##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 OR
 o
    
    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 0-23315
 enherent Corp.
  Delaware
(State or Other Jurisdiction of Incorporation)
    
    No. 13-3914972
(I.R.S. Employer Identification No.)
 
 (212) 889-7722
(Registrants Telephone Number, Including Area Code)
 
  þ o
 o þ
  Class
    
    Shares outstanding as of July 31, 2005Common stock, par value $.001
    
    50,485,717




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enherent Corp. and Subsidiaries
 INDEX
  
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements.
    
    
    1Condensed Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004
    
    
    1Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2005 and 2004
    
    
    2Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2005 and 2004
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    
    9Item 3. Quantitative and Qualitative Disclosures about Market Risk.
    
    
    18Item 4. Controls and Procedures.
    
    
    18PART II. OTHER INFORMATIONItem 1. Legal Proceedings.
    
    
    19Item 4. Submission of Matters to a Vote of Security Holders.
    
    
    19Item 5. Other Information.
    
    
    19Item 6. Exhibits.
    
    
    20Signatures
    
    
    S-1Exhibit Index
    
    
    E-12005 Management Incentive Compensation PlanDirector Compensation PlanCertificationCertificationCertificationCertification
  i




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##### Table of Contents



Item 1. Financial Statements
 ENHERENT CORP. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30,
    
    December 31,2005
    
    2004(Unaudited)
    
    (Note 1)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    381,715
    
    
    $
    28,647Accounts receivable
    
    
    5,500,740
    
    
    
    3,033,280Prepaid and refundable taxes
    
    
    59,318
    
    
    
    9,733Prepaid expenses and other current assets
    
    
    217,402
    
    
    
    113,012Total current assets
    
    
    6,159,175
    
    
    
    3,184,672Furniture, equipment and improvements,
at cost, less accumulated depreciation
    
    
    208,206
    
    
    
    285,725Goodwill and other intangibles
    
    
    4,755,937
    
    
    
    383,049Deferred financing costs
    
    
    124,556
    
    
    
    Other assets
    
    
    56,600
    
    
    
    T O T A L
    
    $
    11,304,474
    
    
    $
    3,853,446LIABILITIESCurrent liabilities:Revolving credit facility
    
    $
    3,689,136
    
    
    $
    2,596,549Current portion of long-term debt
    
    
    391,863
    
    
    
    576,336Accounts payable and accrued expenses
    
    
    3,037,635
    
    
    
    2,042,811Deferred revenue
    
    
    296,874
    
    
    
    99,252Accrued compensation and benefits
    
    
    1,030,687
    
    
    
    222,639Total current liabilities
    
    
    8,446,195
    
    
    
    5,537,587Long-term liabilities:Long-term debt, net of current portion above
    
    
    3,893,187
    
    
    
    2,203,715Noncurrent rent payable
    
    
    35,094
    
    
    
    43,215Total long-term liabilities
    
    
    3,928,281
    
    
    
    2,246,930Total liabilities
    
    
    12,374,476
    
    
    
    7,784,517Commitments and contingenciesSeries A senior participating redeemable convertible preferred stock, $.001 par value; authorized - 10,000,000 shares,issued and outstanding
    
    
    
    
    
    
    CAPITAL DEFICIENCYCommon stock, $.001 par value, authorized - 100,000,000 shares in 2005
and 20,000,000 shares in 2004 issued and outstanding - 50,465,717 shares
in 2005 and 5,908,259 shares in 2004
    
    
    50,466
    
    
    
    5,908Additional paid-in capital
    
    
    27,035,899
    
    
    
    23,348,657Accumulated deficit
    
    
    (28,156,367
    )
    
    
    (27,285,636
    )Total capital deficiency
    
    
    (1,070,002
    )
    
    
    (3,931,071
    )T O T A L
    
    $
    11,304,474
    
    
    $
    3,853,446
  1




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ENHERENT CORP. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 For the Three Months Ended
    
    For the Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Revenues:Service revenue
    
    $
    6,840,108
    
    
    $
    3,665,987
    
    
    $
    9,927,470
    
    
    $
    7,072,191Equipment and software revenue
    
    
    668,586
    
    
    
    344,113
    
    
    
    1,356,909
    
    
    
    2,187,585
    *Total revenues
    
    
    7,508,694
    
    
    
    4,010,100
    
    
    
    11,284,379
    
    
    
    9,259,776Cost of revenues:Cost of services
    
    
    5,156,860
    
    
    
    2,562,974
    
    
    
    7,533,734
    
    
    
    5,221,933Cost of equipment and software
    
    
    492,308
    
    
    
    271,455
    
    
    
    1,002,717
    
    
    
    1,837,603
    *Cost of revenues
    
    
    5,649,168
    
    
    
    2,834,429
    
    
    
    8,536,451
    
    
    
    7,059,536Gross profit
    
    
    1,859,526
    
    
    
    1,175,671
    
    
    
