsourcing and general support
services. The Company supports all major computer technology platforms
(mainframe, mid-range, client/server and network environments) and supports
client projects using a broad range of software applications. For example, the
Company implements SAP's client/server software, custom develops Oracle,
Informix, DB2, VisualBasic, C++ and Web-based applications, implements and
supports 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 (state and
local only), 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
June 30, 1999, the Company performed IT services for 703 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
services arrangements. Substantially all services are billed on a time and
materials basis. During the three months ended June 30, 1999, the Company
estimates that supplemental IT services accounted for more than 90% and project
outsourcing services accounted for less than 10% of the Company's revenue.


                                       12
<PAGE>

         Revenue growth is derived primarily from increases in the number of
consultants placed with existing and new clients. Between June 30, 1998 and June
30, 1999, the number of full time consultants grew from 1,980 to 2,621,
including 570 consultants gained through acquisitions. In addition, over the
same period, the Company increased the average billing rates charged to clients
for consultants.

         During 1999, the Company has experienced slowing demand for its
services. This slowing in demand appears to be primarily the result of Client
uncertainty about starting new IT projects until their Year 2000 issues are
resolved, budget constraints and uncertainty about IT spending priorities. This
slowing in demand has resulted in slower revenue growth in existing offices,
lower bill rate increases than obtained in 1998, more non-billable consultants
and slower growth in profitability. Management believes these conditions may
continue into the first quarter of 2000.

         On December 2, 1998, the Company completed the acquisition of The Avery
Group, an information technology services company with one office in the Palo
Alto/Silicon Valley area of California. The purchase price was $11,754,000, of
which $11 million was paid at closing and $754,000 was paid in February 1999
based on a net worth adjustment calculation performed in February 1999. On
January 1, 1999, the Company acquired D. P. Specialists, Inc. and D.P.
Specialists Learning Center, LLC ("DPS" collectively), an information technology
consulting services and personnel staffing business located in El Segundo,
California and Woodbridge, New Jersey for a purchase price of approximately
$10,070,000, including direct costs of the acquisition of approximately $90,000.
On February 1, 1999, the Company acquired The Professionals - Computer
Management & Consulting, Inc. ("PCM") and Krystal Solutions, Inc. ("KSC"), both
of which are information technology consulting services and personnel staffing
businesses located in Irvine, California and San Bruno, California for a
purchase price of approximately $18,511,000, of which $17,976,000 was paid at
closing, $352,000 was paid in April 1999 based on a net worth adjustment
calculation performed in April 1999 and approximately $183,000 represents direct
costs related to the acquisition. On March 1, 1999, the Company acquired
Solution Technologies, Inc. ("STI"), an information technology consulting
services and personnel staffing business located in Camp Hill (Harrisburg),
Altoona and Pittsburgh, Pennsylvania, Charlotte, North Carolina, Hagerstown,
Maryland and Kansas City, Missouri, for a purchase price of approximately
$28,397,000, of which $24,046,000 was paid at closing, $3,654,000 was paid in
March 1999 based on a consultant count adjustment on March 8, 1999, $591,000 was
paid in April 1999 based on a net worth adjustment calculation performed in
April 1999 and approximately $106,000 represents direct costs of the
acquisition. For each of these acquisitions, if the acquired company achieves
certain predetermined financial results during a twelve month measurement
period, the Company will make an additional payment which will be recorded as
additional goodwill. The measurement periods for the acquired companies end
December 31, 1999, December 31, 1999, January 31, 2000 and February 29, 2000,
respectively.

         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.


                                       13
<PAGE>

                              RESULTS OF OPERATIONS

         FOR PURPOSES OF THE FOLLOWING DISCUSSION, AS OF JUNE 30, 1998, A MATURE
OFFICE IS AN OFFICE THAT WAS OWNED BY THE COMPANY FOR AT LEAST 12 MONTHS AT THE
BEGINNING OF THE EARLIER PERIOD BEING COMPARED AND A NEW OFFICE IS AN OFFICE
OPENED OR ACQUIRED THEREAFTER. AS OF JUNE 30, 1999, A MATURE OFFICE IS AN OFFICE
THAT WAS OWNED BY THE COMPANY FOR AT LEAST 24 MONTHS AND A NEW OFFICE IS AN
OFFICE OPENED OR ACQUIRED WITHIN THE LAST 24 MONTHS.

         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 income for the:

