Digital Solutions Inc. Announces First Quarter 1998Results.

SOMERSET, N.J.--(BUSINESS WIRE)--Jan. 22, 1998--

Net Income Up 149%

Digital Solutions, Inc. (Nasdaq:DGSI) ("DSI"), a leading professional employer organization ("PEO"), today announced unaudited financial results for the first fiscal quarter ended December

First Quarter Exceeds Expectations

The Company announced that net income in the first quarter of fiscal 1998 increased 149% to $500,000 or $.03 per share, versus net income of $201,000 or $.01 per share in the first quarter of fiscal 1997. These results exceeded the Company's internal projections. Revenue for the first quarter of fiscal 1998 increased by 9% to $33,662,000, as compared to $30,885,000 in the first quarter of fiscal 1997.

Donald W. Kappauf, President and Chief Executive Officer of DSI, commented, "We are quite pleased with the results of the first quarter, which benefited from the cost savings initiatives we have been implementing. The quarter also benefited from year-end processing activities, particularly W2s and magnetic tapes, produced through our payroll services unit.

"Other areas of strength in the quarter were the Medical Staffing business, which grew its revenues by 47% over the first quarter of last year, and the Contract Staffing Group, which continues to book new high margin business," Mr. Kappauf continued.

Continued Favorable Outlook

New business starts in the quarter for the PEO division of the Company totaled approximately $11,000,000, partially offset by normal client attrition. The Company reported new contracts of over $3,000,000 in its PEO Division (Northeast) that resulted from the successful conversion of existing Payroll clients to the PEO business.

"Looking forward to our next fiscal quarter, we expect the Company to remain on plan based on current levels of business. For the full year, we believe that pretax earnings of $1.6 to $2.0 million, or earnings per share of $.08 to $.10 per share, is reasonably attainable," Mr. Kappauf concluded.

All forward-looking statements are estimates by the Company's management and are subject to various risks and uncertainties that may cause actual results to differ from management's current expectations. Such factors include, but are not limited to, risks associated with the Company's recent losses, ongoing need for a new credit facility and additional capital; changes in government regulations and labor policies; effects of competition and technological changes; dependence upon key personnel; and other risks as detailed from time to time in the Company's SEC filings.

Digital Solutions, Inc. provides comprehensive human resource management services to employers in a wide variety of industries. The Company continues to diversify its capabilities to offer new employment and management related value-added services to its PEO, temporary staffing and payroll service bureau clients. Based in New Jersey, Digital Solutions also has regional offices in New York, Texas and Florida. DSI was the first public company to be accredited by the National Association of Professional Employer Organization. -0-

              DIGITAL SOLUTIONS, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF INCOME
                             (Unaudited)


                                          Three Months Ended
                                              December 31,
                                            1997        1996

Revenues                                 $33,662,000    $30,885,000

Direct operating expenses                 31,060,000     28,370,000

 Gross profit                              2,602,000      2,515,000

Selling, general & administrative
 expenses                                  1,857,000      2,061,000

Depreciation and amortization                169,000        179,000

Income from operations                       576,000        275,000

Other income (expense)
 Interest and other income                    12,000         17,000
 Interest expense                            (88,000)       (91,000)
                                             (76,000)       (74,000)

Income before taxes                          500,000        201,000

Income tax (expense)                            ---            ---

Net income                                $  500,000      $ 201,000

Diluted earnings per common share          $    0.03         $ 0.01

Diluted shares outstanding                19,458,078     19,914,159

Basic earnings per common share          $      0.03     $     0.01

Weighted average shares outstanding       19,194,409     18,964,158

CONTACT: Digital Solutions, Inc.

Donald W. Kappauf, President & CEO

Donald T. Kelly, Vice President Finance & CFO

732/748-1700

or

INVESTOR RELATIONS COUNSEL:

The Equity Group Inc.

Chris Garland

212/836-9610