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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                       FOR ANNUAL AND TRANSITIONAL REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

(Mark One):

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 For the fiscal year ended December 31, 2005

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 For the transition period from ________ to ________

                         COMMISSION FILE NUMBER: 0-22945

                           THE A CONSULTING TEAM, INC.
             (Exact Name of Registrant as Specified in Its Charter)

                NEW YORK                               13-3169913
    (State or Other Jurisdiction of       (I.R.S. Employer Identification No.)
     Incorporation or Organization)

         200 PARK AVENUE SOUTH                       (212) 979-8228
        NEW YORK, NEW YORK 10003            (Registrant's Telephone Number,
(Address of Principal Executive Offices)          Including Area Code)

     Securities registered pursuant to Section 12(b) of the Act: None

     Securities registered pursuant to Section 12(g) of the Act:

                     COMMON STOCK, PAR VALUE $.01 PER SHARE

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [ ] No [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $15,687,797 based on the average of the bid and
asked prices of the registrant's Common Stock on The NASDAQ Capital Market CM on
the last business day of the registrant's most recently completed second fiscal
quarter.

As of March 24, 2006, there were 2,382,301 shares of the registrant's Common
Stock, $.01 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's definitive Proxy Statement for the 2006 Annual
Meeting of Shareholders, which will be filed on or before April 30, 2006, are
incorporated by reference into Part III of this Report. See Item 15 for a list
of exhibits incorporated by reference into this Report.

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                                TABLE OF CONTENTS

<TABLE>
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                                                                                                     Page
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<S>                                                                                                    <C>
PART I   ...........................................................................................    1
Item 1.  Business ..................................................................................    1
Item 1A. Risk Factors ..............................................................................    4
Item 2.  Properties ................................................................................    7
Item 3.  Legal Proceedings .........................................................................    7
Item 4.  Submission of Matters to a Vote of Security Holders .......................................    7
PART II  ...........................................................................................    8
Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters .....................    8
Item 6.  Selected Financial Data ...................................................................    9
Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations .....    9
Item 7A. Quantitative and Qualitative Disclosures About Market Risk ................................   17
Item 8.  Financial Statements and Supplementary Data ...............................................   17
Item 9.  Changes In and Disagreements With Accountants on Accounting and Financial Disclosure ......   17
Item 9A. Controls and Procedures ...................................................................   17
Item 9B. Other Information .........................................................................   17
PART III ...........................................................................................   17
Item 10. Directors and Executive Officers of the Registrant ........................................   17
Item 11. Executive Compensation ....................................................................   19
Item 12. Security Ownership of Certain Beneficial Owners and Management ............................   19
Item 13. Certain Relationships and Related Transactions ............................................   19
Item 14. Principal Accountant Fees and Services ....................................................   20
PART IV  ...........................................................................................   20
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ..........................   20
</TABLE>

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PART I

This Annual Report on Form 10-K contains forward-looking statements. Additional
written and oral forward-looking statements may be made by the Company from time
to time in Securities and Exchange Commission ("SEC") filings and otherwise. The
Company cautions readers that results predicted by forward-looking statements,
including, without limitation, those relating to the Company's future business
prospects, revenues, working capital, liquidity, capital needs, interest costs,
and income are subject to certain risks and uncertainties that could cause
actual results to differ materially from those indicated in the forward-looking
statements due to risks and factors identified from time to time in the
Company's filings with the SEC including those discussed in this Report.

ITEM 1.  BUSINESS

GENERAL

         Incorporated in 1983, The A Consulting Team, Inc., a New York
corporation (the "Company" or "TACT" or the "Registrant") has provided a wide
range of information technology ("IT") consulting, custom application
development and solutions to Fortune 1000 companies and other large
organizations. In August of 1997, TACT became a public company, headquartered in
New York, NY. In addition, TACT has an office in Clark, NJ. The Company supports
all major computer technology platforms and supports client IT projects by using
a broad range of third-party software applications.

         The Company's shares are listed on The NASDAQ Capital Market(CM) under
the symbol "TACX."

INDUSTRY BACKGROUND

         Rapid technological advance, and the wide acceptance and use of the
Internet as a driving force in commerce, accelerated the growth of the IT
industry through 2001. These advances included more powerful and less expensive
computer technology, the transition from predominantly centralized mainframe
computer systems to open and distributed computing environments and the advent
of capabilities such as relational databases, imaging, software development
productivity tools, and web-enabled software. These advances expanded the
benefits that users can derive from computer-based information systems and
improved the price-to-performance ratios of such systems. As a result, an
increasing number of companies were employing IT in new ways, often to gain
competitive advantages in the marketplace, and IT services have become an
essential component of their long-term growth strategies. The same advances that
have enhanced the benefits of computer systems rendered the development and
implementation of such systems increasingly complex. In addition, there was a
shortage of IT consultants qualified to support these systems. Accordingly,
organizations turned to external IT services organizations such as TACT to
develop, support and enhance their internal IT systems. However, during 2002 and
continuing into 2003 there was a slowdown in IT spending coincident with the
general economic slowdown. This resulted in revenue decreases at many IT service
companies, however, IT spending increased in 2004 and this trend has continued
throughout 2005. Accordingly, the Company will continue to expand its sales and
recruiting function in an effort to further increase its revenues in both the
short-term and long-term.

STRATEGY

         The Company's objective is to continue to provide its clients with high
quality, technology-based consulting services in the areas of migrations and
conversions of legacy systems, performance optimization, web enhancements,
custom development, strategic sourcing and enterprise-wide IT consulting,
outsourcing and software solutions. The Company's strategies include the
following key components:

         Cross-sell Additional Services to Existing Clients. By offering
existing clients additional IT consulting services and software, TACT intends to
leverage its existing client base. The Company's relationships with current
clients provide opportunities to market additional services in current and new
geographical markets.

         Expand Client Base. The Company is developing additional client
relationships in geographic markets where the Company maintains offices (New
York, NY and Clark, NJ) through targeted marketing initiatives, participation in
local trade shows, user group meetings and conventions and referrals from
existing clients.

         Acquisitions and Strategic Relationships. On July 19, 2002, the Company
consummated the acquisition of all of the issued and outstanding capital stock
of International Object Technology, Inc. (IOT). IOT was a privately owned,

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professional services firm that provides data management and business
intelligence solutions, technology consulting and project management services.

         On April 11, 2005, the Company completed an investment in an offshore
joint venture, TACT Global Services Private Limited (TGS), an offshore
subsidiary, in order to substantially enhance its offshore presence in its
continuing endeavor to stay competitive in the industry.

         The Company continuously looks for companies and other organizations
that it may acquire or develop other relationships with that are strategic to
the Company's business. The Company has established certain acquisition
criteria. It is primarily interested in companies and organizations that are (i)
established in geographic locations of the Company, or (ii) has a depth of
service offerings that the Company finds attractive or (iii) a customer base
that the Company can cross sell its services into.

         Operational Efficiencies and Cost Reductions. The Company has
restructured its operations and reduced its cost structure by migrating to a
flexible workforce and reducing corporate and general administrative expenses.

TACT OPERATIONS

         CONSULTING. TACT provides a wide range of IT consulting services,
including technology infrastructure advisory services and systems architecture
design for Fortune 1000 companies and other large organizations. These services
account for over 90% of the Company's revenues. The Company's solutions are
based on an understanding of each client's enterprise model. The Company's
accumulated knowledge may be applied to new projects such as planning, designing
and implementing enterprise-wide information systems, database management
services, performance optimization, migrations and conversions, strategic
sourcing, outsourcing and systems integration.

         TACT delivers its IT solutions through TACT Solution Teams composed of
Project Managers, Technical Practice Managers and Technical Specialists. These
professionals possess the project management skills, technical expertise and
industry experience to identify and effectively address a particular client's
technical needs in relation to its business objectives. TACT's focus on
providing highly qualified IT professionals allows the Company to identify
additional areas of the client's business which could benefit from the Company's
IT solutions, thereby facilitating the cross-marketing of multiple Company
services. The Company keeps its Solution Teams at the forefront of emerging
technologies through close interaction with TACT research personnel who identify
innovative IT tools and technologies. As a result, management believes that TACT
Solution Teams are prepared to anticipate client needs, develop appropriate
strategies and deliver comprehensive IT services, thereby allowing the Company
to deliver the highest quality IT services in a timely fashion.

         A Solution Team is typically deployed from one of the Company's offices
in order to provide solutions to its clients by utilizing local resources.
Management's experience has been that the presence established by a local office
improves the Company's ability to attract local clients, as well as its ability
to attract, develop, motivate and retain locally-based IT professionals. The
Company's corporate headquarters supports its Clark, NJ office and performs many
functions, which allow the office to focus on recruiting, sales and marketing.

         Business Process Outsourcing. During 2004 TACT began to provide
business process outsourcing services (BPO) to its clients. The Company believes
that this is an area where substantial growth opportunities exist. In 2005, the
Company experienced only minimal growth in this area and plans on focusing
resources on growing this line of business in the future.

         SOFTWARE. TACT markets and distributes a number of software products
developed by independent software developers. The Company believes its
relationships with over 70 software clients throughout the country provide
opportunities for the delivery of additional TACT consulting and training
services. The software products offered by TACT are developed in the United
States, England and Finland and marketed primarily through trade shows, direct
mail, telemarketing, client presentations and referrals. Revenue from the sale
of software is ancillary to the Company's total revenues.

CLIENTS

         The Company's clients consist primarily of Fortune 1000 companies and
other large organizations. The Company's clients operate in a diverse range of
industries with a concentration in the pharmaceutical, financial services, and
automotive industries. Four of the Company's top ten clients measured by revenue
for the year ended December 31, 2005 had been clients for over five years. In
2005, three of the Company's largest customers were Pfizer, Chase Mellon and
BMW NA,

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who represented 21%, 20% and 15% of revenues respectively. Besides these
customers, no other customer represented greater than 10% of the Company's
revenues. During 2006, the Company expects that a significant portion of its
revenues will continue to come from these clients.

         Greater than 99% of all of the Company's revenue is derived from
sources within the United States.

NEW TECHNOLOGIES

         TACT continuously investigates new technologies developed by third
parties to determine their viability and potential acceptance in the Fortune
1000 marketplace. The Company's staff works diligently to identify those
"bleeding-edge" technologies that will succeed as "leading-edge" business
solutions. TACT personnel are highly qualified in delivering these technical
solutions.

SALES AND MARKETING

         TACT's marketing strategy is to develop long-term partnership
relationships with existing and new clients that will lead to the Company
becoming a preferred provider of IT services. The Company seeks to employ a
"cross selling" approach where appropriate to expand the number of services
utilized by a single client. Other sales and marketing methods include client
referrals, networking and attending trade shows. At December 31, 2005, the
Company employed 7 sales and marketing personnel. Another marketing resource,
which has also served the Company in its recruiting efforts, is the Company's
web site at http://www.tact.com. The web site provides information about TACT
consulting services and software products to the IT community.

COMPETITION

         The market for IT consulting services is intensely competitive. It is
affected by rapid technological advances and includes a large number of
competitors. The Company's competitors include the current or former consulting
divisions of "Big Four" accounting firms, systems consulting and implementation
firms, application software development firms, management consulting firms,
divisions of large hardware and software companies, offshore outsourcing
companies and niche providers of IT services. Many of these competitors have
significantly greater financial, technical and marketing resources and greater
name recognition than the Company. In addition, the Company competes with its
clients' internal resources, particularly when these resources represent an
existing cost to the client. Such competition may impose additional pricing
pressures on the Company.

         The Company believes that the principal competitive factors in the IT
services market include breadth of services offered, technical expertise,
knowledge and experience in the industry, quality of service and responsiveness
to client needs. The Company believes it competes primarily based on its
in-depth technical expertise, timely delivery of products and services and
quality of service.

         A critical component of the Company's ability to compete in the
marketplace is its ability to attract, develop, motivate and retain skilled
professionals. The Company believes it can compete favorably in hiring such
personnel by offering competitive compensation packages and attractive
assignment opportunities.

HUMAN RESOURCES

         At December 31, 2005, the Company had 90 personnel, of whom 52 were
consultants, 7 were recruiting personnel, 7 were sales and marketing personnel,
5 were technical and customer service personnel and 19 were executive, financial
and administrative personnel. None of the Company's employees are represented by
a labor union, and the Company has never incurred a work stoppage. In addition
to the Company's 90 personnel, the Company was utilizing the services of 67
independent contractors at December 31, 2005. These independent contractors act
as consultants and they are not employees of the Company. There can be no
assurance that the services of these independent contractors will continue to be
available to the Company on terms acceptable to the Company.

INTELLECTUAL PROPERTY RIGHTS

         The Company relies upon a combination of nondisclosure and other
contractual arrangements and trade secret, copyright and trademark laws to
protect its proprietary rights and the proprietary rights of third parties from
whom the Company licenses intellectual property. The Company has entered into
confidentiality agreements with its employees and

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limits distribution of proprietary information. There can be no assurance,
however, that the steps taken by the Company in this regard will be adequate to
deter misappropriation of proprietary information or that the Company will be
able to detect unauthorized use and take appropriate steps to enforce its
intellectual property rights. In addition, the Company is aware of other users
of the term "TACT" and combinations including "A Consulting," which users may be
able to restrict the Company's ability to establish or protect its right to use
these terms. The Company has in the past been contacted by other users of the
term "TACT" alleging rights to the term. However, the Company has completed the
application process for protection of certain marks, including "TACT" and "The A
Consulting Team."

         All ownership rights to software developed by the Company in connection
with a client engagement are typically assigned to the client. In limited
situations, the Company may retain ownership or obtain a license from its
client, which permits the Company or a third party to market the software for
the joint benefit of the client and the Company or for the sole benefit of the
Company.

SEASONALITY

         The Company's business has not been affected by seasonality.

ITEM 1A. RISK FACTORS

FACTORS THAT COULD AFFECT OPERATING RESULTS

         Statements included in Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations and elsewhere in this document
that do not relate to present or historical conditions are "forward-looking
statements" within the meaning of that term in Section 27A of the Securities Act
of 1933, as amended, and in Section 21E of the Securities Exchange Act of 1934,
as amended. Additional oral or written forward-looking statements may be made by
the Company from time to time, and such statements may be included in documents
that are filed with the SEC. Such forward-looking statements involve risk and
uncertainties that could cause results or outcomes to differ materially from
those expressed in such forward-looking statements. Forward-looking statements
may include, without limitation, statements made pursuant to the safe harbor
provision of the Private Securities Litigation Reform Act of 1995. Words such as
"believes," "forecasts," "intends," "possible," "expects," "estimates,"
"anticipates," or "plans" and similar expressions are intended to identify
forward-looking statements. The Company cautions readers that results predicted
by forward-looking statements, including, without limitation, those relating to
the Company's future business prospects, revenues, working capital, liquidity,
capital needs, interest costs, and income are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
indicated in the forward-looking statements, due to the following factors, among
other risks and factors identified from time to time in the Company's filings
with the SEC. Among the important factors on which such statements are based are
assumptions concerning the anticipated growth of the information technology
industry, the continued needs of current and prospective customers for the
Company's services, the availability of qualified professional staff, and price
and wage inflation.

         OPERATING LOSSES

         The Company has incurred operating losses in 2005 and 2003. In the year
ended December 31, 2005, the Company had an operating loss of $461,000 and net
loss of $484,000. In the year ended December 31, 2003, the Company had an
operating loss of $42,000 and net loss of $123,000. There is no guarantee that
the Company can achieve or sustain profitability on a quarterly or annual basis
in the future. If revenues grow slower than anticipated, or if operating
expenses exceed expectations or cannot be adjusted accordingly the Company could
experience losses and the results of operations and financial condition would be
materially and adversely affected.

         CAPITAL REQUIREMENTS

         The Company may be unable to meet its future capital requirements. The
Company may require additional financing in the future in order to continue to
implement its product and services development, marketing and other corporate
programs. The Company may not be able to obtain such financing or obtain it on
acceptable terms. Without additional financing, the Company may be forced to
delay, scale back or eliminate some or all of its product and services
development, marketing and other corporate programs. If the Company is able to
obtain such financing, the terms may contain restrictive covenants that might
negatively affect its shares of Common Stock, such as limitations on payments of
dividends or, in the

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case of a debt financing, reduced earnings due to interest expenses. Any further
issuance of equity securities would likely have a dilutive effect on the holders
of its shares of Common Stock. Its business, operating results and financial
condition may be materially harmed if revenues do not develop or grow slower
than the Company anticipates, if operating expenses exceed the Company's
expectations or cannot be reduced accordingly, or if the Company cannot obtain
additional financing.