<TABLE>
<CAPTION>
                                                                         PERCENTAGE OF REVENUE
                                                   -----------------------------------------------------------------
                                                        THREE MONTHS ENDED                 SIX MONTHS ENDED
                                                             JUNE 30,                           JUNE 30,
                                                   ----------------------------    ---------------------------------
                                                           1998           1999                1998             1999
                                                           ----           ----                ----             ----
<S>                                                       <C>            <C>                 <C>              <C>
Revenue........................................           100.0%         100.0%              100.0%           100.0%
Cost of revenue................................            68.7           70.6                69.1             70.8
                                                   ------------- --------------    ----------------  ---------------
Gross profit...................................            31.3           29.4                30.9             29.2
                                                   ------------- --------------    ----------------  ---------------
Selling, general and administrative expenses...            19.5           17.2                19.6             17.7
Depreciation expense...........................             0.8            0.7                 0.8              0.7
Amortization expense...........................             0.1            0.8                 0.1              0.6
                                                   ------------- --------------    ----------------  ---------------
Total operating expenses.......................            20.4           18.7                20.5             19.0
                                                   ------------- --------------    ----------------  ---------------
Operating income...............................            10.9           10.7                10.4             10.2
                                                   ------------- --------------    ----------------  ---------------
Interest income................................             0.4             -                  0.4               -
Interest expense...............................              -            (0.8)                 -              (0.6)
                                                   ------------- --------------    ----------------  ---------------
Net interest income (expense)..................             0.4           (0.8)                0.4             (0.6)
                                                   ------------- --------------    ----------------  ---------------
Income before income taxes.....................            11.3            9.9                10.8              9.6
Income taxes...................................             4.5            4.0                 4.3              3.9
                                                   ------------- --------------    ----------------  ---------------
Net income.....................................             6.8%           5.9%                6.5%             5.7%
                                                   ============= ==============    ================= ===============
</TABLE>

<TABLE>
<CAPTION>
                                                                           PERCENTAGE CHANGE
                                                                             1999 OVER 1998
                                                   -----------------------------------------------------------------
                                                        THREE MONTHS ENDED                   SIX MONTHS ENDED
                                                             JUNE 30,                            JUNE 30,
                                                   -----------------------------        ----------------------------
<S>                                                          <C>                                  <C>
Revenue........................................               49.5%                                51.5%
Cost of revenue................................               53.5%                                55.3%
Gross profit...................................               40.6%                                43.2%
Selling, general and administrative expenses...               31.6%                                36.4%
Depreciation expense...........................               48.2%                                48.5%
Amortization expense...........................                N/M                                  N/M
Total operating expenses.......................               37.2%                                41.0%
Operating income...............................               46.8%                                47.4%
Interest income................................              (92.2)%                              (81.0)%
Interest expense...............................                N/M                                  N/M
Income before income taxes.....................               30.4%                                35.0%
Income taxes...................................               32.1%                                36.7%
Net income.....................................               29.3%                                33.9%
</TABLE>

-------------
N/M - Not Meaningful


                                       14
<PAGE>

         THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE
         30, 1998

         REVENUE. Revenue increased $25.9 million, or 49.5%, to $78.3 million
for the three months ended June 30, 1999 from $52.4 million for the three months
ended June 30, 1998. $19.7 million of this increase is attributable to
acquisitions during 1998 and 1999. This increase is also a result of increased
billings to existing clients, the addition of new clients and increased billing
rates charged for the Company's consultants.

         COST OF REVENUE. Cost of revenue increased $19.3 million, or 53.5%, to
$55.3 million for the three months ended June 30, 1999 from $36.0 million for
the three months ended June 30, 1998. Cost of revenue increased primarily due to
compensation and benefits associated with growth in the number of consultants,
including consultants added through acquisitions. As a percentage of revenue,
cost of revenue increased to 70.6% for the three months ended June 30, 1999 from
68.7% for the three months ended June 30, 1998 primarily because the percentage
of employees who are hourly is higher in 1999 than in 1998. Hourly employees
have a higher pay rate in relation to their billing rate but do not receive the
same benefits as salaried employees. To a lesser extent, cost of revenue rose
due to lower utilization of salaried consultants. Salaried consultants are paid
even if they are not billing. In addition, pay rates rose faster than bill rates
during 1999.

         GROSS PROFIT. Gross profit increased $6.6 million, or 40.6%, to $23.0
million for the three months ended June 30, 1999 from $16.4 million for the
three months ended June 30, 1998. As a percentage of revenue, gross profit
decreased to 29.4% for the three months ended June 30, 1999 from 31.3% for the
three months ended June 30, 1998.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $3.2 million, or 31.6%, to $13.4 million for
the three months ended June 30, 1999 from $10.2 million for the three months
ended June 30, 1998. This increase is due primarily to costs associated with
recently opened offices, acquired offices, growth of administrative staff in
mature offices, hiring additional corporate staff to support the increased
number of offices and development of the Company's proprietary business systems.
As a percentage of revenue, selling, general and administrative expenses
decreased to 17.2% for the three months ended June 30, 1999 from 19.5% for the
three months ended June 30, 1998. This decrease is in part the result of the
Company's centralization of administrative functions and leverage obtained from
the Company's proprietary business systems.

         DEPRECIATION EXPENSE. Depreciation expense increased $189,000, or
48.2%, to $582,000 for the three months ended June 30, 1999 from $393,000 for
the three months ended June 30, 1998. This increase is primarily attributable to
depreciation on additions to computer equipment and software. As a percentage of
revenue, depreciation expense decreased to 0.7% for the three months ended June
30, 1999 from 0.8% for the three months ended June 30, 1998.

         AMORTIZATION EXPENSE. Amortization expense increased $548,000 to
$596,000 for the three months ended June 30, 1999 from $48,000 for the three
months ended June 30, 1998. This increase is attributable to amortization of
goodwill related to the Company's acquisitions. As a percentage of revenue,
amortization expense increased to 0.8% for the three months ended June 30, 1999
from 0.1% for the three months ended June 30, 1998.

