June 10, 1999
RECOMMENDATION: BUY

FutureLink Distribution Corp. (OTC: FLNKD)

FLNK To Acquire Micro Visions — Synergistic Acquisition Adds Marketing Muscle, Large US Presence, Further Technical Expertise, Revenues & Earnings;

Phil Ladouceur Named Executive Chairman

Exchange Symbol..........................................FLNKD (OTC)
Price of Common Stock (06/09/99).................$7.03
30-Day Average Trading Volume................~100,000
Shares Outstanding (fully-diluted)....approx. 30 million
52-Week High/Low....................................$9.63/$1.19

Address.................250 Sixth Avenue SW, Suite 300
...........................Calgary, Alberta CANADA   T2P 3H7 
Telephone...............................................(877) 216-0001
President & CEO......................................Cameron Chell
VP Finance & CFO....................................Raghu Kilambi
Website............................................www.futurelink.net

Recent Developments

FutureLink Distribution Corp. ("FLNK") announced last week that it had signed a definitive agreement to acquire privately-held Micro Visions, of Irvine, California. Micro Visions is the #1 Citrix Systems reseller and integrator in North America, with approximately 80 employees operating out of six US offices. We believe this is an extremely timely, synergistic acquisition for FLNK for a variety of reasons (see below), and should accelerate growth in FLNK’s ASP offerings. We plan to update our financial model following discussions with FLNK and MV management in the near future, and reiterate our BUY recommendation for investors tolerant of the risks associated with small-cap equity investments.

Micro Visions transaction economics: Under the terms of the agreement, Micro Visions shareholders will receive $12 million in cash and 6 million post-reverse split FLNK common shares upon closing, which is expected to occur in September 1999 (readers should note that the FLNK’s 1-for-5 reverse split became effective last week, and the post-reverse split shares trade under the ticker FLNKD). Micro Vision’s shareholders could receive an additional 2.4 million shares upon achievement of certain performance targets this year, including financial and new customer targets.

Benefits to FLNK: We believe the Micro Vision ("MV") acquisition is very synergistic and extremely beneficial to the FLNK business strategy from a number of perspectives:

• Marketing Muscle: MV is the leading Citrix Systems reseller in North America, with a customer base of over 1300 who are familiar the Citrix operating system (that underpins the FLNK ASP offerings) and have embraced server-based computing. We believe the MV marketing resources will jump-start the FLNK ASP sales effort.

• Expanded US Presence: MV has approximately 80 employees working out of six US offices, including Irvine (headquarters), Atlanta, Las Vegas, Los Angeles, Phoenix and Raleigh/Durham. This greatly expands FLNK’s US presence, which we believe will be the significant "early adopter" marketplace for ASP services. The expanded US presence should also enhance investor relations, public relations and financing opportunities.

• Technical and Management Resources: In addition to the expanded marketing force, the MV acquisition brings to FLNK a strong technical force, and several key senior managers including Glen Holmes, founder and CEO of MV. Mr. Holmes becomes President of FLNK.

• Stronger Financials: MV generated approximately $14 million in revenues in 1998, and was profitable. MV is currently generating revenues at a $20+ million annualized run rate, and is profitable. We believe this will add considerable financing flexibility to FLNK, and the enhanced resources could enhance early market penetration.

We think the FLNK/MV combination is a winner, and are hopeful that the transaction will close in a timely fashion.

Philip R. Ladouceur Named Executive Chairman: On June 3, 1999, FLNK named Phil Ladouceur, 57, as Executive Chairman of the Board. Mr. Ladouceur, formerly an external director, plans to take an active role in the business and strategic development of FLNK. We are very excited about the appointment, as Mr. Ladouceur has an established track record of growing small businesses aggressively, and building shareholder value. On two different occasions in the 1990’s, Mr. Ladouceur had taken small-cap companies (MetroNet and Information Systems Management Ltd), grown them aggressively, and sold them to major corporations (AT&T and IBM, respectively).

Company Background & Overview

FutureLink Distribution Corp. ("FLNK") is at the forefront of two emerging segments of the Information Technology (IT) services industry: Applications Service Provision ("ASP"), and Server-based Computing and Outsourcing. Since its founding in 1996, FLNK has been engaged in the research and development of application software hosting, and server-based (or thin-client) computing solutions. FLNK offers a set of services, it calls "Computer Utility Services," which allow users to compute in a simple, cost effective manner. FLNK is changing the computing paradigm, from one of "ownership" to rental or outsourcing, and is positioned as The Computer Utility CompanyÔ .

The traditional model of network computing consists of computers, each with its own hard drive, and an installed copy of the operating system and multiple software applications. FLNK offers the ability to move to "net-centric," or server-based, computing, whereby all of a client’s files and applications are stored at FLNK’s server farm and accessed remotely via traditional networking connections or the Internet. By hosting applications and storing data on FLNK’s servers, and providing access to these applications or the client’s data via the Internet or traditional networking means, FLNK is able to provide comprehensive computing services in a cost effective manner.