         DEPENDENCE ON LIMITED NUMBER OF CLIENTS

         The Company derives a significant portion of its revenues from a
relatively limited number of clients primarily located in the New York/New
Jersey metropolitan area of the United States. Adverse economic conditions
affecting this region could have an adverse effect on the financial condition of
its clients located there, which in turn could adversely impact its business and
future growth. Revenues from its ten most significant clients accounted for a
majority of its revenues for each of the three years ended December 31, 2005. In
each of the last three years, the Company had at least one customer with
revenues exceeding 10% of the Company's revenues. For the year ended December
31, 2005, the Company had three customers which accounted for 21%, 20% and 15%
of revenues, respectively. For the year ended December 31, 2004, the Company had
two customers which accounted for 20% and 19% of revenues, respectively. For the
year ended December 31, 2003, the Company had one customer which represented 28%
of revenues. Besides these customers, no other customer represented greater than
10% of the Company's revenues. In any given year, its ten most significant
customers may vary based upon specific projects for those clients during that
year. There can be no assurance that the Company's significant clients will
continue to engage it for additional projects or do so at the same revenue
levels. Clients engage the Company on an assignment-by-assignment basis, and a
client can generally terminate an assignment at any time without penalties. The
loss of any significant customer could have a material adverse effect on the
Company's business, results of operations and financial condition. A failure of
the Company to develop relationships with new customers could have a material
adverse effect on the Company's business, results of operations and financial
condition.

         PROJECT RISK

         The Company's projects entail significant risks. Many of its
engagements involve projects that are critical to the operations of its clients'
businesses and provide benefits that may be difficult to quantify. The Company's
failure or inability to meet a client's expectations in the performance of the
Company's services could result in a material adverse change to the client's
operations and therefore could give rise to claims against the Company or damage
its reputation, adversely affecting its business, results of operations and
financial condition.

         RAPID TECHNOLOGICAL CHANGE

         The Company's business is subject to rapid technological change and is
dependent on new solutions. Its success will depend in part on its ability to
develop information technology solutions to meet client expectations, and offer
software services and solutions that keep pace with continuing changes in
information technology, evolving industry standards, changing client preferences
and a continuing shift to outsourced solutions by clients. The Company cannot
assure you that it will be successful in adequately addressing the outsourcing
market or other information technology developments on a timely basis or that,
if addressed, the Company will be successful in the marketplace. The Company
also cannot assure you that products or technologies developed by others will
not render its services uncompetitive or obsolete. Its failure to address these
developments could have a material adverse effect on its business, results of
operations and financial condition.

         POSSIBILITY THAT CUSTOMERS MAY NOT DO BUSINESS WITH THE COMPANY

         The Company's existing customers may decide not to continue to do
business with the Company, and potential customers may decide not to engage the
Company, or may conduct business with the Company on terms that are less
favorable than those currently extended, due to the Company's operating losses
in two of the past three years. In those events, the Company's net revenues
would decrease, and the Company's business would be adversely affected.

         BILLING MARGINS

         The Company's ability to maintain billing margins is uncertain. It
derives revenues primarily from the hourly billing of consultants' services and,
to a lesser extent, from fixed-price projects. Its most significant cost is
project personnel cost, which consists of consultant salaries and benefits.
Thus, its financial performance is primarily based upon billing margin (billable
hourly rate less the consultant's hourly cost) and personnel utilization rates
(number of days worked by a consultant during a two-week billing cycle divided
by the number of billing days in that cycle). The gross margin decreased
slightly in 2005 due to the mix of time and material work compared to fixed
price projects, and was not affected by the

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consultant utilization rate, which remained at the same level (89% in 2005 and
89% in 2004). The gross margin increased in 2004 due to a higher consultant
utilization rate (89% in 2004 compared to 79% in 2003), and higher margin on
fixed price contracts. The gross margin decreased in 2003 due to a lower
consultant utilization rate (79% in 2003 compared to 81% in 2002). There can be
no assurance, however, that the Company's revenues will continue to be billed
primarily on a time and materials basis or that the Company's cost containment
and workforce rationalization effects will continue to provide positive results.
In addition, during the past three years the Company's clients have been adverse
to increases in any costs of the Company's services.

         MANAGING GROWTH

         The Company may have difficulty managing its growth. Its expansion is
dependent upon, among other things,

         o    its ability to hire and retain consultants as employees or
              independent consultants,

         o    its ability to identify suitable new geographic markets with
              sufficient demand for its services, hire and retain skilled
              management, marketing, customer service and other personnel, and
              successfully manage growth, including monitoring operations,
              controlling costs and maintaining effective quality and service
              controls, and

         o    if the Company consummates additional acquisitions, its ability
              to successfully and profitably integrate any acquired businesses
              into its operations.

         If the Company's management is unable to manage growth or new employees
or consultants are unable to achieve anticipated performance levels, its
business, results of operations and financial condition could be materially
adversely affected.

         FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

         The Company's quarterly results of operations are variable. Variations
in revenues and results of operations occur from time to time as a result of a
number of factors, the size and significance of client engagements commenced and
completed during a quarter, the number of business days in a quarter, consultant
hiring and utilization rates and the timing of corporate expenditures. The
timing of revenues is difficult to forecast because the sales cycle can be
relatively long and may depend on such factors as the size and scope of
assignments and general economic conditions. A variation in the number of client
assignments or the timing of the initiation or the completion of client
assignments, particularly at or near the end of any quarter, can cause
significant variations in results of operations from quarter to quarter and can
result in losses to it. In addition, its engagements generally are terminable by
the client at any time without penalties. Although the number of consultants can
be adjusted to correspond to the number of active projects, the Company must
maintain a sufficient number of senior consultants to oversee existing client
projects and to assist with its sales force in securing new client assignments.
An unexpected reduction in the number of assignments could result in excess
capacity of consultants and increased selling, general and administrative
expenses as a percentage of revenues. The Company has also experienced, and may
in the future experience, significant fluctuations in the quarterly results of
its software sales as a result of the variable size and timing of individual
license transactions, competitive conditions in the industry, changes in
customer budgets, and the timing of the introduction of new products or product
enhancements. In the event that its results of operations for any period are
below the expectation of market analysts and investors, the market price of its
shares of Common Stock could be adversely affected.

         VOLATILITY OF STOCK PRICE

         The Company's Common Stock may be subject to wide fluctuations in price
in response to variations in quarterly results of operations and other factors,
including acquisitions, technological innovations and general economic or market
conditions. In addition, stock markets have experienced extreme price and volume
trading volatility in recent years. This volatility has had a substantial effect
on the market price of many technology companies and has often been unrelated to
the operating performance of those companies. This volatility may adversely
affect the market price of its Common Stock. Additionally, there can be no
assurance that a trading market for the Common Stock will be sustained.

         COMPETITION

         The market for information technology services includes a large number
of competitors, is subject to rapid change and is highly competitive. Its
primary competitors include participants from a variety of market segments,
including the

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current and former consulting divisions of the "Big Four" accounting firms,
interactive advertising agencies, web development companies, systems consulting
and implementation firms, application software firms and management consulting
firms. Many of these competitors have significantly greater financial, technical
and marketing resources and greater name recognition than the Company. In
addition, the Company competes with its clients' internal resources,
particularly when these resources represent a fixed cost to the client. In the
future, such competition may impose additional pricing pressures on the Company.
The Company cannot assure you that it will compete successfully with its
existing competitors or with any new competitors.

         INTELLECTUAL PROPERTY RIGHTS

         The Company's business includes the development of custom software
applications in connection with specific client engagements. Ownership of such
software is generally assigned to the client. The Company relies upon a
combination of nondisclosure and other contractual arrangements and trade
secret, copyright and trademark laws to protect its proprietary rights and the
proprietary rights of third parties from whom the Company license intellectual
property. The Company enters into confidentiality agreements with its employees
and limits distribution of proprietary information. However, the Company cannot
assure you that the steps taken by it in this regard will be adequate to deter
misappropriation of proprietary information or that the Company will be able to
detect unauthorized use and take appropriate steps to enforce its intellectual
property rights. The Company is subject to the risk of litigation alleging
infringement of third-party intellectual property rights. Any such claims could
require it to spend significant sums in litigation, pay damages, develop
non-infringing intellectual property or acquire licenses to the intellectual
property, which is the subject of the asserted infringement. In addition, the
Company is aware of other users of the term "TACT" and combinations including "A
Consulting," which users may be able to restrict the Company's ability to
establish or protect its right to use these terms. The Company has in the past
been contacted by other users of the term "TACT" alleging rights to the term.
The Company has completed filings with the U.S. Patent and Trademark Office in
order to protect certain marks, including "TACT" and "The A Consulting Team."
Our inability or failure to establish rights to these terms or protect our
rights may have a material adverse effect on our business, results of operations
and financial condition.

         GOING CONCERN

         The Company's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. For the year ended
December 31, 2005 the Company reported a net loss of $484,000. For the year
ended December 31, 2004 the Company reported net income of $1.2 million. For the
year ended December 31, 2003, the Company reported a net loss of $123,000.
Additionally, the Company has an accumulated deficit of $28 million at December
31, 2005. The Company believes that its continuing focus on cost reductions,
together with a number of other operational changes, has resulted in an improved
financial condition. There can be no assurance that the Company will be
profitable in future years.

ITEM 2.  PROPERTIES

         The Company's executive office is located at 200 Park Avenue South, New
York, NY 10003. The Company's executive office is approximately 6,000 square
feet and is located in a leased facility with a term expiring in July 31, 2007.
The Company also leases approximately 7,000 square feet in a facility in Clark,
NJ. The lease on this facility expires on August 31, 2007.

ITEM 3.  LEGAL PROCEEDINGS

         The Company is not involved in any significant legal proceedings.

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

         No matters were submitted to a vote of the Company's security holders
during the fourth quarter of the year ended December 31, 2005. The Company plans
to hold its 2006 Annual Shareholder Meeting in the second quarter of 2006.

                                        7
<PAGE>

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

PRICE RANGE OF COMMON STOCK

         The Company's Common Stock is currently listed on The NASDAQ Capital
MarketCM ("NASDAQ") under the symbol "TACX." TACT completed an initial public
offering of its Common Stock on August 8, 1997 and was listed on the NASDAQ
National Market. Prior to that date, there was no market for the Company's
Common Stock. In August 2002, the Company's common stock transitioned to the
NASDAQ Capital Market CM.

         On January 7, 2004, the Company effected a one-for-four reverse stock
split of its common stock. Accordingly, the share and per share data throughout
this document have been retroactively adjusted to reflect the reverse stock
split.

         The following table sets forth the quarterly range of high and low bid
prices of the Company's Common Stock since January 1, 2004 as reported by
NASDAQ:

                2004                     HIGH      LOW
                ---------------------   -------   ------
                First Quarter           $  4.24   $ 3.24
                Second Quarter             7.40     3.21
                Third Quarter              7.24     4.76
                Fourth Quarter             7.50     5.70

                2005                     HIGH      LOW
                ---------------------   -------   ------
                First Quarter           $ 12.10   $ 5.96
                Second Quarter            15.00     8.00
                Third Quarter             18.75     3.32
                Fourth Quarter             5.00     3.00

DIVIDENDS

         The Company has not paid any cash dividends on its Common Stock.
However, on January 20, 2005 the Company's Board of Directors authorized a $0.75
dividend on the Company's common stock and preferred stock to shareholders of
record as of March 21, 2005. The dividend was contingent upon the consummation
of share exchange transaction between the Company and Vanguard Info-Solutions
Corporation.

         On August 4, 2005, the Company terminated the Share Exchange Agreement
with Vanguard Info-Solutions Corporation and its stockholders and the Stock
Purchase Agreement with Oak Finance Investments Limited, pursuant to the terms
of each agreement. Therefore, the $0.75 dividend was not, and will not, be paid
to stockholders.

         The Company is prohibited from paying dividends on its stock due to
restrictions under the Loan and Security Agreement between the Company and
Keltic Financial Partners, L.P. Keltic has consented to the payment of dividends
on the Series A and Series B Preferred Stock, provided an event of default does
not exist. All previously outstanding Series A and Series B Preferred Stock was
converted into common stock in 2005.

HOLDERS

         The Company estimates that there were approximately 11 holders of
record of the Company's Common Stock as of March 21, 2006. The Company believes
that the number of beneficial shareholders exceeds 600.

RECENT SALES OF UNREGISTERED SECURITIES

         None.

                                        8
<PAGE>

EQUITY COMPENSATION PLAN INFORMATION

         This information is incorporated by reference from the Company's Proxy
Statement for the Annual Meeting of Shareholders to be held in 2006. The Proxy
Statement shall be filed with the SEC on or before April 30, 2006.

ITEM 6.  SELECTED FINANCIAL DATA

         The following table contains certain financial and operating data and
is qualified by the more detailed Consolidated Financial Statements and Notes
thereto included herein. The selected financial data in the table is derived
from the Company's Consolidated Financial Statements and Notes thereto, which
includes financial data from IOT from the date of acquisition on July 19, 2002
and from TGS from the date of acquisition on September 30, 2005. The selected
financial data should be read in conjunction with the Financial Statements and
Notes thereto and other financial information included herein.

                             SELECTED FINANCIAL DATA
           (IN THOUSANDS, EXCEPT NUMBER OF SHARES AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                                        -----------------------------------------------------------------------
                                           2005           2004          2003            2002           2001
                                        -----------    -----------   -----------     -----------    -----------
<S>                                     <C>            <C>           <C>             <C>            <C>
STATEMENT OF OPERATIONS DATA:
  Revenues                              $    26,432    $    25,035   $    21,646     $    24,009    $    36,227
  (Loss) Income from operations                (461)         1,360           (42)           (130)       (13,472)
  Other income (expense):
  Gain from extinguishment of debt                -              -             -              49            249
  Net (loss) income                            (484)         1,237          (123)            204        (13,651)
  Net (loss) income per share
    Basic                               $     (0.22)   $      0.57   $     (0.07)(1) $      0.10(1) $     (7.67)(1)
    Diluted                             $     (0.22)   $      0.53   $     (0.07)(1) $      0.10(1) $     (7.67)(1)
  Weighted average shares used in per
   share calculation - basic              2,285,874      2,110,072     2,098,810 (1)   1,923,615(1)   1,779,217 (1)
  Weighted average shares used in per
   share calculation - diluted            2,285,874      2,312,021     2,098,810 (1)   1,996,672(1)   1,779,217 (1)

BALANCE SHEET DATA
  Total assets                          $     8,493    $     8,650   $     7,374     $     8,046    $     8,957
  Long-term liabilities                           -             13           231             386             53
  Shareholders' equity                        6,205          6,423         5,193           5,325          4,119
  Number of shares outstanding at
   year end                               2,361,333      2,122,647     2,107,967 (1)   2,096,717(1)   1,779,217 (1)
</TABLE>

(1)  All share and per share amounts have been restated to reflect the one for
     four reverse stock split of the Company's common stock, which occurred on
     January 7, 2004

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         The following discussion and analysis of significant factors affecting
the Company's operating results and liquidity and capital resources should be
read in conjunction with the accompanying consolidated financial statements and
related notes.

                                        9
<PAGE>

OVERVIEW

         Since 1983, TACT has provided IT services and solutions to Fortune 1000
companies and other large organizations. In 1997, TACT became a public company
(NASDAQ Capital Market CM: TACX), headquartered in New York, NY. In addition,
TACT has an office in Clark, NJ.

         Rapid technological advance, and the wide acceptance and use of the
Internet as a driving force in commerce, accelerated the growth of the IT
industry through 2001. These advances included more powerful and less expensive
computer technology, the transition from predominantly centralized mainframe
computer systems to open and distributed computing environments and the advent
of capabilities such as relational databases, imaging, software development
productivity tools, and web-enabled software. These advances expanded the
benefits that users can derive from computer-based information systems and
improved the price-to-performance ratios of such systems. As a result, an
increasing number of companies were employing IT in new ways, often to gain
competitive advantages in the marketplace, and IT services have become an
essential component of their long-term growth strategies. The same advances that
have enhanced the benefits of computer systems rendered the development and
implementation of such systems increasingly complex. In addition, there was a
shortage of IT consultants qualified to support these systems. Accordingly,
organizations turned to external IT services organizations such as TACT to
develop, support and enhance their internal IT systems. However, during 2002 and
continuing into 2003 there was a slowdown in IT spending coincident with the
general economic slowdown. This resulted in revenue decreases at many IT service
companies, however, IT spending increased in 2004 and this trend has continued
throughout 2005. Accordingly, the Company will continue to expand its sales and
recruiting function in our effort to further increase its revenues in both the
short-term and long-term.