         OPERATING INCOME. Operating income increased $2.7 million, or 46.8%, to
$8.4 million for the three months ended June 30, 1999 from $5.7 million for the
three months ended June 30, 1998. As a percentage of revenue, operating income
decreased to 10.7% for the three months ended June 30, 1999 from 10.9% for the
three months ended June 30, 1998. The decline in operating income margin is the
result of lower gross margins and higher amortization expenses not being fully
offset by the improvements in operating expenses the Company realized from its
centralized administrative functions and leverage obtained from the Company's
proprietary business systems.

         INTEREST INCOME. Interest income decreased by $199,000, or 92.2%, to
$17,000 for the three months ended June 30, 1999 from $216,000 for the three
months ended June 30, 1998. This change reflects a decrease in cash and cash
equivalents due to cash used for acquisitions.

         INTEREST EXPENSE. Interest expense was $674,000 for the three months
ended June 30, 1999. There was no interest expense for the three months ended
June 30, 1998. This change is due to borrowings made during the period to pay
for several acquisitions.


                                       15
<PAGE>

         INCOME BEFORE INCOME TAXES. Income before income taxes increased $1.8
million, or 30.4%, to $7.7 million for the three months ended June 30, 1999 from
$5.9 million for the three months ended June 30, 1998. As a percentage of
revenue, income before income taxes decreased to 9.9% for the three months ended
June 30, 1999 from 11.3% for the three months ended June 30, 1998.

         INCOME TAXES. The Company's effective tax rate was 40.5% for the three
months ended June 30, 1999 and 40% for the three months ended June 30, 1998.
Income taxes increased $0.7 million or 32.1%, to $3.1 million for the three
months ended June 30, 1999 from $2.4 million for the three months ended June 30,
1998. As a percentage of revenue, income taxes decreased to 4.0% for the three
months ended June 30, 1999 from 4.5% for the three months ended June 30, 1998.

         NET INCOME. Net income increased $1.0 million, or 29.3%, to $4.6
million for the three months ended June 30, 1999 from $3.6 million for the three
months ended June 30, 1998. As a percentage of revenue, net income decreased to
5.9% for the three months ended June 30, 1999 from 6.8% for the three months
ended June 30, 1998.

         EARNINGS PER SHARE. Diluted earnings per share increased $0.07, or
29.2%, to $0.31 for the three months ended June 30, 1999 from $0.24 for the
three months ended June 30, 1998.

         SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30,
         1998

         REVENUE. Revenue increased $51.3 million, or 51.5%, to $150.8 million
for the six months ended June 30, 1999 from $99.5 million for the six months
ended June 30, 1998. $33.9 million of this increase is attributable to
acquisitions during 1998 and 1999. This increase is also a result of increased
billings to existing clients, the addition of new clients and increased billing
rates charged for the Company's consultants.

         COST OF REVENUE. Cost of revenue increased $38.0 million, or 55.3%, to
$106.8 million for the six months ended June 30, 1999 from $68.8 million for the
six months ended June 30, 1998. Cost of revenue increased primarily due to
compensation and benefits associated with growth in the number of consultants,
including consultants added through acquisitions. As a percentage of revenue,
cost of revenue increased to 70.8% for the six months ended June 30, 1999 from
69.1% for the six months ended June 30, 1998 primarily because the percentage of
employees who are hourly is higher in 1999 than in 1998. Hourly employees have a
higher pay rate in relation to their billing rate but do not receive the same
benefits as salaried employees. To a lesser extent, cost of revenue rose due to
lower utilization of salaried consultants. Salaried consultants are paid even if
they are not billing. In addition, pay rates rose faster than bill rates during
1999.

         GROSS PROFIT. Gross profit increased $13.3 million, or 43.2%, to $44.0
million for the six months ended June 30, 1999 from $30.7 million for the six
months ended June 30, 1998. As a percentage of revenue, gross profit decreased
to 29.2% for the six months ended June 30, 1999 from 30.9% for the six months
ended June 30, 1998.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $7.1 million, or 36.4%, to $26.6 million for
the six months ended June 30, 1999 from $19.5 million for the six months ended
June 30, 1998. This increase is due primarily to costs associated with recently
opened offices, acquired offices, growth of administrative staff in mature
offices, hiring additional corporate staff to support the increased number of
offices and development of the Company's proprietary business systems. As a
percentage of revenue, selling, general and administrative expenses decreased to
17.7% for the six months ended June 30, 1999 from 19.6% for the six months ended
June 30, 1998. This decrease is in part the result of the Company's
centralization of administrative functions and leverage obtained from the
Company's proprietary business systems.

         DEPRECIATION EXPENSE. Depreciation expense increased $361,000, or
48.5%, to $1,105,000 for the six months ended June 30, 1999 from $744,000 for
the six months ended June 30, 1998. This increase is primarily attributable to
depreciation on additions to computer equipment and software. As a percentage of
revenue, depreciation expense decreased to 0.7% for the six months ended June
30, 1999 from 0.8% for the six months ended June 30, 1998.