Application Service Provision (ASP) — Rent, don’t buy, Software

Application Service Provision (ASP) is the next wave in computing: the provision of software applications to users on a rental basis, such as price per month, price per desktop, etc. ASPs host the software applications on centralized servers, called server farms. By hosting, ASPs keep the file, print, database and application software on high performance, multi-user enabled servers housed at the server farm. Users can then use thin-client software to connect to the server farm and run the hosted applications. Customer data and information can be stored locally, or hosted at the ASPs server farm, with the highest levels of availability, performance, and security. There are a number of developments that have, and will continue, to drive the ASP market.

• Growth in Server-based Computing, Networking and the Internet — in the last five years there has been explosive growth in server-based computing, the deployment of networks and use of the Internet. Networking, and the Internet, has developed the concept of shared applications and information across desktops, among clients, and across servers. Connectivity of networks to the Internet has created a common infrastructure and one where information can be shared very cost-effectively.
• Standardization of Software — business applications and productivity software is becoming increasingly standardized, rather than customized by business or desktop. This standardization facilitates the rental model.
• Enterprise Software Providers Going Down Market — the enterprise software producers (such as Oracle, SAP, PeopleSoft and Siebel) that develop packaged business applications for large companies need to find ways to increase their market penetration of small and medium-sized businesses. Provision of their applications through ASPs is being implemented or considered by almost all of these vendors
• IT Outsourcing / Scarcity of Talent — businesses are finding it increasingly difficult and expensive to manage IT departments and equipment internally, and the industry of IT outsourcing is poised to grow dramatically. Equipment is expensive, and IT talent is in short supply, making recruiting and retention very costly. According to EDS, the market for IT outsourcing in the United States alone is expected to generate $70 billion by 2000.
• Growth in E-Commerce — e-commerce is growing dramatically, and many companies consider it to be a critical part of their business strategy. Ordering, billing, and payment transaction information is increasingly transmitted over the Internet. There are many forecasts for growth in Internet and e-commerce revenue growth, all of which are staggering. Generally, e-commerce revenues were estimated to be approximately $10 billion in 1998, with most forecasts exceeding $175 billion by 2001.
• Thin Client Capability — FLNK will be able to deliver its services in a "thin client" environment. A thin-client desktop consists of a monitor, CPU, mouse, and keyboard that is connected to a network. Thin clients have no hard drive, CD-ROM, or other moving parts, which greatly reduces maintenance and operating costs to companies; this eliminates the need for constant computer upgrades, reduces the initial capital investment of buying PCs and reduces the time and money spent on computer maintenance.
• Tele-commuting - companies are using the Internet more and more to communicate with employees who are dispersed geographically. Forrester Research estimates that there are presently 30 to 40 million telecommuters and home-based workers in the United States, and the numbers are growing annually.

We believe these trends are becoming more, not less, significant in the market, and their impact will drive demand for the ASP industry.

Risk Considerations

This section of the document is provided to remind potential investors to undertake a prudent level of due diligence prior to making an investment in the securities of FutureLink Distribution Corp. Inc. For a complete description of risks and uncertainties to FLNK’s business, see the "Risk Factors" section in FLNK’s SEC filings, which can be accessed directly from the SEC Edgar filings at www.SEC.gov on the Internet. Other potential risks include:

• Market risk: Investors should consider technical risks common to many small-cap or micro-cap stock investments, and OTC equities, including liquidity levels, small float, risk of dilution, dependence upon key personnel, dependence upon single products or technologies, and the strength of competitors that may be larger, better capitalized and hold dominant market positions.
• Business risk: FLNK has limited experience in emerging business of applications service provision and thin-client computing. Many of its products and services are in the early stage of commercialization. There can be no assurance that FLNK’s business or the markets in which it competes will materialize or achieve the desired levels of revenues or profitability as expected.
• Competitive risk: The emerging ASP industry is expected to be characterize by intense competition, and many perceive the barriers to entry to be low. Added competition could lead to price competition and lower margins.

For Additional Information

Contact SmallCaps Online LLC — 212-554-4158

Sources for Additional Information

The following are website addresses offering related information, and links to other sources of information.

www.FutureLink.net FutureLink’s corporate website

www.SmallCapsOnline.com SmallCaps Online’s site for company information and research

www.aspindustry.org The ASP Industry Consortium’s website

www.SEC.gov U.S. Securities and Exchange Commission, with links to EDGAR filings

www.aspnews.com ASP Industry newsletter

www.greatplains.com Great Plains Software

www.onyxcorp.com Onyx Software Corporation

www.applix.com Applix, Inc.

www.galleoninc.com Galleon Distributed Technologies, Inc.

www.citrix.com Citrix, Inc.

The information in this report has been obtained from sources that we believe to be reliable, but we do 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 its affiliates, has performed investment banking, consulting or other services for or may solicit investment banking, consulting or other business from, any company mentioned in this report. SmallCaps Online LLC or its affiliates or persons associated with SmallCaps Online LLC or its affiliates may at anytime be long or short any of the securities referred to herein and may make purchases or sales thereof while this report is in circulation or posted on the SmallCaps Online LLC website 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 which is intended for electronic transmission and could be thus subjected to tampering or alteration. Copyright © 1999 by SmallCaps Online LLC. All rights reserved.