         TACT is an end-to-end IT solutions and services provider focused on
leveraging existing systems and data. The Company's goal is to empower customers
through the utilization of technology to reduce costs, improve services and
increase revenues. The Company delivers migrations and conversions of legacy
systems, web enablement of existing systems, customer development, performance
optimization, migrations and conversions, outsourcing, strategic sourcing and
enterprise wide IT consulting, and software solutions. In addition, TACT
established TACT Global Services Private Limited (TGS), an offshore subsidiary,
in order to substantially enhance its offshore presence in its continuing effort
to stay competitive in the industry.

         Over 61% of the Company's consulting services revenues were generated
from the hourly billing of its consultants' services to its clients under time
and materials engagements, with the remainder generated under fixed-price
engagements for 2005. The Company does not expect that the percentage of fixed
fee contracts will vary significantly.

         TACT provides clients with enterprise-wide information technology
consulting services and software products. TACT solutions cover the entire
spectrum of IT needs, including applications, data, and infrastructure. TACT
provides complete project life-cycle services--from application and system
design, through development and implementation, to documentation and training.
Strategic alliances with leading software vendors ensure that TACT solutions are
dependable and within the mainstream of industry trends. These partnerships
allow TACT to provide a wide variety of business technology solutions such as
enterprise reporting solutions, data warehousing, systems strategies,
application and database conversions, and application development services.

         When TACT is engaged by its clients to implement IT solutions or
services it uses its Smart Approach. TACT's Smart Approach is a leading edge set
of end-to-end solutions and services that include Strategy, Methodology,
Architecture, Resources and Tools. The Strategy is developed together with the
client to ensure that the client's goals and objectives are met. The Methodology
is a Tried and True TACT Methodology that is followed in order to implement the
Strategy. The solutions and services are built on a robust Architecture. Utilize
highly qualified TACT Resources and Exploits best-of-breed Tools.

         The Company established standard-billing guidelines for consulting
services based on the type of service offered. Actual billing rates are
determined on a project-by-project basis and may vary from the standard
guidelines. The Company typically bills its clients for time and materials
services on a semi-monthly basis. Arrangements for fixed-price engagements are
made on a case-by-case basis. Consulting services revenues generated under time
and materials engagements are recognized as those services are provided.
Revenues from fixed fee contracts are recorded when work is performed on the
basis of the proportionate performance method, which is based on costs incurred
to date relative to total estimated costs.

         The Company's most significant operating cost is its personnel cost,
which is included in cost of revenues. As a result, the Company's operating
performance is primarily based upon billing margins (billable hourly rate less
the consultant's hourly cost) and consultant utilization rates (number of days
worked by a consultant during a semi-monthly billing cycle

                                       10
<PAGE>

divided by the number of billing days in that cycle). During 2000 and the first
half of 2001, the Company's margins were adversely affected by a decrease in
billing rates and a reduction in consultant utilization rate; however, gross
margins began to improve in the second half of 2001 and have continued to
improve through 2005, primarily due to improved utilization rates and decreases
in consultant costs. Large portions of the Company's engagements are on a time
and materials basis. While most of the Company's engagements allow for periodic
price adjustments to address, among other things, increases in consultant costs,
during 2003, 2004, and 2005 clients have been adverse to accepting cost
increases. TACT also actively manages its personnel utilization rates by
constantly monitoring project requirements and timetables. Through the Company's
cost containment and work force rationalization efforts TACT's utilization rates
began to improve in the second half of 2001 and continued through 2005. As
projects are completed, consultants either are re-deployed to new projects at
the current client site or to new projects at another client site or are
encouraged to participate in TACT's training programs in order to expand their
technical skill sets. TACT carefully monitors consultants that are not utilized
and has established guidelines for the amount of non-billing time that it allows
before a consultant is terminated.

         Historically, the Company has also generated revenues by selling
software licenses. In addition to initial software license fees, the Company
also derives revenues from the annual renewal of software licenses. Revenues
from the sale of software licenses are recognized upon delivery of the software
to a customer, because future obligations associated with such revenue are
insignificant. The revenues from the sales of software is ancillary to the
Company's total revenues.

         On July 19, 2002, the Company, acquired all of the common stock of
International Object Technology, Inc. (IOT) for a combination of deferred cash
consideration of $650,000 and 317,500 shares of TACT unregistered Common Stock,
which has been retroactively adjusted to reflect the one-for-four reverse stock
split that occurred on January 7, 2004 and was valued at $635,000. The
acquisition of IOT was accounted for using the purchase method of accounting.
Accordingly, the results of operations of IOT are included in the Company's
consolidated results of operation from the date of acquisition. The purchase
price of the acquisition exceeded the fair market value of the net assets
acquired, resulting in the recording of goodwill of $1,181,520 and other
identifiable intangibles of $312,000 with the identifiable intangible assets
being amortized over a three year period on a straight line basis. IOT was a
privately owned, professional services firm that provided data management and
business intelligence solutions, technology consulting and project management
services. The acquisition increased the depth of the Company's services and
solution offerings and provided the Company with cross-selling opportunities.

         On April 11, 2005, the Company completed an investment in an offshore
joint venture, TACT Global Services Private Limited (TGS), in the amount of
$250,000, which represented approximately a 68% ownership. A minority partner
invested $100,000 for the remaining 32% ownership. In September 2005, the
Company increased its ownership to 100% by repurchasing the minority partners
investment for $100,000. The Company has consolidated the results of TGS in its
financial statements for the period from September 2005 to December 31, 2005,
and recorded the Company's proportionate ownership share of the results of TGS
from April 11, 2005 to September 2005.

         On January 21, 2005, the Company entered into a Share Exchange
Agreement (the "Share Exchange Agreement") with Vanguard Info-Solutions
Corporation, a New Jersey corporation ("Vanguard"), the Vanguard shareholders
and the authorized representative of the Vanguard shareholders named therein
providing for an exchange of 7,312,796 shares of the Company's common stock for
all of the issued and outstanding shares of capital stock of Vanguard (the
"Share Exchange"). Additionally, on January 21, 2005, the Company entered into a
Stock Purchase Agreement (the "Stock Purchase Agreement") with Oak Finance
Investments Limited ("Oak"), a British Virgin Islands company, providing for the
sale of between 625,000 and 1,250,000 shares of the Company's common stock to
Oak at a cash purchase price of $8.00 per share (the "Share Issuance"). The
Company's Chairman and CEO, Mr. Shmuel BenTov also entered into an agreement
under which he agreed to sell all of his shares of TACT capital stock to Oak in
a separate transaction at $10.25 per share. These transactions required the
approval of a majority of TACT's shares of common stock and preferred stock
voting as a single class.

         On May 5, 2005, the Company announced that its Board of Directors voted
to postpone its 2005 annual shareholders' meeting scheduled for May 5, 2005. The
Company's Board of Directors had determined that the disclosure in the proxy
statement relating to the shareholders' meeting should be amended to describe
certain terms and implications of the contemplated financing that Oak intended
to enter into in order to finance its commitments relating to the Share Issuance
and its purchase of Mr. BenTov's shares of TACT common stock. The Company held
its annual shareholders meeting on July 26, 2005 at which time the matters set
forth in the proxy statement were approved by the shareholders.

         On August 4, 2005, the Company terminated the Share Exchange Agreement
with Vanguard Info-Solutions Corporation and its stockholders and the Stock
Purchase Agreement with Oak Finance Investments Limited, pursuant to the

                                       11
<PAGE>

terms of each agreement. The Company's Board of Directors felt that this action
was in the best interest of the shareholders, employees and its clients.

CRITICAL ACCOUNTING POLICIES

         The methods, estimates and judgments we use in applying our most
critical accounting polices have a significant impact on the results we report
in our consolidated financial statements. We evaluate our estimates and
judgments on an on-going basis. We base our estimates on historical experience
and on assumptions that we believe to be reasonable under the circumstances. Our
experience and assumptions form the basis for our judgments about the carrying
value of assets and liabilities that are not readily apparent from other
sources. Actual results may vary from what we anticipate and different
assumptions or estimates about the future could change our reported results. We
believe the following accounting policies are the most critical to us, in that
they are important to the portrayal of our financial statements and they require
our most difficult, subjective or complex judgments in the preparation of our
consolidated financial statements.

Goodwill and Intangible Assets

         Goodwill acquired in a purchase and determined to have an indefinite
useful life is not amortized, but instead tested for impairment at least
annually in accordance with the provisions of SFAS No. 142. The Company's
goodwill is also evaluated and tested on a periodic basis by an independent
third party. If it is determined by the Company that goodwill has been impaired
it will be written down at that time.

         The Company's useful life of its intangible assets has been evaluated
and it was determined that they will be amortized over a three year period.

Revenue Recognition

         Consulting revenues are recognized as services are provided. The
Company primarily provides consulting services under time and material
contracts, whereby revenue is recognized as hours and costs are incurred.
Customers for consulting revenues are billed on a weekly, semi-monthly and
monthly basis. Revenues from fixed fee contracts are recorded when work is
performed on the basis of the proportionate performance method, which is based
on costs incurred to date relative to total estimated costs. Any anticipated
contract losses are estimated and accrued at the time they become known and
estimable. Unbilled accounts receivables represent amounts recognized as revenue
based on services performed in advance of customer billings. Revenue from sales
of software licenses is recognized upon delivery of the software to a customer
because future obligations associated with such revenue are insignificant.

Allowance for Doubtful Accounts

         The Company monitors its accounts receivable balances on a monthly
basis to ensure that they are collectible. On a quarterly basis, the Company
uses its historical experience to accurately determine its accounts receivable
reserve. The Company's allowance for doubtful accounts is an estimate based on
specifically identified accounts as well as general reserves. The Company
evaluates specific accounts where it has information that the customer may have
an inability to meet its financial obligations. In these cases, management uses
its judgment, based on the best available facts and circumstances, and records a
specific reserve for that customer against amounts due to reduce the receivable
to the amount that is expected to be collected. These specific reserves are
reevaluated and adjusted as additional information is received that impacts the
amount reserved. The Company also establishes a general reserve for all
customers based on a range of percentages applied to aging categories. These
percentages are based on historical collection and write-off experience. If
circumstances change, the Company's estimate of the recoverability of amounts
due the Company could be reduced or increased by a material amount. Such a
change in estimated recoverability would be accounted for in the period in which
the facts that give rise to the change become known.

Valuation of Deferred Tax Assets

         Deferred tax assets are reduced by a valuation allowance when, in the
opinion of the Company, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. The Company assesses the
recoverability of deferred tax assets at least annually based upon the Company's
ability to generate sufficient future taxable income and the availability of
effective tax planning strategies.

                                       12
<PAGE>

RESULTS OF OPERATIONS

         The following table sets forth the percentage of revenues of certain
items included in the Company's Statements of Operations:

                                                 YEAR ENDED DECEMBER 31,
                                           -----------------------------------
                                              2005         2004         2003
                                           ---------    ---------    ---------
         Revenues                              100.0%       100.0%       100.0%
         Cost of revenues                       70.5%        69.3%        73.1%
                                           ---------    ---------    ---------
         Gross profit                           29.5%        30.7%        26.9%
         Operating expenses                     31.3%        25.2%        27.1%
                                           ---------    ---------    ---------
         (Loss)/Income from operations          (1.8)%        5.4%         (.2)%
                                           ---------    ---------    ---------
         Gain from extinguishment of debt        0.0%         0.0%         0.0%
                                           ---------    ---------    ---------
         Net (loss) income                      (1.8)%        4.9%         (.6)%
                                           =========    =========    =========

COMPARISON OF YEAR ENDED DECEMBER 31, 2005 TO YEAR ENDED DECEMBER 31, 2004

         REVENUES. Revenues of the Company increased by $1.4 million or 5.6%
from $25 million for the year ended December 31, 2004 to $26.4 million for the
year ended December 31, 2005. The increase was primarily attributable to
industry wide increased spending in the IT industry and an increase in fixed
price projects, as a result of increased marketing efforts by the Company.

         Software licensing revenues increased by $125,000 or 9.3% from $1.3
million in 2004 to $1.5 million in 2005. Software sales are expected to remain
ancillary to the Company's total revenues in future years.

         GROSS PROFIT. The resulting gross profit for 2005 increased by $127,000
or 1.7% from $7.7 million in 2004 to $7.8 million in 2005. As a percentage of
total revenue, gross margin for the year decreased from 30.7% in 2004 to 29.5%
in 2005. Gross margin decreased slightly primarily due to the mix of time and
material work compared to fixed price projects.

         OPERATING EXPENSES. Operating expenses are comprised of Selling,
General and Administrative ("SG&A") expenses and depreciation and amortization
costs. Operating expenses increased by $1.9 million, or 30.9% from $6.3 million
in 2004 to $8.3 million in 2005. The costs associated with the terminated
transaction with Vanguard, represented $1.2 million of this increase. The
balance of the increase, $786,000 or 12.4% was primarily attributable to costs
of $190,000 related to Sarbanes-Oxley consulting services, an increase of
$467,000 in payroll and related costs, and a stock compensation expense in the
amount of $134,000 which were partially offset by a decrease in depreciation and
amortization expenses.

         TAXES. Taxes in 2005 were $16,000 compared to $99,000 in 2004. The
decrease in income taxes was attributable to the decrease in income before
income taxes from income of $1.3 million in 2004 to a loss of ($468,000) in
2005.

         NET(LOSS)/INCOME. As a result of the above, the Company had a net loss
of ($484,000) in 2005 compared to net income of $1.2 million in 2004.

COMPARISON OF YEAR ENDED DECEMBER 31, 2004 TO YEAR ENDED DECEMBER 31, 2003

         REVENUES. Revenues of the Company increased by $3.4 million or 15.7%
from $21.6 million for the year ended December 31, 2003 to $25 million for the
year ended December 31, 2004. The increase was primarily attributable to an
industry wide increase in IT spending in 2004 and increased marketing efforts by
the Company.

         Software licensing revenues decreased by $348,000 or 20.5% from $1.7
million in 2003 to $1.3 million in 2004. Software sales are expected to remain
ancillary to the Company's total revenues in future years.

         GROSS PROFIT. The resulting gross profit for 2004 increased by $1.9
million or 32% from $5.8 million in 2003 to $7.7 million in 2004. As a
percentage of total revenue, gross margin for the year increased from 26.9% in
2003 to 30.7% in 2004.

                                       13
<PAGE>

Gross margin increased primarily due to increased consultant utilization rates
(89% in 2004 compared to 79% in 2003) and an increase in revenues coming from
fixed price contracts, which have higher gross margins.

         OPERATING EXPENSES. Operating expenses are comprised of Selling,
General and Administrative ("SG&A") expenses and depreciation and amortization
costs. Operating expenses increased by $455,000, or 7.8% from $5.9 million in
2003 to $6.3 million in 2004. The increase was primarily attributable to an
increase of $430,000 in payroll and related costs due to increases in recruiting
and sales staffs, $150,000 of costs associated with the proposed transaction
with Vanguard and an increase in bad debt expenses of $105,000 which were
partially offset by a decrease in depreciation and amortization expenses.

         TAXES. Taxes in 2004 were $99,000 compared to $24,000 in 2003. The
increase in income taxes was attributable to the increase in income before
income taxes from a loss of ($100,000) in 2003 to income of $1.3 million in
2004. The Company's effective tax rate is low due to the utilization of net
operating loss carry forwards.

         NET INCOME/(LOSS). As a result of the above, the Company had net income
of $1.2 million in 2004 compared to a net loss of ($123,000) in 2003.

LIQUIDITY AND CAPITAL RESOURCES

         The Company has a line of credit of $4.0 million with Keltic Financial
Partners, LP, (Keltic) based on the Company's eligible accounts receivable
balances. The line of credit has certain financial covenants, which the Company
must meet on a quarterly basis. There was no outstanding balance at December 31,
2005 or 2004. On March 23, 2004, the line of credit was amended and restated to
include the following: an extension to June 2007, the removal of the guarantee
of the Chief Executive Officer and less restrictive financial covenants. On
March 23, 2005, the agreement was restated and amended, again. Included in the
restated and amended agreement is Keltic's consent for the proposed transaction
with Vanguard Info-Solutions Corporation, (as defined in more detail in the
Definitive Proxy Statement filed on June 27, 2005), which transaction was
terminated on August 4, 2005 and a waiver to certain financial covenants that
the Company failed to comply with in the first quarter ending March 31. The
Company failed to comply with these covenants for the second and third quarters
ended June 30 and September 30, 2005, respectively. Accordingly, a waiver was
obtained from Keltic. On December 1, 2005, the agreement was further amended to
reset the EBITDA covenant effective October 1, 2005. The line of credit bears
interest at a variable rate based on prime plus 1.75% and the rate was 9.00% at
December 31, 2005.