                                       16
<PAGE>

         AMORTIZATION EXPENSE. Amortization expense increased $885,000 to
$975,000 for the six months ended June 30, 1999 from $90,000 for the six months
ended June 30, 1998. This increase is attributable to amortization of goodwill
related to the Company's acquisitions. As a percentage of revenue, amortization
expense increased to 0.6% for the three months ended June 30, 1999 from 0.1% for
the six months ended June 30, 1998.

         OPERATING INCOME. Operating income increased $4.9 million, or 47.4%, to
$15.3 million for the six months ended June 30, 1999 from $10.4 million for the
six months ended June 30, 1998. As a percentage of revenue, operating income
decreased to 10.2% for the six months ended June 30, 1999 from 10.4% for the six
months ended June 30, 1998. The decline in operating income margin is the result
of lower gross margins and higher amortization expenses not being fully offset
by the improvements in operating expenses the Company realized from its
centralized administrative functions and leverage obtained from the Company's
proprietary business systems.

         INTEREST INCOME. Interest income decreased by $320,000, or 81.0%, to
$75,000 for the six months ended June 30, 1999 from $395,000 for the six months
ended June 30, 1998. This change reflects a decrease in cash and cash
equivalents due to cash used for acquisitions.

         INTEREST EXPENSE. Interest expense increased by $839,000 to $850,000
for the six months ended June 30, 1999 from $11,000 for the six months ended
June 30, 1998. This change reflects an increase in the average level of
borrowings during the period related to the use of cash to make several
acquisitions.

         INCOME BEFORE INCOME TAXES. Income before income taxes increased $3.7
million, or 35.0%, to $14.5 million for the six months ended June 30, 1999 from
$10.8 million for the six months ended June 30, 1998. As a percentage of
revenue, income before income taxes decreased to 9.6% for the six months ended
June 30, 1999 from 10.8% for the six months ended June 30, 1998.

         INCOME TAXES. The Company's effective tax rate was 40.5% for the six
months ended June 30, 1999 and 40% for the six months ended June 30, 1998.
Income taxes increased $1.6 million or 36.7%, to $5.9 million for the six months
ended June 30, 1999 from $4.3 million for the six months ended June 30, 1998. As
a percentage of revenue, income taxes decreased to 3.9% for the six months ended
June 30, 1999 from 4.3% for the six months ended June 30, 1998.

         NET INCOME. Net income increased $2.1 million, or 33.9%, to $8.6
million for the six months ended June 30, 1999 from $6.5 million for the six
months ended June 30, 1998. As a percentage of revenue, net income decreased to
5.7% for the six months ended June 30, 1999 from 6.5% for the six months ended
June 30, 1998.

         EARNINGS PER SHARE. Diluted earnings per share increased $0.15, or
34.9%, to $0.58 for the six months ended June 30, 1999 from $0.43 for the six
months ended June 30, 1998.

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 June 30, 1999, 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.


                                       17
<PAGE>

<TABLE>
<CAPTION>
                                                                        Gross Profit             Operating Income
                                                                    -------------------      -----------------------
                                                                                 % of                         % of
STATEMENTS OF INCOME DATA                                 REVENUE    AMOUNT     REVENUE       AMOUNT         REVENUE
-------------------------                                 -------    ------     -------       ------         -------
                                                                           (Dollars in thousands)
<S>                                                        <C>        <C>         <C>          <C>              <C>
1996:
         June.........................................     27,812     8,452       30.4         2,248            8.1
         September....................................     29,142     8,817       30.3         2,431            8.3
         December.....................................     30,681     9,216       30.0         2,314            7.5
1997:
         March........................................     33,045     9,727       29.4         2,741            8.3
         June.........................................     35,883    10,841       30.2         3,409            9.5
         September....................................     40,569    12,580       31.0         4,314           10.6
         December.....................................     43,080    13,351       31.0         4,612           10.7
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
</TABLE>

----------

         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

         During the first quarter of 1999, the Company acquired The Avery Group,
D.P. Specialists, Inc. and D.P. Specialists Learning Center, LLC, The
Professionals - Computer Management & Consulting, Inc., Krystal Solutions, Inc.
and Solution Technologies, Inc. as described in Note 3 of Notes to Consolidated
Financial Statements. The acquisitions caused the Company to exhaust the balance
of the proceeds from its January 1997 initial public offering and incur
$38,418,100 in debt on its credit facilities.

         The Company sold 50,000 shares of stock under the Metro Information
Services, Inc. Employee Stock Purchase Plan for an aggregate purchase price of
$739,768 during the six months ended June 30, 1999.

         During 1999, certain employees exercised stock options which vested on
December 31, 1997 pursuant to the 1997 Employee Incentive Stock Option Plan.
Total proceeds from the issuance of stock for option exercises were $77,600
during the six months ended June 30, 1999.