    2,747,928
    
    
    
    2,200,240Operating expenses:Selling, general and administrative
    
    
    1,646,462
    
    
    
    975,094
    
    
    
    2,596,923
    
    
    
    2,022,221Non-recurring merger related expenses
    
    
    238,708
    
    
    
    
    
    
    
    573,227
    
    
    
    Depreciation and amortization expense
    
    
    91,556
    
    
    
    70,547
    
    
    
    156,886
    
    
    
    135,727Total operating expenses
    
    
    1,976,726
    
    
    
    1,045,641
    
    
    
    3,327,036
    
    
    
    2,157,948Operating income (loss)
    
    
    (117,200
    )
    
    
    130,030
    
    
    
    (579,108
    )
    
    
    42,292Interest expense
    
    
    (164,019
    )
    
    
    (113,208
    )
    
    
    (282,064
    )
    
    
    (235,320
    )Income (loss) before income taxes
    
    
    (281,219
    )
    
    
    16,822
    
    
    
    (861,172
    )
    
    
    (193,028
    )Provision for income taxes
    
    
    (1,909
    )
    
    
    (4,650
    )
    
    
    (9,559
    )
    
    
    (4,650
    )NET INCOME (LOSS)
    
    $
    (283,128
    )
    
    $
    12,172
    
    
    $
    (870,731
    )
    
    $
    (197,678
    )Basic net income (loss) per share
    
    $
    (.01
    )
    
    $
    
    
    
    $
    (.03
    )
    
    $
    (.01
    )Number of shares used in computing
basic net income (loss) per
share
    
    
    50,319,050
    
    
    
    20,745,541
    
    
    
    25,232,859
    
    
    
    20,745,541Diluted net income (loss) per share
    
    $
    (.01
    )
    
    $
    
    
    
    $
    (.03
    )
    
    $
    (.01
    )Number of shares used in computing
diluted net income (loss) per
share
    
    
    50,319,050
    
    
    
    22,047,080
    
    
    
    25,232,859
    
    
    
    20,745,541
 
 *
    
    Certain amounts for the three and six months ended June 30, 2004 have been restated to conform
with the current year presentation.  2




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ENHERENT CORP. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the Six Months EndedJune 30,2005
    
    2004Cash flows from operating activities:Net loss
    
    $
    (870,731
    )
    
    $
    (197,678
    )Adjustments to reconcile net loss to net
cash provided by (used for) operating activities:Bad debt expense
    
    
    (33,108
    )
    
    
    Depreciation and amortization
    
    
    156,886
    
    
    
    135,727Deferred rent
    
    
    (8,121
    )
    
    
    (6,196
    )Deferred revenue
    
    
    197,622
    
    
    
    93,047Changes in assets and liabilities:Accounts receivable
    
    
    81,885
    
    
    
    382,040Prepaid expenses and other current assets
    
    
    28,494
    
    
    
    (30,424
    )Prepaid and refundable taxes
    
    
    (49,584
    )
    
    
    (6,618
    )Other assets
    
    
    (6,600
    )
    
    
    Accounts payable, accrued expense and
accrued compensation and benefits
    
    
    (373,906
    )
    
    
    (90,445
    )Net cash provided by (used for) operating activities
    
    
    (877,163
    )
    
    
    279,453Cash flows from investing activities:Cash balance of merged entity
    
    
    892,309
    
    
    
    Purchase of furniture, fixtures, equipment and improvements
    
    
    (31,948
    )
    
    
    (3,240
    )Payments of direct merger costs
    
    
    (345,760
    )
    
    
    Net cash provided by (used for) investing activities
    
    
    514,601
    
    
    
    (3,240
    )Cash flows from financing activities:Payments of deferred financing costs
    
    
    (132,956
    )
    
    
    Net proceeds (repayments) under revolving loan
    
    
    1,093,274
    
    
    
    (300,535
    )Principal repayments on term loan
    
    
    (150,000
    )
    
    
    (150,000
    )Principal payment on capital lease obligations
    
    
    (25,158
    )
    
    
    (29,145
    )Repayment of other notes payable
    
    
    (69,530
    )
    
    
    (56,472
    )Net cash provided by (used for) financing activities
    
    
    715,630
    
    
    
    (536,152
    )NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    353,068
    
    
    
    (259,939
    )Cash and cash equivalents  January 1,
    
    
    28,647
    
    
    
    875,536CASH AND CASH EQUIVALENTS  June 30,
    
    $
    381,715
    
    
    $
    615,598Supplemental disclosure of cash flow information:Cash paid during the period for:Interest
    
    $
    254,353
    
    
    $
    225,262Income taxes
    
    $
    1,909
    
    
    $
    4,435Noncash investing and financing transactions:Equipment acquired under capital leases
    
    $
    
    
    
    $
    30,252
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ENHERENT CORP. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1.
    
