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SmallCaps Online LLC (formerly SmallCaps Online LLC) Comments on FutureLink’s Deal With Microsoft

Visit SmallCaps Online’s Web Site at www.SmallCapsOnline.com for Detailed Report

New York, NY, May 28, 1999 — SmallCaps Online LLC (formerly SmallCaps Online LLC) commented today on FutureLink’s (OTC BB: FLNK) deal with Microsoft (Nasdaq: MSFT). The full text of this report can be accessed at SmallCaps Online’s web site, at www.SmallCapsOnline.com.

Excerpts from the report follow:

FutureLink Distribution Corp. recently announced that it will offer subscriptions to Microsoft Back Office products such as MS SQL Server, MS Exchange and MS Windows NT Server to the new software rental, or ASP, market (see below for a description of the ASP market). FLNK is the first ASP in the industry to begin a pilot study with MSFT, which we view as a significant validation of FLNK’s business strategy, management team and the quality of service provided. As part of this agreement, MSFT agrees to offer its back-office products on a monthly Server License Subscription basis for at least two years. Benefits to FLNK include:

Potential for Margin Expansion: One of the most significant capital expenditures for FLNK and other ASPs is the build-out of server farms and the licensing of "back-end" server operating systems. We believe FLNK’s agreement with MFST will enable FLNK to price its ASP offerings more competitively, will reduce capital expenditures on server farm build-outs and will allow FLNK to better accommodate short-term users. This should enhance FLNK’s marketing efforts and should provide for margin expansion over time.

Validation for FLNK & ASP Model: We believe MSFT’s decision to offer its Back Office product suite to FLNK on a monthly subscription basis is a very significant endorsement for the ASP market in general, and FLNK specifically. Many enterprise software packages, and "front-end" business office software, are built to run Microsoft operating systems. The ability to offer monthly subscriptions to the Microsoft Back Office systems (which will be essentially transparent to the end-user) should greatly enhance pricing flexibility for FLNK and other ASPs, and expand the breadth of "front-end" applications that can be offered on a rental basis. This appears to be recognition, on the part of Microsoft, of the emerging ASP market and the growing demand by consumers, particularly small businesses which FLNK targets, to license software on a "rental" or "subscription" basis, and to leverage the economies of server-based computing.

FLNK is building a leader in the emerging new industry called Application Service Provision (ASP), or the provision of software applications to users on a rental basis, either over the Internet or through traditional networking means. Independent market research firms estimate that the market for application software rentals will grow from virtually nothing a couple months ago to several billion dollars in two to three years. We continue to recommend purchase of FLNK common stock by investors tolerant of the risks associated with small-cap equity investments.

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SmallCaps Online LLC is a registered investment advisor focused on identifying emerging growth companies in the healthcare and information technology sectors that offer compelling investment opportunities over the long term. By providing comprehensive financial services, including corporate finance, M&A advisory, strategic partnering and communications consulting, the company positions itself to provide a fully integrated package of value-added services to emerging growth companies.

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The information in this press release has been obtained from sources that SmallCaps Online LLC believes to be reliable, but the Company does not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation by SmallCaps Online LLC for the purchase or sale of any securities. SmallCaps Online LLC or any of its affiliates has performed investment banking, consulting or other services for FLNK and may solicit investment banking, consulting or other business from, any company mentioned in this release. SmallCaps Online LLC or any of its affiliates or persons associated with SmallCaps Online LLC may at anytime be long or short any of the securities referred to herein and may make purchases or sales thereof while the Company’s reports are in circulation or posted on the SmallCaps Online LLC web site at www.SmallCapsOnline.com. This material, or any portion thereof, may not be reproduced without prior permission from SmallCaps Online LLC. SmallCaps Online LLC is not responsible for the contents of this document that is intended for electronic transmission and could be thus subjected to tampering or alteration. Copyright © 1999 by SmallCaps Online LLC. All rights reserved.