         The Company funds its operations primarily from cash generated by
operations. Net cash provided by operations was $2,728,276 for the six months
ended June 30, 1999 and consisted primarily of net income of $8,643,313 and,
excluding the effects of acquisitions, increases in accounts receivable of
$4,967,140 and accrued compensation and benefits of $3,200,077 and a decrease in
accounts payable of $4,393,586. The increases in accounts receivable and accrued
compensation and benefits are primarily due to the revenue growth experienced
during the six months ended June 30, 1999. The decrease in accounts payable is
due to the Company paying the majority of accounts payable at June 30, 1999.
This was done to ease the Company's implementation of new financial accounting
software on July 1, 1999. The Company had working capital of $37,186,383 at June
30, 1999 compared to $36,776,571 at December 31, 1998.


                                       18
<PAGE>

         Net cash used in investing activities was $59,275,088 for the six
months ended June 30, 1999 and included normal acquisitions of property and
equipment used in operations of $1,625,632 and $56,977,630 of payments for the
acquisitions described above. The Company's investing activities also include
$676,053 spent on developing new computer systems for financial accounting,
human resources and payroll activities. See "New Systems Implementation."

         On January 15, 1999, the Company increased its credit facilities from
$39,900,000 to $90,000,000. The credit facilities are provided in equal amounts
by three banks. The Company has borrowed $41,453,764 against these facilities,
leaving $48,546,236 available as of June 30, 1999. The facilities mature in June
2004 and may be extended each year for an additional year. Until that time
interest only is payable monthly. Two of the facilities allow the Company to
select among prime rate and London Interbank Offered Rate (LIBOR) based interest
rates while the third has only LIBOR based interest rates. All of the facilities
have interest rates which increase as the balance outstanding under the
facilities increases. The Company has selected a 30-day LIBOR based rate and the
rate on such borrowings was 5.5% as of June 30, 1999. The facilities also
contain fees, ranging from 0.125% to 0.3125% annually, which are charged on the
unused portion of the facilities. The facilities are collateralized by accounts
receivable of the Company.

         The credit facilities contain several covenants, including one
requiring the maintenance of a certain tangible net worth ratio, which limit the
amount of dividends that can be paid. The covenants also impose limits on
incurring additional debt 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.

         The Company believes that the available funds under its credit
facilities and cash flows from operations will be adequate to meet its needs for
working capital and capital expenditures for at least the next year. Any
significant acquisitions, however, may require additional debt and equity
financing.

                                YEAR 2000 ISSUES

         Many computer systems use dates to correctly process information. Until
recently, computer systems used a two-digit date to indicate a year. For
example, the year 1958 is indicated in these systems by the digits "58." As the
year 2000 approaches, these systems will need to process information involving
the year 2000 and later years. Systems that use only a two-digit year may
confuse the year 2000 for the year 1900, causing the systems to produce
incorrect results. This problem is commonly known as the Year 2000, Y2K or
Millenium Bug problem. In this disclosure, the problem is referred to as the
"Year 2000" problem.

         As an investor, you should be aware that the full extent of the Year
2000 problem is unknown. In 1998, the Securities and Exchange Commission ("SEC")
issued an Interpretation in which it indicated that, "... the extent of the
potential impact of the Year 2000 problem is not yet known, and if not timely
corrected, it could affect the global economy." The SEC's Interpretation
requires publicly traded companies such as us to disclose additional information
about their Year 2000 problems. This disclosure is the result of our effort to
inform the investing public of the risks we believe are likely to affect us. All
readers of this document are encouraged to read the SEC Interpretation.

         Estimates of the cost to fix Year 2000 problems worldwide run to the
hundreds of billions of dollars. Additional costs in the form of business
interruptions, additional repair costs and litigation costs may be incurred if
the fixes do not work. It appears there is no way to predict with certainty what
will happen after December 31, 1999. It is certain, however, that the year 2000
will arrive soon. As a result, all companies should be undertaking a study to
determine how they may be affected by the Year 2000 problem and take steps to
address the effects where appropriate. Failure to do so could cause injury not
only to the company that is not ready for the year 2000, but every other person
dealing with that company. As a result, it is difficult for any company,
including Metro, to evaluate effectively the impact that third party failures
may have on its business. In this disclosure, we have assumed we will not be
Year 2000 compliant under the Interpretation until all third parties with whom
we have a material relationship provide us with written assurance that they
expect to be Year 2000 compliant in time. We have treated written responses to
our requests for this information, information provided on third parties' web
sites


                                       19
<PAGE>

and information filed with the SEC by our U.S. public company clients as written
assurance under this disclosure.

         METRO'S STATE OF READINESS

         Metro's approach to the Year 2000 problem involves: 1) assessing,
correcting and testing our internal systems; 2) obtaining assurance from third
parties who exchange information electronically with us that the information
they provide will be Year 2000 compliant; 3) obtaining assurance or information
on the state of Year 2000 readiness of our material clients and suppliers; and
4) developing contingency plans, when practical, to address expected Year 2000
failures. A discussion of each of these areas follows.

         INTERNAL RISKS

         We completed an initial assessment of our systems in 1997. Additional
information received by us led to a second assessment during the third quarter
of 1998.