         The Company is prohibited from paying dividends on its common stock due
to restrictions under the restated and amended Loan and Security Agreement with
Keltic Financial Partners, L.P. Keltic has consented to the payment of dividends
on the Series A and Series B Preferred Stock, provided an event of default does
not exist.

         The Series A and Series B Preferred Stock was fully converted into
common stock during 2005. As result, there are no outstanding shares of Series A
or Series B Preferred Stock as of December 31, 2005.

         On August 4, 2005, the Company terminated the Share Exchange Agreement
with Vanguard Info-Solutions Corporation and its stockholders and the Stock
Purchase Agreement with Oak Finance Investments Limited, pursuant to the terms
of each agreement. The Company's Board of Directors felt that this action was in
the best interest of the shareholders, employees and its clients.

         The Company acquired 51% of ownership interest in T3 Media as a result
of several investments in 1998 and 1999, Due to deterioration in performance and
market conditions for T3 Media's services, the operations of T3 Media ceased in
the second quarter of 2001. T3 Media had entered into a series of capital lease
obligations, which the Company had guaranteed to finance its expansion plans,
covering leasehold improvements, furniture and computer-related equipment. The
amount outstanding under such leases was approximately $291,000 at December 31,
2005 and 2004. The Company continues the process of negotiating buy-outs on
these leases.

         The Company's cash balances were approximately $2.2 million at December
31, 2005 and $2.5 million at December 31, 2004. Net cash used in operating
activities in 2005 was approximately ($142,000) compared to net cash provided by
operating activities of $1.2 million in 2004 and net cash used in operating
activities of ($88,000) in 2003.

         The Company's accounts receivable, less allowance for doubtful
accounts, at December 31, 2005 and December 31, 2004 were $4.4 million and $4.1
million, respectively, representing 53 and 55 days of sales outstanding,
respectively. The

                                       14
<PAGE>

accounts receivable at December 31, 2005 and 2004 included $435,000 and $260,000
of unbilled revenue respectively. The Company has provided an allowance for
doubtful accounts at the end of each of the periods presented. After giving
effect to this allowance, the Company does not anticipate any difficulty in
collecting amounts due.

         For the twelve months ended December 31, 2005, the Company had revenues
from three customers, which represented 21%, 20% and 15% of revenues. For the
year ended December 31, 2004, the Company had revenues from two customers, which
represented 20% and 19% of revenues, respectively. No other customer represented
greater than 10% of the Company's revenues for such periods.

         The Company has written down its minority investment in Methoda
Computer Ltd. during the third quarter of 2002 from $500,000 to $368,000. In
January of 2004, the Company sold approximately 75 percent of its investment in
Methoda for $200,000 in cash and $81,000 payable over the next twenty months.
The remaining investment has a carrying value of $87,000. Methoda Computer Ltd.
is a methodology provider and knowledgebase for IT management and software
engineering based in Israel.

         Net cash used in investing activities was approximately ($96,000), for
the year ended December 31, 2005. Net cash provided by investing activities was
approximately $44,000, and cash used in investing activities was approximately
($10,000), for the years ended December 31, 2004 and 2003, respectively. In each
of the three years, this represented additions to property and equipment of
($93,000), ($168,000), and ($23,000) respectively.

         On July 19, 2002, the Company acquired all of the Common Stock of IOT
for a combination of cash consideration of $650,000 through debt financing and
317,500 shares of TACT unregistered Common Stock, which has been retroactively
adjusted to reflect the one-for-four reverse stock split that occurred on
January 7, 2004 and was valued at $635,000.

         The cash consideration of $650,000 was paid as follows and is reflected
as a repayment of long-term debt: $140,000 on September 2, 2002; $210,000 on
April 1, 2003; $100,000 on April 1, 2004 and $200,000 on January 2, 2005. The
excess of the purchase price over the estimated fair value of the net
identifiable assets acquired totaled $1,494,000 and was allocated as follows;
$312,000 to intangible assets which is being amortized on a straight line basis
over thirty six months, and $1,182,000 to goodwill. The three majority
shareholders of IOT received employment agreements for a three-year period at an
annual salary of $160,000 per year each. During the second quarter of 2003, one
of the former IOT principals left the Company, a buyout of his contract was
negotiated and a portion of the intangible asset was written down ($23,000).
From the date of acquisition through the end of year 2002, the Company recorded
revenue attributed to IOT in the amount of $1,689,000. The Company recorded
revenue attributable to the IOT acquisition in the amount of $2,771,000 and
$4,154,000 for the years ended December 31, 2005 and 2004, respectively.

         Net cash used in financing activities was approximately ($98,000) in
2005, ($202,000) in 2004, and ($267,000) in 2003.

         On August 12, 2002, the Company issued 530,304 shares of Series A
Preferred Stock to Shmuel BenTov in exchange for $350,000.64. On November 12,
2002, the Company issued 41,311 shares of Series B Preferred Stock to Mr. Yossi
Vardi in exchange for $27,265.26. The Company relied upon the exemption from
registration set forth in Section 4(2) of the Securities Act, relating to sales
by an issuer not involving a public offering, in issuing the stock to Shmuel
BenTov and Yossi Vardi. Based upon discussions with and representations made by
the investors, the Company reasonably believed that such investors were
accredited and sophisticated investors. Mr. BenTov and Mr. Vardi had access to
information on the Company necessary to make an informed investment decision.
The shares of Series A and Series B Preferred Stock are convertible into Common
Stock on a 4:1 basis, which reflects the Company's one-for-four reverse stock
split that occurred on January 7, 2004 and are subject to further adjustment for
stock splits, consolidations and stock dividends. In addition, the shares of
Series A and Series B Preferred Stock are entitled to a 7% cumulative dividend
payable semi-annually. The Company has also agreed to grant "piggyback"
registration rights to Mr. BenTov and Mr. Vardi for the shares of Common Stock
issuable upon conversion of the Series A and Series B Preferred Stock. The
Company used the proceeds from the sale of Series A and Series B Preferred Stock
for general working capital purposes.

         The Series A and Series B Preferred Stock was fully converted into
common stock during 2005. As result, there are no outstanding shares of Series A
or Series B Preferred Stock as of December 31, 2005

         In the years ended, 2005, 2004 and 2003, the Company did not sell any
other equity securities.

                                       15
<PAGE>

         In 2005, 56,032 shares of Common Stock were issued pursuant to the
exercise of options issued under the Company's stock option plan. In 2004 and
2003, 14,688 and 11,250 shares of Common Stock, which have been retroactively
adjusted to reflect the one-for-four reverse stock split that occurred on
January 7, 2004, were issued pursuant to the exercise of options issued under
the Company's stock option plan. No other shares of Common Stock were issued
pursuant to the exercise of options issued under the Company's stock option
plan.

         The Company's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. For the years
ended December 31, 2005, 2004, and 2003, the Company reported a net loss of
($484,000), a net income of $1.2 million and, a net loss of ($123,305),
respectively. Additionally, the Company has an accumulated deficit of
($28,278,152) as of December 31, 2005. The Company actively manages its
personnel utilization rates and is constantly monitoring project requirements
and timetables.

         In management's opinion, cash flows from operations and borrowing
capacity combined with cash on hand will provide adequate flexibility for
funding the Company's working capital obligations for the next twelve months.
There may be circumstances that would accelerate its use of liquidity resources,
including but not limited to, its ability to implement a profitable business
model, and its initiatives to acquire or develop other relationships that are
strategic to the Company's business. If this occurs, the Company, may from time
to time, incur additional indebtedness or issue, in public or private
transactions, equity or debt securities. However, there can be no assurance that
suitable debt or equity financing will be available to the Company.

OFF-BALANCE SHEET ARRANGEMENTS

         The Company did not have any "Off Balance Sheet Arrangements" in 2005,
2004, and 2003.

CONTRACTUAL OBLIGATIONS

         The Company has the following contractual obligations as of December
31, 2005:

<TABLE>
<CAPTION>
                                                    PAYMENTS DUE BY PERIOD
                             ------------------------------------------------------------------
                                           LESS THAN 1       1 - 3          3 - 5     MORE THAN
 CONTRACTUAL OBLIGATIONS        TOTAL         YEAR           YEARS          YEARS      5 YEARS
--------------------------   -----------   -----------     ----------   -----------   ---------
<S>                          <C>           <C>             <C>          <C>           <C>
LONG TERM OBLIGATIONS
Automobile Loan              $    13,478   $    13,478     $        -   $         -   $       -
Employment Contracts             746,250       386,250(1)     360,000             -           -

CAPITAL LEASE OBLIGATIONS
Capital Lease - Short Term       290,517       290,517              -             -           -

OPERTATING LEASES
Rent                             499,763       308,663        191,100             -           -
                             -----------   -----------     ----------   -----------   ---------
TOTAL                        $ 1,550,008   $   998,908     $  551,100   $         -   $       -
                             ===========   ===========     ==========   ===========   =========
</TABLE>

(1)  Due to the resignation of the Company's Chief Financial Officer, effective
     February 17, 2006, the employment contract with the Company was terminated.
     Therefore, the Company's Contractual Obligations for Employment Contracts
     for Less Than 1 Year have been adjusted to reflect Mr. Falcone's salary
     through February 17, 2006 of $26,250 as opposed to $192,500 that would have
     been due had he not resigned.

                                       16
<PAGE>

RECENT ACCOUNTING PRONOUNCEMENTS

         See page F-12 of the consolidated financial statements for a discussion
of the impact of recent accounting standards.

INFLATION

         The Company has not suffered material adverse affects from inflation in
the past. However, a substantial increase in the inflation rate in the future
may adversely affect customers' purchasing decisions, may increase the costs of
borrowing, or may have an adverse impact on the Company's margins and overall
cost structure.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See financial statements on pages F-1 through F-21 of this Annual
Report on Form 10-K.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

         None.

ITEM 9A. CONTROLS AND PROCEDURES

         Evaluation of disclosure controls and procedures. The Company's Chief
Executive Officer and principal financial officer, after evaluating the
effectiveness of the Company's "disclosure controls and procedures" (as defined
in the Securities and Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of
the end of the period covered by this report, had concluded that our disclosure
controls and procedures were effective and designed to ensure information
required to be disclosed was recorded, processed, summarized and reported within
time periods specified in the SEC's rules and forms.

         Changes in internal controls. There were no changes in the Company's
internal control over financial reporting that occurred during our fourth fiscal
quarter of 2005 that has materially affected or is reasonably likely to
materially affect our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

         None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The following section sets forth information as to each director and
executive officer of TACT, including his or her age, present principal
occupation, other business experience during the last five years, directorships
in other publicly-held companies, membership on committees of the Board of
Directors and period of service with TACT.

         Shmuel BenTov, 51, is the founder of TACT and has been the Chairman of
the Board and Chief Executive Officer of the Company since its establishment in
1983. Mr. BenTov received a B.Sc. in Economics and Computer Science in 1979

                                       17
<PAGE>

from the Bar-Ilan University in Israel. From 1979 to 1983, Mr. BenTov was a
consultant Database Administrator and then an Account Manager with Spiridellis &
Associates. From 1972 to 1979, Mr. BenTov served with the Israeli Defense Forces
as a Programmer, Analyst, Project Manager, Database Administrator and Chief
Programmer.

         Steven S. Mukamal, 65, has been a director of the Company since August
1997. Mr. Mukamal is the Chairman of the Compensation Committee as well as a
member of the Audit Committee and the Nominating Committee. Mr. Mukamal received
a B.A. in 1962 from Michigan State University and a J.D./L.L.B. in 1965 from
Brooklyn Law School. Since 1965, he has been a member and senior partner of the
law firm Barst & Mukamal LLP. Mr. Mukamal specializes in the areas of
immigration and nationality law, consular law and real estate and debt
restructuring.

         Reuven Battat, 49, has been a director of the Company since August
1997. Mr. Battat is a member of the Compensation Committee, the Audit Committee
and the Nominating Committee. In 2003, Mr. Battat became the Chief Executive
Officer of Actimize, LTD, a provider of enterprise technology solutions for
mitigating operational risk. Mr. Battat was the President and Chief Executive
Officer of ProcureNet Inc., a provider of internet business to government and
business to business solutions and services, from 2000 through 2003. Mr. Battat
was the Senior Vice President and General Manager of Global Marketing for
Computer Associates International, Inc. and from 1995 through 1999. Mr. Battat
was responsible for Computer Associates' worldwide marketing activities and
long-term planning of product development in new and emerging markets.

         William Miller, 68, has been a director of the Company since July 2002.
Mr. Miller is the Chairman of the Audit Committee, as well as a member of the
Nominating Committee. Mr. Miller is a private investor. He is a Certified Public
Accountant and an Attorney. He was affiliated for eight years with Cantor
Fitzgerald, an Investment Banking Firm, as Executive Vice President responsible
for corporate finance, real estate, and retail sales. Subsequent to that he was
with Telerate, a computer information services company.

         Rabin K. Dhoble, 44, has been a director of the company since February
2006. Mr. Dhoble received his B.A. in Marketing in 1984 from Temple University.
Mr. Dhoble is currently the President of Diversified Agency Services Healthcare,
Omnicom. Since 1998, he has been a senior executive within the healthcare
communications practice of Diversified Agency Services, the specialty
communications unit of Omnicom Group. Mr. Dhoble specializes in the development
of business strategies and the management of cross-functional teams that support
the global commercialization of biotechnology and pharmaceutical brands.

AUDIT COMMITTEE

         The Company's Audit Committee is comprised of three independent
directors as follows: Mr. William Miller, Chairman, Mr. Steven S. Mukamal and
Mr. Reuven Battat. Mr. William Miller, Chairman of the Audit Committee, is
considered an "audit committee financial expert" as defined in Regulation S-K,
Item 401(h)(2).

AUDIT COMMITTEE FINANCIAL EXPERT

         The Board of Directors has affirmatively determined that the Company
has at least one Audit Committee Financial Expert as defined by Section 407 of
the Sarbanes-Oxley Act of 2002 serving on our audit committee. The directors
have determined that Mr. William Miller is independent, as that term is used in
Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934 and
has all of the following five attributes due to his experience overseeing and
assessing the performance of companies with respect to the preparation and
evaluation of financial statements:

         o    An understanding of GAAP and financial statements;

         o    The ability to assess the general application of such principles
              in connection with the accounting for estimates, accruals and
              reserves;

         o    Experience preparing, auditing, analyzing or evaluating financial
              statements that present a breadth and level of complexity of
              accounting issues that are generally comparable to the breadth
              and complexity of issues that can reasonably be expected to be
              raised by the Company's financial statements, or experience
              actively supervising one or more persons engaged in such
              activities;

         o    An understanding of internal controls and procedures for
              financial reporting; and

         o    An understanding of audit committee functions.

                                       18
<PAGE>

NOMINATING COMMITTEE

         The Company's Nominating Committee is comprised of three independent
directors as follows: Mr. Reuven Battat, Chairman, Mr. William Miller and Mr.
Steven S. Mukamal.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and certain beneficial owners of the
Company's equity securities (the "Section 16 Reporting Persons") to file with
the SEC reports regarding their ownership and changes in ownership of the
Company's equity securities. The Company believes that, during the fiscal year
2005, its Section 16 Reporting Persons complied with all Section 16(a) filing
requirements, except that (i) Stephen Mukamal reported seven transactions late
on a Form 4 filed in 2005, (ii) Reuven Battat reported two transactions late on
a Form 4 filed in 2005, (iii) Richard D. Falcone reported one transaction late
on a Form 4 filed in 2005, and (iv) William Miller reported six transactions
late on a Form 4 filed in 2005. In making this statement, the Company has relied
upon examination of the copies of Forms 3, 4 and 5 provided to the Company and
the written representations of the Section 16 Reporting Persons.

CODE OF ETHICS

         The Board of Directors has adopted a code of ethics designed, in part,
to deter wrongdoing and to promote honest and ethical conduct, including the
ethical handling of actual or apparent conflicts of interest between personal
and professional relationships, full, fair, accurate, timely and understandable
disclosure in reports and documents that the Company files with or submit to the
Securities and Exchange Commission and in the Company's other public
communications, compliance with applicable governmental laws, rules and
regulations, the prompt internal reporting of violations of the code to an
appropriate person or persons, as identified in the code and accountability for
adherence to the code. The code of ethics applies to all directors, executive
officers and employees of the Company. The Company will provide a copy of the
code to any person without charge, upon request to Ms. Jeannie Lovastik, Human
Resources Generalist by calling 732-499-8228 or writing to Ms. Lovastik's
attention at The A Consulting Team, Inc., 77 Brant Avenue, Suite 320, Clark, NJ,
07066.