         These assessments covered embedded computer chips, computer software,
computer hardware, telephones, communications equipment, facsimile machines,
scanners, copiers and voice mail which we own and were able to identify as
critical to our ability to provide services to our clients. These assessments
identified a limited amount of software that displayed dates in an ambiguous
2-digit format, but processed dates correctly in 4-digit format. We corrected
this ambiguity in the third quarter of 1998. The assessment also identified a
variety of BIOS programs (programs that allow personal computers to run) that
require additional upgrades to make them Year 2000 compliant according to the
manufacturer of the personal computers. We finished upgrading these BIOS
programs by December 31, 1998. On May 5, 1999, we finished upgrading certain
non-compliant computer operating systems with patches provided by the computer
manufacturers. Should further Year 2000 related upgrades become available and be
deemed necessary, we plan to apply them in a timely manner. As of the date of
this filing, we have remediated substantially all of the Year 2000 problems
we know exist. We will continue to perform additional testing of our systems
through September 30, 1999. If those tests reveal additional Year 2000
problems, we plan to fix those issues before December 31, 1999 or put into
effect contingency plans.

         After the assessments described above were made, we acquired five
companies: The Avery Group, D.P. Specialists, Inc. and D.P. Specialists Learning
Center, LLC ("DPS" collectively), The Professionals - Computer Management &
Consulting, Inc., Krystal Solutions, Inc. and Solution Technologies, Inc. We
have completed an assessment of these companies and the upgraded noncompliant
BIOS and operating systems. We expect all systems to be Year 2000 compliant
except for certain accounting software and development systems and non-Metro
recruiting systems which we plan to replace or upgrade by December 31, 1999.

         We are seeking information from other companies with whom we have a
material relationship. We have sent letters to these companies requesting
confirmation that they will be able to continue their relationship with us at
the same level and without interruption before and after the Year 2000. As of
June 30, 1999, we had not received responses from 2.8% of these companies. We
are continuing our efforts to obtain information from these companies. For
companies that did not respond by June 30, 1999 or indicated they will not be
compliant, we are identifying alternate suppliers or developing other
contingency plans.

         On July 1, 1999 we implemented other systems which we have received
written assurances are Year 2000 compliant. See "New Systems Implementation." We
are not treating the costs of these new systems as Year 2000 costs because we
did not accelerate their implementation due to Year 2000 problems.

         EXTERNAL RISKS. We have installed new software that we began using July
1, 1999. See "New Systems Implementation." This new system increases the amount
of information we exchange with our banks and 401(k) plan administrator. In some
cases, the Year 2000 problem does not affect the information being received. In
other cases, we have received assurances from these institutions that they will
be Year 2000 compliant in a timely fashion. In one case, we have made
arrangements to receive the information in a usable 2-digit year format. We are
relying on these assurances as part of our Year 2000 planning. If these
assurances are wrong, they could have a material adverse effect on our business,
financial condition and results of operations.


                                       20
<PAGE>

         We have reviewed filings made by our U.S. public company clients who
provided more than 0.2% of revenue during the 12 months ended June 30, 1999.
This review covered filings through June 30, 1999, and was performed to
determine the extent of the risk that our clients may not be Year 2000
compliant. These companies represented 49.5% of our revenue for the 12 months
ending June 30, 1999. This review furnished the following information on our
clients' expected completion date for their Year 2000 efforts:

<TABLE>
<CAPTION>
                                     Will not
                        Not         Be Year 2000        Year 2000            By              By             By
                     Disclosed       Compliant        Compliant Now        6/30/99        9/30/99        12/31/99
<S>                     <C>             <C>                <C>              <C>            <C>             <C>
% Of Metro
    Revenue             0%              0%                 9.2%             11.8%          22.9%           5.6%
</TABLE>

         We have treated the information furnished in these reports as written
assurance provided by these clients on the status of their Year 2000 problem. In
some cases these clients have indicated they will be substantially complete or
will have completed Year 2000 efforts for their mission critical systems by the
date indicated. We have treated this disclosure as an indication that these
companies will be able to continue their business relationships with us without
disruption or failure. We have or will request additional information from those
clients who indicated they will not be compliant or provided no disclosure. At
present, we plan to monitor disclosures made by these publicly traded clients in
Forms 10-Q and 10-K. Please note that these filings reflect the position of
these companies on the date of their filings and may change in subsequent
filings.

         We are also requesting assurance from our other clients who provided
more than 0.2% of revenue during the 12 months ended June 30, 1999. These
clients represented 25.1% of revenue during the 12 months ended June 30, 1999.
We have reviewed written assurances from these clients representing 12.5% of
revenue during the 12 months ended June 30, 1999. This review furnished the
following information on our clients' expected completion date for their Year
2000 efforts:

<TABLE>
<CAPTION>
                                     Will not
                        Not         be Year 2000        Year 2000            By              By             By
                     Disclosed       Compliant        Compliant Now        6/30/99        9/30/99        12/31/99
<S>                     <C>             <C>                <C>              <C>             <C>            <C>
% Of Metro
    Revenue             0%              0%                 1.7%             1.3%            0.8%           8.7%
</TABLE>

         We have not yet received assurance from the rest of these companies. We
expect to have more information on these companies when we file our Quarterly
Report on Form 10-Q in November 1999. If these clients do not become Year 2000
compliant in a timely fashion, our business, financial condition and results of
operations could be materially adversely affected.