         The Company intends to disclose any amendments to or waivers of its
code of ethics as it applies to directors or executive officers by filing them
on Form 8-K.

ITEM 11. EXECUTIVE COMPENSATION.

         The information required by this item is incorporated by reference to
the Company's Proxy Statement for its 2006 Annual Meeting of Shareholders, which
will be filed with the SEC on or before April 30, 2006.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The information required by this item is incorporated by reference to
the Company's Proxy Statement for the 2006 Annual Meeting of Shareholders, which
will be filed with the SEC on or before April 30, 2006.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information required by this item is incorporated by reference to
the Company's Proxy Statement for the 2006 Annual Meeting of Shareholders, which
will be filed with the SEC on or before April 30, 2006.

                                       19
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         The information required by this item is incorporated by reference to
the Company's Proxy Statement for the 2006 Annual Meeting of Shareholders, which
will be filed with the SEC on or before April 30, 2006.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a)(1) and (2) The response to this portion of Item 15 is submitted as a
separate section of this report at F-1.

(a)(3) Listing of Exhibits

Exhibit
Number      Description of Exhibits
--------    --------------------------------------------------------------------
  2.1       Stock Purchase Agreement dated as of June 28, 2002 among the
            Registrant, International Object Technology, Inc. and the
            Stockholders of International Object Technology, Inc. incorporated
            by reference to Exhibit 2.1 to the Form 8-K, as previously filed
            with the SEC on July 12, 2002.

  3.1       Restated Certificate of Incorporation of the Registrant,
            incorporated by reference to Exhibit 3.1 to the Form 10Q for the
            period ended June 30, 2001, as previously filed with the SEC on
            August 10, 2001.

  3.2.1     Certificate of Amendment of the Certificate of Incorporation of the
            Registrant dated August 8, 2002 incorporated by reference to Exhibit
            3.2 to the Form 10-Q for the period ended June 30, 2001, as
            previously filed with the SEC on August 14, 2002.

  3.2.2     Certificate of Amendment of the Certificate of Incorporation of the
            Registrant dated November 12, 2002, incorporated by reference to
            Exhibit 3.2.2 to the Form 10-Q for the period ended September 30,
            2002, as previously filed with the SEC on November 14, 2002.

  3.2.3     Certificate of Amendment of the Certificate of Incorporation of the
            Registrant dated January 5, 2004, incorporated by reference to
            Exhibit 3.2.3 to the Form 8-K dated January 8, 2004, as previously
            filed with the SEC on January 8, 2004.

  3.3       Amended and Restated By-Laws of the Registrant, incorporated by
            reference to Exhibit 3.3 to the Registration Statement on Form SB-2
            as previously filed with the SEC on August 6, 1997.

  3.4       Amendment No. 1 to the Amended and Restated Bylaws of the Registrant
            incorporated by reference to Exhibit 3.4 to the Form 10-Q for the
            period ended June 30, 2003, as previously filed with the SEC on
            August 14, 2003.

  4.1       Specimen Common Stock Certificate, incorporated by reference to
            Exhibit 4 to the Registration Statement on Form SB-2 as previously
            filed with the SEC on July 23, 1997.

  4.2       Registration Rights Agreement dated as of July 19, 2002 among the
            Registrant and those persons listed on Schedule I attached thereto,
            incorporated by reference to Exhibit 4.1 to the Form 8-K dated July
            19, 2002, as previously filed by the SEC on July 25, 2002.

  10.1.1    Stock Option and Award Plan of the Registrant and Form of
            Nonqualified Stock Option Agreement, incorporated by reference to
            Exhibit 10.1 to the Registration Statement on Form SB-2 as
            previously filed with the SEC on August 6, 1997.

  10.1.2    Amendment to the Stock Option and Award Plan of the Registrant,
            incorporated by reference to Post-Effective Amendment No. 1 to the
            Registration Statement on Form S-8 as previously filed with the SEC
            on June 25, 1998.

                                       20
<PAGE>

  10.1.3    Amendment No. 2 to the Stock Option and Award Plan of the
            Registrant, incorporated by reference to Exhibit C to the
            Registrant's 2001 Proxy Statement on Schedule 14A, as previously
            filed with the SEC on April 30, 2001.

  10.2      Amended and restated Loan and Security Agreement between the
            Registrant and Keltic Financial Partners, LP, dated March 23, 2004,
            incorporated by reference to Exhibit 10.2 to the Form 10-K for the
            year ended December 31, 2003, as previously filed with the SEC on
            March 29, 2004.

  10.2.1    First Modification to the March 23, 2004 Amended and Restated Loan
            and Security Agreement, incorporated by reference to the Form 10-Q
            for the first quarter ended March 31, 2005, as previously filed with
            the SEC on May 12, 2005.

  10.2.2    Amendment dated December 1, 2005 to the March 23, 2004 Amended and
            Restated Loan and Security Agreement

  10.3      Employment Agreement, dated December 1, 2005, between the Registrant
            and Shmuel BenTov, incorporated by reference to Exhibit 10.1 to the
            Form 8-K dated December 12, 2005, as previously filed with the SEC
            on December 15, 2005.

  10.4      Form of S Corporation Termination, Tax Allocation and
            Indemnification Agreement, incorporated by reference to Exhibit 10.4
            to the Registration Statement on Form SB-2, as previously filed with
            the SEC on August 6, 1997.

  10.5      Letter of Undertaking from the Registrant and Shmuel BenTov,
            incorporated by reference to Exhibit 10.9 to the Registration
            Statement on Form SB-2, as previously filed with the SEC on July 23,
            1997.

  10.6      Shmuel BenTov Letter Commitment, dated March 29, 2001, incorporated
            by reference to Exhibit 10.10 to the Form 10-K for the fiscal year
            ended December 31, 2000, as previously filed with the SEC on April
            2, 2001.

  10.7      Form of Indemnification Agreement between the Registrant and each of
            its Directors and its Chief Executive Officer, incorporated by
            reference to Exhibit 10.12 to the Form 10-Q for the period ended
            September 30, 2003 as filed with the SEC on November 11, 2003.

  23.1      Consent of Grant Thornton, LLP

  23.2      Consent of Mercadien, P.C., Certified Public Accountants

  31.1      Certification of Chief Executive Officer pursuant to Section 302 of
            Sarbanes-Oxley Act of 2002.

  31.2      Certification of Principal Financial Officer pursuant to Section 302
            of Sarbanes-Oxley Act of 2002.

  32.1      Certification of the Chief Executive Officer, pursuant to 18 U.S.C.
            Section 1350, as adopted pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002.

  32.2      Certification of the Principal Financial Officer, pursuant to 18
            U.S.C. Section 1350, as adopted pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002.

(b) Exhibits - The response to this portion of Item 15 is submitted as a
separate section of this report.

(c) Financial Statement Schedules - The response to this portion of Item 15 is
submitted as a separate section of this report at S-1.

                                       21
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                                 THE A CONSULTING TEAM, INC.


                                                 By: /s/ Shmuel BenTov
                                                     ---------------------------
                                                     Shmuel BenTov,
                                                     Chief Executive Officer
                                                     Date: March 29, 2006

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
            SIGNATURE                                TITLE                           DATE
----------------------------------    ------------------------------------    ------------------
<S>                                   <C>                                       <C>
       /s/ Shmuel BenTov              Chief Executive Officer, Director         March 29, 2006
------------------------------        and Principal Financial Officer
         Shmuel BenTov

       /s/ Reuven Battat              Director                                  March 29, 2006
------------------------------
         Reuven Battat

      /s/ Steven Mukamal              Director                                  March 29, 2006
------------------------------
        Steven Mukamal

      /s/ William Miller              Director                                  March 29, 2006
------------------------------
        William Miller

       /s/ Rabin Dhoble               Director                                  March 29, 2006
------------------------------
         Rabin Dhoble
</TABLE>

                                       22
<PAGE>

ITEM 15 (a) (1) AND (2)

                           THE A CONSULTING TEAM, INC.

The following consolidated financial statements and financial statement schedule
of The A Consulting Team, Inc. are included in Item 8:

<TABLE>
<S>                                                                                                       <C>
Consolidated Balance Sheets...............................................................................F-4

Consolidated Statements of Operations and Comprehensive Income............................................F-5

Consolidated Statements of Shareholders' Equity...........................................................F-6

Consolidated Statements of Cash Flows.....................................................................F-7

Notes to Consolidated Financial Statements................................................................F-8

The following consolidated financial statement schedule of The A Consulting Team, Inc. is included
 in Item 15(c): Schedule II - Valuation and Qualifying Accounts...........................................S-1
</TABLE>

All other schedules for which provision is made in the applicable accounting
regulation of the SEC are not required under the related instructions or are
inapplicable and therefore have been omitted.

                                       F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
The A Consulting Team, Inc.

We have audited the accompanying consolidated balance sheet of The A Consulting
Team, Inc. and Subsidiaries, (the "Company") as of December 31, 2005, and the
related consolidated statements of operations and comprehensive income,
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of the Company for the years ended December
31, 2004, and 2003 were audited by other auditors whose report, dated February
24, 2005, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the 2005 financial statements referred to above present fairly,
in all material respects, the financial position of The A Consulting Team, Inc.
and Subsidiaries as of December 31, 2005, and the results of its operations and
its cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole for 2005. The Schedule II listed in the
index of financial statements is presented for purposes of additional analysis
and is not a required part of the basic financial statements. This schedule has
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements for 2005 taken as a
whole.

/s/ Mercadien, P.C., Certified Public Accountants


Hamilton, New Jersey
February 15, 2006

                                       F-2
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
The A Consulting Team, Inc.

We have audited the accompanying consolidated balance sheet of The A Consulting
Team, Inc. and Subsidiaries, (the "Company") as of December 31, 2004 and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the two years in the period ended December 31, 2004. These
financial statement are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The A Consulting
Team, Inc. and Subsidiaries as of December 31, 2004, and the consolidated
results of their operations, and their cash flows for each of the two years in
the period ended December 31, 2004, in conformity with accounting principles
generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Schedule II listed in the index of
financial statements is presented for purposes of additional analysis and is not
a required part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

/s/ GRANT THORNTON LLP


New York, New York
February 24, 2005

                                       F-3
<PAGE>

                           THE A CONSULTING TEAM, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                DECEMBER 31,      DECEMBER 31,
                                                                    2005              2004
                                                               --------------    --------------
<S>                                                            <C>               <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                    $    2,156,867    $    2,493,104
  Accounts receivable- less allowance for
   doubtful accounts of $320,804 at December 31, 2005,
   and $296,828 at December 31, 2004                                3,918,371         3,810,759
  Unbilled receivables                                                434,563           260,000
  Prepaid expenses and other current assets                           160,414           139,704
                                                               --------------    --------------
    Total current assets                                            6,670,214         6,703,568
  Investments, net                                                     87,059            87,059
  Property and equipment, net                                         480,845           556,896
  Goodwill                                                          1,140,964         1,140,964
  Intangibles, net                                                          -            34,667
  Deposits and other assets                                           114,363           126,363
                                                               --------------    --------------
    TOTAL ASSETS                                               $    8,493,444    $    8,649,515
                                                               ==============    ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable and accrued expenses                        $    1,764,647    $    1,666,160
  Capital lease obligation                                            290,517           290,517
  Deferred revenue                                                    220,005                 -
  Deferred income taxes                                                     -            22,500
  Current portion of long-term debt                                    13,479           233,962
                                                               --------------    --------------
    Total current liabilities                                       2,288,648         2,213,139
  Other long-term liabilities                                               -            13,479
                                                               --------------    --------------
    TOTAL LIABILITIES                                          $    2,288,648    $    2,226,617
                                                               --------------    --------------
SHAREHOLDERS' EQUITY:
  Preferred stock, $.01 par value; 2,000,000 shares
   authorized; no shares issued and outstanding as
   of December 31, 2005, and 571,615 shares issued and
   outstanding as of December 31, 2004                                      -             5,716
  Common stock, $.01 par value; 30,000,000 shares
   authorized; 2,361,333 issued and outstanding as
   of December 31, 2005, and 2,122,647 issued and
   outstanding as of December 31, 2004                                 23,614            21,227
  Paid-in capital                                                  34,462,262        34,181,206
  Accumulated other comprehensive loss- foreign
   currency translation                                                (2,927)                -
  Accumulated deficit                                             (28,278,152)      (27,785,251)
                                                               --------------    --------------
  Total shareholders' equity                                        6,204,797         6,422,898
                                                               --------------    --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                     $    8,493,444    $    8,649,514
                                                               ==============    ==============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-4
<PAGE>

                           THE A CONSULTING TEAM, INC.
         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                        YEAR ENDED DECEMBER 31,
                                           ------------------------------------------------
                                                2005             2004             2003
                                           --------------   --------------   --------------
<S>                                        <C>              <C>              <C>
Revenues                                   $   26,431,967   $   25,035,167   $   21,645,763
Cost of revenues                               18,631,523       17,361,526       15,829,442
                                           --------------   --------------   --------------
Gross profit                                    7,800,444        7,673,640        5,816,321
Operating expenses:
  Selling, general and administrative           8,057,416        5,952,343        5,105,462
  Depreciation and amortization                   203,678          360,859          752,609
                                           --------------   --------------   --------------
                                                8,261,095        6,313,202        5,858,071
                                           --------------   --------------   --------------
(Loss)/income from operations                    (460,651)       1,360,438          (41,750)
                                           --------------   --------------   --------------
Interest income                                    17,611            8,664            8,379
Interest expense                                  (24,724)         (33,313)         (66,433)
                                           --------------   --------------   --------------
Interest (expense), net                            (7,113)         (24,649)         (58,055)
                                           --------------   --------------   --------------
(Loss)/income before income taxes                (467,764)       1,335,789          (99,805)
Provision for income taxes                         16,240           99,085           23,500
                                           --------------   --------------   --------------
Net (loss) income                          $     (484,004)  $    1,236,705   $     (123,305)
Other comprehensive loss - foreign
 currency adjustment                               (2,927)               -                -
                                           --------------   --------------   --------------
Comprehensive (loss) income                $     (486,931)  $    1,236,705   $     (123,305)
                                           ==============   ==============   ==============
Net (loss) income per share
  Basic                                    $        (0.22)  $         0.57   $        (0.07)
                                           ==============   ==============   ==============
  Diluted                                  $        (0.22)  $         0.53   $        (0.07)
                                           ==============   ==============   ==============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-5
<PAGE>

                           THE A CONSULTING TEAM, INC.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                          Preferred Stock             Common Stock (*)          Additional    Accumulated
                                       ----------------------    ---------------------------     Paid-In       Other Comp
                                        Shares       Amount         Shares         Amount        Capital          Loss
                                       --------    ----------    ------------   ------------   ------------   ------------
<S>                                    <C>         <C>           <C>            <C>            <C>            <C>
Balance, December 31, 2002              571,615    $    5,716       2,096,709   $     20,967   $ 34,143,440   $          -
  Net loss                                    -             -               -              -              -              -
  Preferred dividend                          -             -               -              -              -              -
  Exercise of employee stock options          -             -          11,250            113         18,188              -
                                       --------    ----------    ------------   ------------   ------------   ------------
Balance, December 31, 2003              571,615    $    5,716       2,107,959   $     21,080   $ 34,161,628   $          -
  Net income                                  -             -               -              -              -              -
  Preferred dividend                          -             -               -              -              -              -
  Exercise of employee stock options          -             -          14,688            147         19,578              -
                                       --------    ----------    ------------   ------------   ------------   ------------
Balance, December 31, 2004              571,615    $    5,716       2,122,647   $     21,227   $ 34,181,206   $          -
  Net loss                                    -             -               -              -              -              -
  Preferred dividend                          -             -               -              -              -              -
  Conversion of Preferred Stock        (571,615)       (5,716)        142,903          1,429              -              -
  Restricted stock issuance                   -             -          30,000            300              -              -
  Exercise of employee stock options          -             -          65,783            658        281,056              -
  Foreign exchange translation                -             -               -              -              -         (2,927)
                                       --------    ----------    ------------   ------------   ------------   ------------
Balance, December 31, 2005                    -    $        -       2,361,333   $     23,614   $ 34,462,262   $     (2,927)
                                       ========    ==========    ============   ============   ============   ============
<CAPTION>
                                             Accumulated
                                               Deficit           Total
                                           --------------   --------------
<S>                                        <C>              <C>
Balance, December 31, 2002                 $  (28,845,025)  $    5,325,098
  Net loss                                       (123,305)        (123,305)
  Preferred dividend                              (26,776)         (26,776)
  Exercise of employee stock options                    -           18,301
                                           --------------   --------------
Balance, December 31, 2003                 $  (28,995,106)  $    5,193,318
  Net income                                    1,236,705        1,236,705
  Preferred dividend                              (26,850)         (26,850)
  Exercise of employee stock options                    -           19,725
                                           --------------   --------------
Balance, December 31, 2004                 $  (27,785,251)  $    6,422,898
  Net loss                                       (484,004)        (484,004)
  Preferred dividend                               (8,897)          (8,897)
  Conversion of Preferred Stock                         -           (4,287)
  Restricted stock issuance                             -              300
  Exercise of employee stock options                    -          281,714
  Foreign exchange translation                          -           (2,927)
                                           --------------   --------------
Balance, December 31, 2005                 $  (28,278,152)  $    6,204,797
                                           ==============   ==============
</TABLE>

* Adjusted for the January 7, 2004 reverse stock split (See Note 1)

          See accompanying notes to consolidated financial statements.

                                       F-6
<PAGE>

                           THE A CONSULTING TEAM, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                                           ------------------------------------------------
                                                                2005             2004             2003
                                                           --------------   --------------   --------------
<S>                                                        <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)income                                           $     (484,005)  $    1,236,705   $     (123,305)
Adjustments to reconcile net (loss)income to
 net cash (used in)
  provided by operating activities, net of
   acquired assets:
  Depreciation and amortization                                   203,679          360,859          752,609
  Deferred income taxes                                           (22,500)         (22,500)         (22,500)
  Provision for doubtful accounts                                  35,000          145,000           40,000
  Amortization of deferred financing cost                          12,000           10,000                -
  Compensation expense for stock issued - to non-employees        133,200                -                -
  Changes in operating assets and liabilities:
    Accounts receivable                                          (142,611)        (532,488)        (386,383)
    Unbilled receivables                                         (174,563)        (126,395)        (133,605)
    Prepaid expenses and other current assets                     (20,709)         (53,150)           3,668
    Accounts payable and accrued expenses                          98,487          223,431         (218,907)
    Deferred revenue                                              220,005                -                -
                                                           --------------   --------------   --------------
Net cash (used in) provided by operating activities              (142,017)       1,241,460          (88,422)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment                                (92,962)        (168,127)         (23,487)
Proceeds from sale of investment                                        -          250,450                -
Deposits                                                                -          (38,489)          13,259
                                                           --------------   --------------   --------------
Net cash (used in) provided by investing activities               (92,962)          43,834          (10,228)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from conversion of stock options                         144,527           19,726           18,300
Payment of deferred financing cost                                      -          (40,000)               -
Dividend paid to Preferred Shareholders                            (8,897)         (26,850)         (23,140)
Repayment of long-term debt                                      (233,962)        (154,690)        (261,715)
                                                           --------------   --------------   --------------
Net cash (used in) financing activities                           (98,332)        (201,814)        (266,554)
                                                           --------------   --------------   --------------
Effect of foreign currency exchange rate changes on
 cash and cash equivalents                                         (2,927)               -                -
                                                           --------------   --------------   --------------
Net (decrease) increase in cash and cash equivalents             (336,237)       1,083,481         (365,205)
Cash and cash equivalents at beginning of period                2,493,104        1,409,623        1,774,828
                                                           --------------   --------------   --------------
Cash and cash equivalents at end of period                 $    2,156,867   $    2,493,104   $    1,409,623
                                                           ==============   ==============   ==============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest                   $       24,724   $       33,313   $       66,433
                                                           ==============   ==============   ==============
Cash paid during the period for income taxes               $       18,863   $       99,085   $       48,457
                                                           ==============   ==============   ==============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-7
<PAGE>

                          THE A CONSULTING TEAM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SIGNIFICANT ACCOUNTING POLICIES

     Description of Business and Basis of Presentation

         The A Consulting Team, Inc. (the "Company" or "TACT") was incorporated
on February 16, 1983, in the State of New York and provides information
technology consulting, custom application development services and solutions to
Fortune 1000 companies. The Company's customers are primarily located in the New
York/New Jersey metropolitan area.

         The Company's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. For the years
ended December 31, 2005, 2004, and 2003, the Company reported a net loss of
$484,004, net income of $1,236,705 and a net loss of $123,305, respectively.
Additionally, the Company has an accumulated deficit of $28,278,152 as of
December 31, 2005. The Company has implemented a plan whereby it is actively
managing its personnel utilization rates and is constantly monitoring project
requirements and timetables.

         In management's opinion, cash flows from operations and borrowing
capacity combined with cash on hand will provide adequate flexibility for
funding the Company's working capital obligations for the next twelve months.
There may be circumstances that would accelerate its use of liquidity resources,
including but not limited to, its ability to implement a profitable business
model, which may include further restructuring charges. If this occurs, the
Company, may from time to time, incur additional indebtedness or issue, in
public or private transactions, equity or debt securities. However, there can be
no assurance that suitable debt or equity financing will be available to the
Company.

     Reverse Stock Split

         On January 7, 2004, the Company effected a one-for-four reverse stock
split of its common stock in order to regain compliance with NASDAQ's minimum
bid price requirement to remain listed on the NASDAQ Capital MarketCM. All share
and per share amounts used in the Company's financial statements and notes
thereto have been retroactively restated to reflect the one-for-four reverse
stock split.

     Principles of Consolidation

         The consolidated financial statements include the accounts of The A
Consulting Team, Inc., its 100% owned subsidiary International Object
Technology, Inc. (IOT) from its date of acquisition on July 19, 2002 and its 51%
owned subsidiary, T3 Media, Inc., which ceased operations in 2001, from its date
of acquisition in 1999 and its 100% owned subsidiary TACT Global Services from
its date of acquisition on September 30, 2005. All material inter-company
accounts and transactions have been eliminated.

     Use of Estimates

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

     Earnings Per Share

         The Company calculates earnings per share in accordance with Financial
Accounting Standards Board (FASB) Statement No. 128, Earnings Per Share. Basic
earnings per share is calculated by dividing net earnings available to common
shares by weighted average common shares outstanding. Diluted earnings per share
is calculated similarly, except that it includes the dilutive effect of the
assumed exercise of securities except when it is anti-dilutive, including the
effect of shares issuable under the Company's incentive plans. All share and per
share amounts used in the Company's financial statements and notes thereto have
been retroactively restated to reflect the one-for-four reverse stock split,
which occurred on January 7, 2004.

                                       F-8
<PAGE>

                          THE A CONSULTING TEAM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Cash Equivalents

         The Company considers all highly liquid financial instruments with
original maturity of three months or less when purchased to be cash equivalents.

     Fair Value of Financial Instruments

         The carrying value of financial instruments (principally consisting of
cash, cash equivalents, accounts receivable, long term debt and capital leases)
approximates fair value because of their short maturities.

     Property and Equipment

         Property and equipment are depreciated using the straight-line method
over the estimated useful lives of the assets, which range from three to ten
years.

     Long-Lived Assets

         The Company adopted the provisions of FASB Statement No. 144,
"Accounting for the Impairment or Disposal of Long Lived Assets " effective
January 1, 2002. When impairment indicators are present, the Company reviews the
carrying value of its assets in determining the ultimate recoverability of their
unamortized values using analyses of future undiscounted cash flows expected to
be generated by the assets. If such assets are considered impaired, the
impairment recognized is measured by the amount by which the carrying amount of
the asset exceeded its fair value. Assets to be disposed of are reported at the
lower of the carrying amount or fair value, less cost to sell.

     Goodwill and Intangible Assets

         The Company adopted the provisions of FASB Statement No. 142, "Goodwill
and Other Intangible Assets," (SFAS No. 142) effective January 1, 2002. SFAS No.
142 required that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead tested for impairment using the guidance for
measuring impairment set forth in this statement. As prescribed under SFAS 142,
the Company had an evaluation done of its goodwill and intangible assets, which
was performed by an independent third party. The Company tested for impairment
using the guidance for measuring impairment set forth in SFAS No. 142 and it was
determined by the Company with the results from the independent third party that
there was no impairment at December 31, 2005, 2004 and 2003.

         In accordance with SFAS No. 142, the following are changes in the
carrying amount of goodwill for the year ended December 31, 2005, 2004 and 2003:

<TABLE>
<CAPTION>
                                             2005             2004             2003
                                        --------------   --------------   --------------
<S>                                     <C>              <C>              <C>
Balance as of January 1,                $    1,140,964   $    1,140,964   $    1,181,520
Goodwill acquired during the year                    -                -                -
Reclass of reduction in reserve for
 acquisition costs                                   -                -          (40,556)
                                        --------------   --------------   --------------
Balance as of December 31,              $    1,140,964   $    1,140,964   $    1,140,964
                                        ==============   ==============   ==============
</TABLE>

                                       F-9
<PAGE>

                          THE A CONSULTING TEAM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The following summarizes the carrying amounts of acquired intangible
assets and related amortization:

<TABLE>
<CAPTION>
                                                           YEAR ENDED DECEMBER 31
                                                 ------------------------------------------------
                                                      2005             2004             2003
                                                 --------------   --------------   --------------
<S>                                              <C>              <C>              <C>
Amortized intangible assets
  Employee Contracts- gross carrying amount      $      312,000   $      312,000   $      312,000
Less accumulated amortization                          (312,000)        (277,333)        (208,000)
                                                 --------------   --------------   --------------
Unamortized intangible assets                    $            -   $       34,667   $      104,000
                                                 ==============   ==============   ==============
Amortization expense
  For the year ended 12/31/03                    $            -   $            -   $      156,000
  For the year ended 12/31/04                    $            -   $       69,333   $            -
  For the year ended 12/31/05                    $       34,667   $            -   $            -
Estimated amortization expense:
  For the year ended 12/31/06                    $            -   $            -   $            -
</TABLE>

         During 2005, the Company recorded amortization of intangible assets of
$34,667. As part of the purchase price of IOT (See Note 2), the Company recorded
intangible assets pertaining to certain employment contracts. The cost of these
employment contracts were being amortized over the three year period of the
assets estimated useful life. During 2005, the Company recorded amortization
expense of $34,667 and completed the amortization of these contracts.

     Revenue Recognition

         Consulting revenues are recognized as services are provided. The
Company primarily provides consulting services under time and material
contracts, whereby revenue is recognized as hours and costs are incurred.
Customers for consulting revenues are billed on a weekly, semi-monthly and
monthly basis. Revenues from fixed fee contracts are recorded when work is
performed on the basis of the proportionate performance method, which is based
on costs incurred to date relative to total estimated costs. Any anticipated
contract losses are estimated and accrued at the time they become known and
estimable. Unbilled accounts receivables represent amounts recognized as revenue
based on services performed in advance of customer billings. Revenue from sales
of software licenses is recognized upon delivery of the software to a customer
because future obligations associated with such revenue are insignificant.

     Accounts Receivable and Allowance for Doubtful Accounts

         Accounts receivable are stated at amounts due from customers, net of an
allowance for doubtful accounts. The Company monitors its accounts receivable
balances on a monthly basis to ensure that they are collectible. On a quarterly
basis, the Company uses its historical experience to accurately determine its
accounts receivable reserve. The Company's allowance for doubtful accounts is an
estimate based on specifically identified accounts as well as general reserves.
The Company evaluates specific accounts where it has information that the
customer may have an inability to meet its financial obligations. In these
cases, management uses its judgment, based on the best available facts and
circumstances, and records a specific reserve for that customer against amounts
due to reduce the receivable to the amount that is expected to be collected.
These specific reserves are reevaluated and adjusted as additional information
is received that impacts the amount reserved. The Company also establishes a
general reserve for all customers based on a range of percentages applied to
aging categories. These percentages are based on historical collection and
write-off experience. If circumstances change, the Company's estimate of the
recoverability of amounts due the company could be reduced or increased by a
material amount. Such a change in estimated recoverability would be accounted
for in the period in which the facts that give rise to the change become known.

                                      F-10
<PAGE>

                          THE A CONSULTING TEAM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Segment Information

         The disclosure of segment information in accordance with SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information" is not
required as the Company operates in only one business segment.

     Stock-Based Compensation

         The Company accounts for equity instruments issued to non-employees in
accordance with the provisions of SFAS 123. During 2005, the Company recorded
$133,200 of such related expenses.

         At December 31, 2005, the Company has stock based compensation plans
with employees, which are described more fully in Note 12. As permitted by SFAS
No. 123, "Accounting for Stock Based Compensation", the Company accounts for
stock-based compensation arrangements with employees in accordance with
provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees". Compensation expense for stock options issued to
employees is based on the difference on the date of grant, between the fair
value of the Company's stock and the exercise price of the option. No stock
based employee compensation cost is reflected in net income, as all options
granted under those plans had an exercise price equal to the market value of the
underlying common stock at the date of grant.

         The following table illustrates the effect on net income and earnings
per share if the Company had applied the fair value recognition provisions of
SFAS No. 123 to stock based compensation:

<TABLE>
<CAPTION>
                                                             Year ended December 31,
                                                 ------------------------------------------------
                                                      2005             2004             2003
                                                 --------------   --------------   --------------
<S>                                              <C>              <C>              <C>
Net (loss) income, as reported                   $     (484,000)  $    1,237,000   $     (123,000)
Deduct:
Total stock based compensation
 expense determined under fair
 value based method for all awards                       (3,000)         (20,000)         (85,000)
                                                 --------------   --------------   --------------
  Pro forma net inome (loss)                     $     (487,000)  $    1,217,000   $     (208,000)
                                                 ==============   ==============   ==============

Earnings per share:
  Basic - as reported                            $        (0.22)  $         0.57   $        (0.07)
                                                 ==============   ==============   ==============
  Basic - pro forma                              $        (0.21)  $         0.57   $        (0.06)
                                                 ==============   ==============   ==============
  Diluted - as reported                          $        (0.22)  $         0.53   $        (0.07)
                                                 ==============   ==============   ==============
  Diluted - pro forma                            $        (0.21)  $         0.53   $        (0.06)
                                                 ==============   ==============   ==============
</TABLE>

         The fair value of options at the date of grant was estimated using the
Black-Scholes model with the following assumptions:

                                                 2005       2004       2003
                                               --------   --------   --------
Expected life (years)                              4.00       4.00       4.00
Risk free interest rate                            4.50%      3.00%      3.00%
Expected volatility                                0.95       0.96       0.83
Expected dividend yield                            0.00       0.00       0.00
Weighted average fair value per option         $   4.83   $   3.53   $   0.80

                                      F-11
<PAGE>

                          THE A CONSULTING TEAM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The weighted average fair value of options granted by the Company was
$4.83 in 2005, $3.53 in 2004, and $.80 in
2003.

     Recent Accounting Pronouncements

         In December 2004, the Financial Accounting Standards Board issued
Statement 123 (revised 2004), Share Based Payment (Statement 123 (R) ). This
Statement requires that the costs of employee share based payments be measured
at fair value on the awards' grant date using an option-pricing model and
recognized in the financial statements over the requisite service period. This
Statement does not change the accounting for stock ownership plans, which are
subject to American Institute of Certified Public Accountants SOP 93-6,
"Employer's Accounting for Employee Stock Ownership Plans." Statement 123 (R)
supersedes Opinion 25, Accounting for Stock Issued to Employees and its related
interpretations, and eliminates the alternative to use Opinion 25's intrinsic
value method of accounting, which the Company is currently using. Statement 123
(R) allows for two alternative transition methods. The first method is the
modified prospective application whereby compensation cost for the portion of
awards for which the requisite service has not yet been rendered that are
outstanding as of the adoption date will be recognized over the remaining
service period. The compensation cost for that portion of awards will be based
on the grant-date fair value of those awards as calculated for pro forma
disclosures under Statement 123, as originally issued. All new awards and awards
that are modified, repurchased, or cancelled after the adoption date will be
accounted for under the provisions of Statement 123 (R). The second method is
the modified retrospective application, which requires that the Company restates
prior period financial statements. The modified retrospective application may be
applied either to all prior periods or only to prior interim periods in the year
of adoption of this statement. The Company has determined that it will adopt the
modified prospective application whereby compensation cost for the portion of
awards for which the requisite service has not yet been rendered that are
outstanding as of the adoption date will be recognized over the remaining
service period. The compensation cost for that portion of awards will be based
on the grant-date fair value of those awards as calculated for pro forma
disclosures under Statement 123, as originally issued. All new awards and awards
that are modified, repurchased, or cancelled after the adoption date will be
accounted for under the provisions of Statement 123 (R).