         BUSINESS RISKS. We are seeking written assurance from our clients. See
EXTERNAL RISKS above.

         LITIGATION RISKS. We have limited our involvement in Year 2000 projects
and worked primarily on a time and materials basis. We have also sought
limitations on our liability for Year 2000 related problems arising from our
services when appropriate. We are not able to estimate the cost of any
litigation that may arise in the future.

         COSTS TO ADDRESS THE COMPANY'S YEAR 2000 PROBLEM

         Our internal information technology staff has made repairs to our
internal systems. We believe our internal systems are Year 2000 compliant. We
may perform additional assessments, remediation and testing if information about
Year 2000 risks to our internal systems changes.

         Our internal information technology staff is also requesting
information from our material clients and suppliers to address external risks.
We do not expect to incur material incremental costs to gather this information.
We will defer other projects these individuals could have worked on by about 6
months. We do not consider these deferred


                                       21
<PAGE>

projects mission critical or expect their delay to have a material adverse
effect on our business, results of operations or financial condition.

         The cost of our Year 2000 activities is expected to be approximately
$230,000, approximately $70,000 of which had been incurred at June 30, 1999.

         RISKS OF THE COMPANY'S YEAR 2000 ISSUES

         The Year 2000 problem involves several risks for us. One risk is that
our computerized systems and embedded systems (such as minicontrollers and chips
in elevators, machinery and equipment) ("internal risks") and those of our
clients, suppliers, vendors, financial institutions and others ("external
risks") will be disrupted or fail. We also consider the possible loss of revenue
when consultants on Year 2000 assignments complete their assignments and
possible slow downs in demand for our services in the latter half of 1999 to be
Year 2000 related risks. We may also become involved in litigation over the Year
2000 services we have rendered to our clients. These risks have the capacity to
cause a material adverse effect on our business, results of operations and
financial condition although we are uncertain what risks we will actually
suffer. These risks are discussed below.

         INTERNAL RISKS. We rely heavily on computer systems to run our
business. Internal risks consist of potential disruptions and failures of our
proprietary and purchased computer software, computer hardware, office
equipment, office systems and turnover in our information technology staff.
Software systems include recruiting, candidate tracking, payroll, human
resources, benefits and financial accounting systems. Disruptions and failures
of these systems could hurt our ability to bill our clients, collect money from
clients, pay our employees in a timely manner and continue in business.

         EXTERNAL RISKS.

         External risks are risks that third parties will suffer Year 2000
problems that adversely affect us. These risks include the inability of certain
third parties to exchange electronic data with us and the risk of disruptions
and failures of persons with whom we do business. These third parties include
our clients, suppliers, vendors, financial institutions and others with whom we
do business.

         If we are not able to exchange information electronically with third
parties, our ability to receive and pay money as needed may be slowed and
information on 401(k) account and cash balances may be delayed. If our clients,
suppliers, vendors and financial institutions are not Year 2000 compliant, their
noncompliance may cause a material disruption to their businesses. These
disruptions could negatively impact us in many ways, including: a client may be
unable to pay us; a financial institution may be unable to process checks drawn
on our bank accounts, accept deposits or process wire transfers; a client,
supplier, vendor or financial institution may fail; vendor deliveries of
computer equipment and other supplies may be delayed or cease; voice and data
connections we use to share information may be interrupted and brokers who make
a market in our stock may not be able to trade our stock. This list is not
comprehensive. Other interruptions to the normal conduct of business by us, the
nature and extent of which we cannot fully foresee, may also occur. We are
unable to determine the nature or length or effect such interruptions, if any,
may have on us.

         BUSINESS RISKS. As an IT services company, we have benefited from the
Year 2000 problem by providing consultants with the skills necessary to help
address these issues for our clients. We face the risk of reduced business
opportunities, revenue and profits as clients resolve their Year 2000 problem if
Year 2000 assignments are not replaced with other assignments. We believe that
when consultants complete Year 2000 assignments, many of these consultants will
be re-assigned to perform activities delayed by clients while addressing the
Year 2000 problem. In other cases, we will need to find other assignments for
these consultants. We estimate that, at June 30, 1999, approximately 13% of our
consultants were involved in Year 2000 assignments. In addition, some clients
are delaying implementation of new software during the latter half of 1999 to
avoid the risk of introducing non-compliant software into previously tested
systems. It appears these delays, sometimes referred to as "lockdowns," will
only affect a portion of our clients and in most cases only during the fourth
quarter of 1999 and the first quarter of 2000, typically a slow growth period
for us. If more clients impose lockdowns or begin them earlier or extend


                                       22
<PAGE>

their length, our growth and prospects for the balance of 1999 and 2000 will be
adversely affected. As of June 30, 1999, approximately 34% of our consultants
were working with mainframe computer systems.

         LITIGATION RISKS. Approximately 70% of our services involve writing
custom software for clients and maintaining software for clients. Clients may
sue us over work we have performed that causes or fails to fix a Year 2000
problem. This risk exists regardless of the steps we may take to provide error
free Year 2000 services and make our internal systems Year 2000 ready. Any
litigation may have a material adverse effect on our business, financial
condition and results of operations and may distract management's attention from
running the business. This distraction could have further adverse effects on the
business.