2.   ACQUISITIONS

         On April 11, 2005, the Company completed an investment in an offshore
joint venture, TACT Global Services Private Limited (TGS), in the amount of
$250,000, which represented approximately a 68% ownership. A minority partner
invested $100,000 for the remaining 32% ownership. In September 2005, the
Company increased its ownership to 100% by purchasing the minority partners
investment for $100,000. The Company has consolidated the results of TGS in its
financial statements for the period from September 2005 to December 31, 2005,
and recorded the Company's proportionate ownership share of the results of TGS
from April 11, 2005 to September 2005.

         On July 19, 2002, the Company consummated the acquisition of all of the
issued and outstanding capital stock of IOT, a New Jersey corporation, pursuant
to a Stock Purchase Agreement dated as of June 28, 2002 among TACT, IOT and the
holders of all of the issued and outstanding capital stock of IOT (the "IOT
Stockholders"). TACT acquired all of the issued and outstanding capital stock of
IOT from the IOT Stockholders in exchange for an aggregate of three hundred
seventeen thousand five hundred (317,500) shares of unregistered TACT Common
Stock, which has been retroactively adjusted to reflect the one-for-four reverse
stock split that occurred on January 7, 2004, and was valued at $635,000 (the
"Acquisition Shares") and the obligation to make certain deferred cash payments
of six hundred fifty thousand ($650,000) in the aggregate (the "Deferred
Payments"). The Acquisition Shares were issued by TACT to the IOT Stockholders
at the closing of the acquisition. Subject to the terms and conditions of the
Stock Purchase Agreement, the Deferred Payments were payable as follows: (i) an
aggregate of $140,000 on or before September 2, 2002, (ii) an aggregate of
$210,000 on or before April 1, 2003, (iii) an aggregate of $100,000 on or before
April 1, 2004, and (iv) an aggregate of $200,000 on or before January 2, 2005.
The consideration paid by TACT for the acquisition of IOT was determined through
arms-length negotiation by the management of TACT and a majority of the IOT
Stockholders. The acquisition was accounted for under the purchase method of
accounting for business combinations and operations of IOT has been included
from the date of acquisition. The purchase price of the acquisition exceeded the
fair market value of the net assets acquired, resulting in the recording of
goodwill of $1,181,520. The three majority shareholders of IOT received
employment agreements for a three-year period at an annual salary of $160,000
per year each. For the year ended December 31, 2005, the amortization expense
for the intangible asset was $34,667.

                                      F-12
<PAGE>

                          THE A CONSULTING TEAM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         IOT was a privately owned, professional services firm that provides
data management and business intelligence solutions, technology consulting and
project management services. IOT operates as a wholly owned subsidiary of TACT.
The acquisition was made to increase the depth of the Company's services and
solutions offerings and provide the Company with significant cross-selling
opportunities.

         On October 2, 1998, the Company made an investment in web integrator T3
Media of $3 million, in return for non-voting convertible preferred stock. On
June 23, 1999, the Company converted its preferred stock into 30% common stock
ownership and increased its ownership interest to approximately 51% by an
additional investment in T3 Media's common stock of $370,000. The acquisition of
T3 Media was accounted for using the purchase method of accounting. Accordingly,
the results of operations of T3 Media are included in the Company's consolidated
results of operations from the date of acquisition. The excess of the purchase
price over the estimated fair value of the net identifiable assets acquired
totaled $4.0 million and was recorded as goodwill and was being amortized using
the straight-line method over 7 years. During 2000, the Company wrote-off the
net carrying value of the goodwill which amounted to $3.1 million. T3 Media
ceased operations in the second quarter of 2001. During 2003, the Company
reversed approximately $113,000, in accounts payable relating to T-3 Media,
resulting in a reduction in SG&A expenses.

3.   INVESTMENTS

         The Company invested approximately $2,000,000 and $300,000 in Always-On
Software, Inc. during 2000 and 1999, respectively, and the Company invested
$500,000 in Methoda Computers Ltd. during 2000. Due to the deteriorating
conditions of the software application services ("ASP") market and deteriorating
cash reserves, Always-On Software, Inc. ceased operations in July 2001. As a
result, the Company wrote-down virtually all of its investment of $2.3 million
to reflect the impairment in the value of its investment in the second quarter
of 2001. In the fourth quarter of 2001, Always-On Software Inc. merged with
Veracicom, Inc. and the Company received warrants in this transaction. In the
third quarter of 2002, the Company wrote off the remainder of its investment in
Always-On Software, Inc. in the amount of $18,000. The Company also wrote down
its investment in Methoda Computer Ltd. in that same period in the amount of
$132,000.

         In January of 2004, the Company sold approximately 75 percent of its
investment in Methoda for $200,000 in cash and $81,000 payable over the next
twenty months, which was fully satisfied in 2005. The remaining investment had a
carrying value of $87,000 as of December 31, 2005 and 2004.

                                      F-13
<PAGE>

                          THE A CONSULTING TEAM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.   NET INCOME (LOSS) PER SHARE

         The following table sets forth the computation of basic and diluted net
income (loss) per share for the years ended December 31, 2005, 2004 and 2003.

<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,
                                                     ------------------------------------------
                                                         2005           2004           2003
                                                     ------------   ------------   ------------
<S>                                                  <C>            <C>            <C>
NUMERATOR FOR BASIC NET (LOSS) INCOME PER SHARE
  Net (loss) income                                  $   (484,004)  $  1,236,705   $   (123,305)
  Preferred Dividend                                        8,897         26,850         26,776
                                                     ------------   ------------   ------------
  Net (loss) income available to
   common stockholders                               $   (492,901)  $  1,209,855   $   (150,081)
                                                     ============   ============   ============
NUMERATOR FOR DILUTED NET (LOSS) INCOME PER SHARE
  Net (loss) income available to common
   stockholders & assumed conversion                 $   (492,901)  $  1,236,705   $   (150,081)
                                                     ============   ============   ============
DENOMINATOR:
  Denominator for basic (loss) income before
   extraordinary item and net loss per share
   - weighted-average shares                            2,285,874      2,110,072      2,098,810
  Effect of dilutive securities:
  Preferred shares                                              -        142,903              -
  Employee stock options                                        -         59,046              -
                                                     ------------   ------------   ------------
  Denominator for diluted earnings (loss) per
   share - adjusted weighted-average shares             2,285,874      2,312,021      2,098,810
                                                     ============   ============   ============

BASIC EARNINGS (LOSS) INCOME PER SHARE:
                                                     ------------   ------------   ------------
  Net (loss) income                                  $      (0.22)  $       0.57   $      (0.07)
                                                     ============   ============   ============

DILUTED EARNINGS (LOSS) INCOME PER SHARE:
                                                     ------------   ------------   ------------
  Net (loss) income                                  $      (0.22)  $       0.53   $      (0.07)
                                                     ============   ============   ============
</TABLE>

         During the year ended December 31, 2004 there were 159,140 options,
that were excluded from the computation of diluted earnings per share, because
the options were not vested or the exercise price was in excess of the fair
market value. All options and warrants outstanding during 2005 and 2003 (see
Notes 13) were not included in the computation of net loss per share because the
effect would be antidilutive.

                                      F-14
<PAGE>

                          THE A CONSULTING TEAM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.   PROPERTY AND EQUIPMENT

         Property and equipment, at cost, consists of the following:

<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                                   -------------------------------
                                                        2005             2004
                                                   --------------   --------------
<S>                                                <C>              <C>
Equipment and leaseholds                           $    5,585,602   $    5,516,985
Software                                                  990,845          972,879
Furniture and fixtures                                  1,113,650        1,107,272
Automobiles                                               158,769          158,769
                                                   --------------   --------------
                                                        7,848,866        7,755,905
Less accumulated depreciation and amortizat             7,368,021        7,199,009
                                                   --------------   --------------
                                                   $      480,845   $      556,896
                                                   ==============   ==============
</TABLE>

6.   CREDIT ARRANGEMENT

         The Company has a line of credit of $4.0 million with Keltic Financial
Partners, LP, (Keltic) based on the Company's eligible accounts receivable
balances. The line of credit has certain financial covenants, which the Company
must meet on a quarterly basis. There was no outstanding balance at December 31,
2005 or 2004. On March 23, 2004, the line of credit was amended and restated to
include the following: an extension to June 2007, the removal of the guarantee
of the Chief Executive Officer and less restrictive financial covenants. On
March 23, 2005, the agreement was restated and amended, again. Included in the
restated and amended agreement is Keltic's consent for the proposed transaction
with Vanguard Info-Solutions Corporation, (as defined in more detail in the
Definitive Proxy Statement filed on June 27, 2005), which transaction was
terminated on August 4, 2005 and a waiver to certain financial covenants that
the Company failed to comply with in the first quarter ending March 31. The
Company failed to comply with these covenants for the second and third quarters
ending June 30 and September 30, 2005, respectively. Accordingly, a waiver was
obtained from Keltic. On December 1, 2005, the agreement was further amended to
reset the EBITDA covenant effective October 1, 2005. The line of credit bears
interest at a variable rate based on prime plus 1.75% and the rate was 9.00% at
December 31, 2005.

         The Company is prohibited from paying dividends on its common stock due
to restrictions under the restated and amended Loan and Security Agreement with
Keltic Financial Partners, L.P. Keltic has consented to the payment of dividends
on the Series A and Series B Preferred Stock, provided an event of default does
not exist.

         As of December 31, 2005, The Series A and Series B Preferred Stock was
fully converted into common stock during 2005. As result, there are no
outstanding shares of Series A or Series B Preferred Stock as of December 31,
2005.

7.   CONTRACTUAL OBLIGATIONS AND COMMITMENTS

         The Company has the following commitments as of December 31, 2005, and
is comprised of short term obligations of an automobile loan and employment
contracts. In addition, there is a capital lease obligation and operating lease
obligation as well. The automobile loan is payable in monthly installments of
$1,262 including interest at 6%. As of December 31, 2005, the loan matures as
follows: 2006 - $13,478. The employment contracts are payable as follows: 2006 -
$386,250, 2007-$360,000. One of the Company's subsidiaries, T3 Media, which
ceased operations in 2001, had entered into a series of capital lease
obligations, which the Company had guaranteed. The Company continues the process
of negotiating buy-outs on these leases. The Company has two operating leases
for its corporate headquarters located in NY and its branch office in NJ. The
annual amounts due for both locations are as follows: 2006 - $308,663 and 2007 -
$191,100.

         As of December 31, 2005, the Company does not have any "Off Balance
Sheet Arrangements".

                                      F-15
<PAGE>

                          THE A CONSULTING TEAM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The Company's contractual obligations at December 31, 2005, are
comprised of the following:

<TABLE>
<CAPTION>
                                                           PAYMENTS DUE BY PERIOD
                                 --------------------------------------------------------------------------
                                                    LESS THAN 1         1 - 3          3 - 5     MORE THAN
  CONTRACTUAL OBLIGATIONS            TOTAL             YEAR             YEARS          YEARS      5 YEARS
-----------------------------    --------------   --------------   --------------   ----------   ----------
<S>                              <C>              <C>              <C>              <C>          <C>
LONG TERM OBLIGATIONS
Automobile Loan                  $       13,478   $       13,478   $            -   $        -   $        -
Employment Contracts                    746,250          386,250(1)       360,000            -            -

CAPITAL LEASE OBLIGATIONS
Capital Lease - Short Term              290,517          290,517                -            -            -

OPERTATING LEASES
Rent                                    499,763          308,663          191,100            -            -
                                 --------------   --------------   --------------   ----------   ----------
TOTAL                            $    1,550,008   $      998,908   $      551,100   $        -   $        -
                                 ==============   ==============   ==============   ==========   ==========
</TABLE>

(1)  Due to the resignation of the Company's Chief Financial Officer, effective
     February 17, 2006, the employment contract with the Company was terminated.
     Therefore, the Company's Contractual Obligations for Employment Contracts
     for Less Than 1 Year have been adjusted to reflect Mr. Falcone's salary
     through February 17, 2006 of $26,250 as opposed to $192,500 that would have
     been due had he not resigned.

8.   ACCOUNTS PAYABLE AND ACCRUED EXPENSES

         Accounts payable and accrued expenses consists of the following:

                                          December 31,
                                -------------------------------
                                     2005             2004
                                --------------   --------------
 Accounts payable               $      467,864   $      490,818
 Payroll                               484,745          533,065
 Bonuses                                59,956          108,956
 Other accrued expenses                752,081          533,321
                                --------------   --------------
                                $    1,764,647   $    1,666,160
                                ==============   ==============

9.   INCOME TAXES

         The Company accounts for income taxes using the liability method in
accordance with Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("SFAS 109").

         Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.

                                      F-16
<PAGE>

                          THE A CONSULTING TEAM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         Deferred tax assets and (liabilities) consist of the following:

                                             DECEMBER 31,
                                   -------------------------------
                                        2005             2004
                                   --------------   --------------
Licensing revenues                 $      (50,000)  $      (53,000)
Accounts receivable reserve               128,000          119,000
Depreciation and amortization             214,000          201,000
Investments                               928,000          928,000
Other                                      50,000           29,000
Accounting method change                        -          (22,500)
Net operating losses                    4,675,000        4,439,000
                                   --------------   --------------
                                        5,945,000        5,640,500
Valuation allowance                    (5,945,000)      (5,663,000)
                                   --------------   --------------
                                   $            -   $      (22,500)
                                   ==============   ==============

         The deferred tax liability at December 31, 2004 relates to the change
in accounting methods for tax purposes arising from the IOT acquisition.

         Internal Revenue Code Section 382 places a limitation on the
utilization of Federal net operating loss and other credit carry-forwards when
an ownership change, as defined by the tax law, occurs. Generally, this occurs
when a greater than 50 percentage point change in ownership occurs. Accordingly,
the actual utilization of the net operating loss carry-forwards and other
deferred tax assets for tax purposes may be limited annually under Code Section
382 to a percentage (currently about four and a half percent) of the fair market
value of the Company at the time of any such ownership change.

         For the year ended December 31, 2005, approximately $588,000 of federal
and $598,000 of state net operating losses were generated. As a result, at
December 31, 2005, the Company has federal net operating loss carry forwards of
approximately $10.8 million which will begin to expire in 2020. In addition, the
Company has state net operating loss carry forward of approximately $17 million
remaining which will expire 2009 to 2013. The full utilization of the deferred
tax assets in the future is dependent upon the Company's ability to generate
taxable income; accordingly, a valuation allowance of an equal amount has been
established. During the year ended December 31, 2005, the valuation allowance
increased by $282,000 and during the years ended December 31, 2004 and 2003, the
valuation allowance decreased by $1,592,000 and $69,000, respectively.

         Significant components of the provision for income taxes are as
follows:

                                     YEAR ENDED DECEMBER 31,
                           ------------------------------------------
                               2005           2004           2003
                           ------------   ------------   ------------
Current:
  Federal                  $          -   $     35,625   $          -
  State and local                38,740         85,960         46,000
                           ------------   ------------   ------------
    Total Current          $     38,740   $    121,585   $     46,000
                           ------------   ------------   ------------
Deferred:
  Federal                             -         (5,625)       (19,125)
  State and local               (22,500)       (16,875)        (3,375)
                           ------------   ------------   ------------
    Total Deferred              (22,500)       (22,500)       (22,500)
                           ------------   ------------   ------------
Total                      $     16,240   $     99,085   $     23,500
                           ============   ============   ============

                                      F-17
<PAGE>

                          THE A CONSULTING TEAM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         A reconciliation between the federal statutory rate and the effective
income tax rate for the years ended December 31, 2005, 2004, and 2003.

                                         2005       2004       2003
                                       --------   --------   --------
Federal statutory rate                    (34.0)%     34.0%     (34.0)%
State and local taxes net
 of federal tax benefit                     2.3        5.7       45.6
Non-deductible expenses                   (25.1)       5.4        4.8
Carryback of losses for which no
 benefit was
  previously recorded                                               -
Change in valuation allowance             60.27     (37.68)      7.15
                                       --------   --------   --------
Total                                      3.47%      7.42%     23.55%
                                       ========   ========   ========

10.  RETIREMENT PLAN

         The Company sponsors a defined contribution plan under Section 401(k)
of the Internal Revenue Code for its employees. Participants can make elective
contributions subject to certain limitations. Under the plan, the Company can
make matching contributions on behalf of all participants. There were no such
contributions made by the Company in 2005, 2004 and 2003.