         The SEC has directed us to describe our "most reasonably likely worst
case scenario" posed by the Year 2000 issues we face. Based on our current
understanding of the Year 2000 issues facing the Company, we believe our most
reasonably likely worst case scenario is that we will suffer little or no
disruptions or failures in our internal systems, but minor disruptions and
failures among our material clients, suppliers, vendors and financial
institutions. We also expect little or no growth in the last quarter of 1999 due
to normal seasonality and client "lockdowns." Nonetheless, as we learn more from
our material clients, suppliers, vendors and financial institutions, it is
possible that this belief could change for better or worse.

         CONTINGENCY PLANS

         We are developing Year 2000 contingency plans where practical. These
plans address alternatives to electronic processing of candidate resumes, hires
of new employees, terminations of existing employees, payroll, supplier
payments, cash receipts from clients, invoices to clients and initiatives
without e-mail. These plans also address furnishing required reports to clients,
furnishing required governmental reports, gaining access to leased office space,
shipping intracompany correspondence and communicating Company reports. These
plans include stockpiling supplies and equipment, identifying alternative
sources of goods and services and performing certain tasks manually. For
example, we may store paper copies of electronically stored data (such as
candidate resumes) at locations likely to need them if we believe that the data
will not be accessible due to a Year 2000 failure. In some situations, however,
it is not practical to have an effective contingency plan. For example, a
failure by our primary banking institution may interrupt our cash receipts and
our ability to pay our employees in a timely manner. Our contingency plan may
call for paying employees in cash, but may not be practical due the amount of
cash involved, the number of Company locations and the number of employees who
must be paid. Our payroll is currently several million dollars per pay period
paid through 45 locations in 42 metropolitan markets to over 3,000 employees.

         As an investor, you should be aware that the number of Year 2000
failures suffered by us may exceed our ability to address them all at one time.
In addition, significant Year 2000 failures by third parties, including clients,
may jeopardize our financial strength. In severe circumstances, our ability to
continue as a going concern may be threatened or we may fail. We believe,
however, that we are taking reasonable and prudent steps to address the Year
2000 problem based on the information currently available to us. We will
continue to monitor this issue and plan to modify our approach to the problem if
we believe the circumstances warrant such a change.

NEW SYSTEMS IMPLEMENTATION

         The Company has implemented new human resources, payroll and financial
accounting software. These systems provide enhanced capabilities and integration
of information and are believed to be Year 2000 compliant. A combination of
Metro employees and outside consultants implemented these systems. The Company
spent $2.8 million on these systems. The Company capitalized these costs and
will amortize them over seven years.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company has not entered into the market risk sensitive transactions
required to be disclosed under this Item.


                                       23
<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

         At the Annual Meeting of Shareholders of Metro Information
         Services, Inc. held on June 8, 1999, the following matters
         were voted on with the results indicated below.

         1) Election of two Class 3 Directors to serve for a term of
         three years or until a successor is elected.

                                      FOR            WITHHELD
                                      ---            --------
         A. Eugene Loving, Jr.     14,636,031        105,249
         Robert J. Eveleigh        14,624,898        116,382

         The term of office of directors Ray E. Becker, Andrew J.
         Downing and John H. Fain continued after the meeting.

         2) Amendment of the Metro Information Services, Inc. Employee
         Stock Purchase Plan.

                  FOR         AGAINST     ABSTAIN     BROKER NON-VOTES
                  ---         -------     -------     ----------------
               12,603,267     166,970      6,998          1,964,045

         3) Approval of the Amended and Restated Metro Information
         Services, Inc. 1997 Stock Option Plan.

                  FOR         AGAINST     ABSTAIN     BROKER NON-VOTES
                  ---         -------     -------     ----------------
               11,313,626    1,455,866     7,743          1,964,045

         4) Ratification of the appointment of KPMG LLP as Independent
         Auditors for the Company for the year ending December 31,
         1999.

                  FOR         AGAINST     ABSTAIN
                  ---         -------     -------
               14,524,461     213,177      3,642


                                       24
<PAGE>

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

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

                           ( i ) 27 Financial Data Schedule

         (b)      Reports on Form 8-K/A during second quarter of 1999:

                  Report dated February 1, 1999 reporting under Item 2 the
                  acquisition of certain assets and liabilities of The
                  Professionals - Computer Management & Consulting, Inc. and
                  Krystal Solutions, Inc.

                  Report dated March 1, 1999 reporting under Item 2 the
                  acquisition of certain assets and liabilities of Solution
                  Technologies, Inc.


                                       25
<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 30th day of July, 1999.


                                Metro Information Services, Inc.


                              By             /s/ JOHN H. FAIN
                                ---------------------------------------------
                                                 John H. Fain
                                 PRESIDENT AND PRINCIPAL EXECUTIVE OFFICER


                              By          /s/ ROBERT J. EVELEIGH
                                ---------------------------------------------
                                              Robert J. Eveleigh
                                         PRINCIPAL FINANCIAL OFFICER


                                       26