11.  CONCENTRATION OF CREDIT RISK

         Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist primarily of cash and accounts
receivable. The Company maintains its cash balances on deposit with a limited
number of financial institutions in amounts which may exceed federally insured
limits. Historically, the Company has not experienced any related cash-in-bank
losses. For the year ended December 31, 2005, the Company had three customers
which accounted for 21%, 20% and 15% of revenues, respectively. For the year
ended December 31, 2004, the Company had two customers which accounted for 20%
and 19% of revenues, respectively. For the year ended December 31, 2003, the
Company had one customer which represented 28% of revenues. Besides these
customers, no other customer represented greater than 10% of the Company's
revenues. Four customers represented approximately 10%, 15%, 15% and 23% of
accounts receivable as of December 31, 2005, three customers represented
approximately 10%, 14% and 17% of accounts receivable as of December 31, 2004,
and three customers represented approximately 10%, 13% and 15% of accounts
receivable as of December 31, 2003.

12.  LEASES

         The Company leases office space under non-cancelable operating leases.
The future minimum payments for all non-cancelable operating leases as of
December 31, 2005 are as follows:

         2006                                      308,663
         2007                                      191,100
                                               -----------
         Total minimum future lease payments   $   499,763
                                               ===========

         Office leases are subject to escalations based on increases in real
estate taxes and operating expenses. Rent expense for the years ended December
31, 2005, 2004, and 2003, was approximately $301,042, $299,121and $340,000,
respectively.

                                      F-18
<PAGE>

                           THE A CONSULTING TEAM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         In 2001, T3 Media stopped paying its capital lease obligations. The
Company was a guarantor of the majority of these obligations and is continuing
the process of negotiating buy-outs of the remaining leases. For the year ended
December 31, 2005, $290,517 of T3 Media's capital lease obligations remained
outstanding.

13.  STOCK OPTION PLAN

         The Company adopted a Stock Option Plan (the "Plan") that provides for
the grant of stock options that are either "incentive" or "non-qualified" for
federal income tax purposes. The Plan provided for the issuance of up to a
maximum of 150,000 shares of common stock. On May 27, 1998, the shareholders
approved and ratified an increase to the Plan from 150,000 to 225,000 shares of
common stock, on May 24, 2001, the shareholders approved and ratified an
increase to the Plan from 225,000 to 300,000 shares of common stock and on July
26, 2005, the shareholders approved and ratified an increase to the Plan from
300,000 to 1,200,000 shares of common stock (subject to adjustment pursuant to
customary anti-dilution provisions).

         The exercise price per share of a stock option is established by the
Executive Compensation Committee of the Board of Directors in its discretion,
but may not be less than the fair market value of a share of common stock as of
the date of grant. The aggregate fair market value of the shares of common stock
with respect to which "incentive" stock options are exercisable for the first
time by an individual to whom an "incentive" stock option is granted during any
calendar year may not exceed $100,000. Stock options generally vest over a
period between 1 to 4 years.

         Stock options, subject to certain restrictions, may be exercisable any
time after full vesting for a period not to exceed ten years from the date of
grant and terminate upon the date of termination of employment. Such period is
to be established by the Company in its discretion on the date of grant.

         Information with respect to options under the Company's Plan (adjusted
for reverse stock split that occurred on January 7, 2004) is as follows:

                                                            WEIGHTED
                                            NUMBER OF       AVERAGE
                                             SHARES      EXERCISE PRICE
                                          ------------   --------------
     Balance - January 1, 2003                 249,154   $         6.58
        Granted during 2003                      1,000             1.81
        Exercised during 2003                  (11,250)            1.63
        Forfeitures during 2003                (80,383)           13.75
                                          ------------
     Balance - December 31, 2003               158,521             3.27
        Granted during 2004                    154,750             4.61
        Exercised during 2004                  (14,688)            1.34
        Forfeitures during 2004                (43,020)            4.94
                                          ------------
     Balance - December 31, 2004               255,563             3.91
        Granted during 2005                     15,750             4.67
        Exercised during 2005                  (56,032)            2.19
        Forfeitures during 2005                 (9,188)            5.64
                                          ------------
     Balance - December 31, 2005               206,093   $         4.36
                                          ============

         At December 31, 2005, 2004, and 2003, 105,937, 96,657, and 83,959,
respectively, were exercisable with weighted average exercise prices of $4.28,
$3.56, and $4.78, respectively.

                                      F-19
<PAGE>

                           THE A CONSULTING TEAM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The following table summarizes the status of the stock options
outstanding and exercisable at December 31, 2005:

                            STOCK OPTIONS OUTSTANDING
-------------------------------------------------------------------------------
                                                                    NUMBER OF
                     WEIGHTED                      WEIGHTED-          STOCK
EXERCISE PRICE       AVERAGE        NUMBER OF      REMAINING         OPTIONS
    RANGE         EXERCISE PRICE    OPTIONS     CONTRACTUAL LIFE   EXERCISABLE
---------------   --------------   ----------   ----------------   ------------
  $0.00 - $4.80   $        2.735      132,593       5.4 years            80,062
  $4.80 - $9.60   $        5.903       63,750       4.5 years            16,125
 $9.60 - $14.40   $        9.620          750       4.6 years               750
$14.40 - $19.20   $       15.504        8,000       3.9 years             8,000
$24.00 - $28.80   $       28.000          500       3.0 years               500
$28.80 - $33.60   $       30.000          500       2.8 years               500
                                   ----------                      ------------
                                      206,093                           105,937
                                   ==========                      ============

         At December 31, 2005, the Company had 1,200,000 shares of Common Stock
reserved in connection with the Stock Option Plan.

14.  IMPAIRMENT OF ASSETS AND RESTRUCTURING CHARGES

         The Company began to restructure its operations in 2000 and has
continued to restructure its operations through 2002. The restructuring was
completed in the first quarter of 2003.

         At December 31, 2005 and 2004, the Company had no restructuring charge
liability.

15.  EMPLOYMENT AGREEMENT OF CHIEF EXECUTIVE OFFICER

         The Company has entered into an employment agreement with Shmuel
BenTov, its Chairman, Chief Executive Officer and President, which terminates on
December 31, 2007. The contract calls for a salary of $360,000 per year. His
employment agreement contains non-competition, non-disclosure and
non-solicitation covenants. It also contains an annual bonus, subject to the
approval of the non-employee members of the Company's Executive Compensation
Committee and further subject to the Company meeting certain financial
performance criteria, in an amount to be determined by the non-employee members
of the Committee. In the event that he is terminated by the Company, he is to
receive severance pay that is two times his then annual salary and is payable
within 30 days of the termination.

16.  SALES AND CONVERSION OF PREFERRED SHARES

         In 2002, the Company issued 530,304 shares of Series A Preferred Stock
and 41,311 shares of Series B Preferred Stock. The shares of Series A and Series
B Preferred Stock are convertible into Common Stock on a 4:1 basis, which
reflects the Company's one-for-four reverse stock split that occurred on January
7, 2004 and are subject to further adjustment for stock splits, consolidations
and stock dividends. In addition, the shares of Series A and B Preferred Stock
are entitled to a 7% cumulative dividend payable semi-annually. The Company has
also agreed to grant "piggyback" registration rights to the Preferred
Stockholders for the shares of Common Stock issuable upon conversion of the
Series A and Series B Preferred Stock. The Series A and Series B Preferred Stock
carries a liquidation preference in that the Series A and Series B shareholders
are paid before any other class of stock.

         As of December 31, 2005, the Series A and Series B Preferred Stock was
fully converted into common stock during 2005. As result, there are no
outstanding shares of Series A or Series B Preferred Stock as of December 31,
2005.

                                      F-20
<PAGE>

                          THE A CONSULTING TEAM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17.  QUARTERLY RESULTS (UNAUDITED)

         The following is a summary of the quarterly results of operations for
the years ended December 31, 2005 and 2004.

<TABLE>
<CAPTION>
                                                                    QUARTER ENDED
                                      ---------------------------------------------------------------------
(in thousands, except per share          MARCH 31,          JUNE 30,       SEPTEMBER 30,      DECEMBER 31,
amounts)                                   2005              2005              2005              2005
-----------------------------------   ---------------   ---------------   ---------------   ---------------
<S>                                   <C>               <C>               <C>               <C>
Revenues                              $         6,115   $         6,704   $         6,858   $         6,755
Gross profit                                    1,875             1,783             1,900             2,242
(Loss) income from operations                    (257)             (543)              133               206
Net (loss) income                                (259)             (546)              118               203
Net (loss) income per share-basic
 and dilutive                         $         (0.12)  $         (0.24)  $          0.05   $          0.09
</TABLE>

<TABLE>
<CAPTION>
                                                                    QUARTER ENDED
                                      ---------------------------------------------------------------------
                                         MARCH 31,          JUNE 30,       SEPTEMBER 30,      DECEMBER 31,
                                           2004              2004              2004              2004
                                      ---------------   ---------------   ---------------   ---------------
<S>                                   <C>               <C>               <C>               <C>
Revenues                              $         5,801   $         6,347   $         6,585   $         6,302
Gross profit                                    1,682             1,907             2,098             1,986
Income (loss) from operations                     275               337               398               351
Net income (loss)                                 220               298               370               349
Net income (loss) per share-basic
 and dilutive                         $          0.10   $          0.14   $          0.16   $          0.16
</TABLE>

                                      F-21
<PAGE>

                           THE A CONSULTING TEAM, INC.

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                COL. A                     COL. B                COL. C                COL. D         COL. E
-------------------------------------   ------------   ---------------------------   ----------     -----------
                                                                ADDITIONS
                                                       ---------------------------
                                                          (1)             (2)
                                                       ----------   --------------
                                         BALANCE AT    CHARGED TO     CHARGED TO                    BALANCES AT
                                        BEGINNING OF   COSTS AND    OTHER ACCOUNTS   DEDUCTIONS       END OF
             DESCRIPTION                   PERIOD       EXPENSES       DESCRIBE       DESCRIBE        PERIOD
-------------------------------------   ------------   ----------   --------------   ----------     -----------
<S>                                     <C>            <C>          <C>              <C>            <C>
Reserves and allowances deducted from
 asset accounts:
For the year ended December 31, 2005
  Allowance for doubtful accounts       $    296,828   $   35,000   $            -   $  (11,024)(a) $   320,804
For the year ended December 31, 2004
  Allowance for doubtful accounts       $    305,290   $  145,000   $            -   $ (153,462)(b) $   296,828
For the year ended December 31, 2003
  Allowance for doubtful accounts       $    380,472   $   40,000   $            -   $ (115,182)(c) $   305,290
</TABLE>

(a) Uncollectible accounts written off during 2005.

(b) Uncollectible accounts written off during 2004.

(c) Uncollectible accounts written off during 2003.

                                       S-1
<PAGE>

                                  EXHIBIT INDEX

Exhibit
Number      Description of Exhibits
---------   --------------------------------------------------------------------
  2.1       Stock Purchase Agreement dated as of June 28, 2002 among the
            Registrant, International Object Technology, Inc. and the
            Stockholders of International Object Technology, Inc. incorporated
            by reference to Exhibit 2.1 to the Form 8-K, as previously filed
            with the SEC on July 12, 2002.

  3.1       Restated Certificate of Incorporation of the Registrant,
            incorporated by reference to Exhibit 3.1 to the Form 10Q for the
            period ended June 30, 2001, as previously filed with the SEC on
            August 10, 2001.

  3.2.1     Certificate of Amendment of the Certificate of Incorporation of the
            Registrant dated August 8, 2002 incorporated by reference to Exhibit
            3.2 to the Form 10-Q for the period ended June 30, 2001, as
            previously filed with the SEC on August 14, 2002.

  3.2.2     Certificate of Amendment of the Certificate of Incorporation of the
            Registrant dated November 12, 2002, incorporated by reference to
            Exhibit 3.2.2 to the Form 10-Q for the period ended September 30,
            2002, as previously filed with the SEC on November 14, 2002.

  3.2.3     Certificate of Amendment of the Certificate of Incorporation of the
            Registrant dated January 5, 2004, incorporated by reference to
            Exhibit 3.2.3 to the Form 8-K dated January 8, 2004, as previously
            filed with the SEC on January 8, 2004.

  3.3       Amended and Restated By-Laws of the Registrant, incorporated by
            reference to Exhibit 3.3 to the Registration Statement on Form SB-2
            as previously filed with the SEC on August 6, 1997.

  3.4       Amendment No. 1 to the Amended and Restated Bylaws of the Registrant
            incorporated by reference to Exhibit 3.4 to the Form 10-Q for the
            period ended June 30, 2003, as previously filed with the SEC on
            August 14, 2003.

  4.1       Specimen Common Stock Certificate, incorporated by reference to
            Exhibit 4 to the Registration Statement on Form SB-2 as previously
            filed with the SEC on July 23, 1997.

  4.2       Registration Rights Agreement dated as of July 19, 2002 among the
            Registrant and those persons listed on Schedule I attached thereto,
            incorporated by reference to Exhibit 4.1 to the Form 8-K dated July
            19, 2002, as previously filed by the SEC on July 25, 2002.

  10.1.1    Stock Option and Award Plan of the Registrant and Form of
            Nonqualified Stock Option Agreement, incorporated by reference to
            Exhibit 10.1 to the Registration Statement on Form SB-2 as
            previously filed with the SEC on August 6, 1997.

  10.1.2    Amendment to the Stock Option and Award Plan of the Registrant,
            incorporated by reference to Post-Effective Amendment No. 1 to the
            Registration Statement on Form S-8 as previously filed with the SEC
            on June 25, 1998.

  10.1.3    Amendment No. 2 to the Stock Option and Award Plan of the
            Registrant, incorporated by reference to Exhibit C to the
            Registrant's 2001 Proxy Statement on Schedule 14A, as previously
            filed with the SEC on April 30, 2001.

<PAGE>

  10.2      Amended and restated Loan and Security Agreement between the
            Registrant and Keltic Financial Partners, LP, dated March 23, 2004,
            incorporated by reference to Exhibit 10.2 to the Form 10-K for the
            year ended December 31, 2003, as previously filed with the SEC on
            March 29, 2004.

  10.2.1    First Modification to the March 23, 2004 Amended and Restated Loan
            and Security Agreement, incorporated by reference to the Form 10-Q
            for the first quarter ended March 31, 2005, as previously filed with
            the SEC on May 12, 2005.

  10.2.2    Amendment dated December 1, 2005 to the March 23, 2004 Amended and
            Restated Loan and Security Agreement

  10.3      Employment Agreement, dated December 1, 2005, between the Registrant
            and Shmuel BenTov, incorporated by reference to Exhibit 10.1 to the
            Form 8-K dated December 12, 2005, as previously filed with the SEC
            on December 15, 2005.

  10.4      Form of S Corporation Termination, Tax Allocation and
            Indemnification Agreement, incorporated by reference to Exhibit 10.4
            to the Registration Statement on Form SB-2, as previously filed with
            the SEC on August 6, 1997.

  10.5      Letter of Undertaking from the Registrant and Shmuel BenTov,
            incorporated by reference to Exhibit 10.9 to the Registration
            Statement on Form SB-2, as previously filed with the SEC on July 23,
            1997.

  10.6      Shmuel BenTov Letter Commitment, dated March 29, 2001, incorporated
            by reference to Exhibit 10.10 to the Form 10-K for the fiscal year
            ended December 31, 2000, as previously filed with the SEC on
            April 2, 2001.

  10.7      Form of Indemnification Agreement between the Registrant and each of
            its Directors and its Chief Executive Officer, incorporated by
            reference to Exhibit 10.12 to the Form 10-Q for the period ended
            September 30, 2003 as filed with the SEC on November 11, 2003.

  23.1      Consent of Grant Thornton, LLP

  23.2      Consent of Mercadien, P.C., Certified Public Accountants

  31.1      Certification of Chief Executive Officer pursuant to Section 302 of
            Sarbanes-Oxley Act of 2002.

  31.2      Certification of Principal Financial Officer pursuant to Section 302
            of Sarbanes-Oxley Act of 2002.

  32.1      Certification of the Chief Executive Officer, pursuant to 18 U.S.C.
            Section 1350, as adopted pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002.

  32.2      Certification of the Principal Financial Officer, pursuant to 18
            U.S.C. Section 1350, as adopted pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002.