    Basis of Presentation:The unaudited condensed consolidated financial statements presented herein have been prepared in
accordance with generally accepted accounting principles for interim financial information and
the instructions to Form 10-Q and Item 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, the accompanying
unaudited condensed consolidated financial statements include all adjustments (consisting only
of normal recurring entries) considered necessary for a fair presentation of the financial
condition and results of operations for the periods presented. The results of operations for
the six-month period ended June 30, 2005 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2005. The condensed consolidated balance sheet as
of December 31, 2004 was derived from the audited consolidated balance sheet as of that date.
The statements should be read in conjunction with the audited condensed consolidated financial
statements and notes thereto included in the Form 8-K/A dated June 13, 2005 of enherent Corp.
(enherent or Company).As further described in Note 3, on April 1, 2005, enherent completed the Merger (the Merger)
with Dynax Solutions, Inc. (Dynax). The Merger was completed upon the majority approval of
shareholders in separate shareholder meetings as required by the Agreement and Plan of Merger,
executed on October 12, 2004, as amended. As a result of the Merger, each outstanding share of
Dynax stock was converted into 3.8359 shares of enherent common stock.The Merger was accounted for using the purchase method of accounting for financial reporting
purposes. In a merger-of-equals transaction, the purchase method requires the identification of
the acquiring entity. While enherent was the legal acquirer in the Merger, Dynax was deemed
the accounting acquirer. Accordingly, the historical financial statements presented for periods
prior to the Merger are those of Dynax. The operations of the former enherent business have been
included in the financial statements for the period subsequent to April 1, 2005, the date
of the Merger.enherent and Dynax each historically operated in a single business segment. Subsequent to the
Merger, enherents management reviewed its business operations and has determined that the
Company continues to operate in a single business segment.
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2.
    
    Income (Loss) Per Share:The following table sets forth the computation of basic and diluted income (loss) per share:
 Three months ended
    
    Six months endedJune 30
    
    June 302005
    
    2004
    
    2005
    
    2004Numerator:Net income (loss)
    
    
    (283,128
    )
    
    $
    12,172
    
    
    $
    (870,731
    )
    
    $
    (197,678
    )Denominator:Weighted average of shares
outstandingBasic
    
    
    50,319,050
    
    
    
    20,745,541
    
    
    
    25,232,859
    
    
    
    20,745,541Diluted
    
    
    50,319,050
    
    
    
    22,047,080
    
    
    
    25,232,859
    
    
    
    20,745,541Basic income (loss) per share
    
    $
    (.01
    )
    
    $
    
    
    
    $
    (.03
    )
    
    $
    (.01
    )Diluted income (loss) per share
    
    $
    (.01
    )
    
    $
    
    
    
    $
    (.03
    )
    
    $
    (.01
    )
 The weighted average outstanding shares of Dynax prior to the Merger are based on its
outstanding shares and dilutive stock options after giving effect to the exchange ratio of
3.8359 shares of enherent issued for each share of Dynax in the Merger.3.
    
    Merger with Dynax Solutions, Inc.:On October 12, 2004, enherent entered into a definitive Agreement and Plan of Merger (the Merger
Agreement) with Dynax to combine in a stock-for-stock exchange. The Merger Agreement was
subsequently amended as of November 4, 2004. The Merger was completed on April 1, 2005.
Following the Merger, the former stockholders of Dynax own approximately 50% of the common stock
of enherent on a fully diluted basis. enherent was the surviving legal entity.The Merger was accounted for using the purchase method of accounting for financial reporting
purposes. In a merger-of-equals transaction, the purchase method requires the identification of
the acquiring entity based on the criteria of Financial Accounting Standard Board (FASB)
Financial Accounting Standards No. 141, Accounting for Business Combinations (FAS141). Based
on an analysis of minority interests in the surviving corporation and the composition of the
board of directors and senior management of the surviving corporation, for accounting purposes
Dynax was identified as the acquiring entity, and enherent as the acquired entity. Under
purchase accounting, the assets and liabilities of an acquired company (enherent) as of the
effective time of the acquisition are recorded at their respective fair values and added to those
of the acquiring company (Dynax). Financial statements issued after the consummation of an
acquisition accounted for as a purchase would reflect such values and not be restated
retroactively to reflect the historical financial position or results of operations of the
acquired company. The historical financial statements of the surviving corporation are those of
the accounting acquirer (Dynax) and comparative statements of the surviving corporation are those
of the accounting acquirer (Dynax) rather than the legal acquirer (enherent).enherent has followed the guidance of SFAS No. 141 to record this purchase. SFAS No. 141
requires that the purchase method of accounting be used for all business combinations initiated
after June 1, 2001 and that goodwill, as well as any intangible assets believed to have an
indefinite life, not be amortized for financial accounting purposes. enherent has recognized
goodwill and other intangibles of $4,780,937 in connection with this Merger.The following unaudited condensed combined pro forma results of operations reflect the pro forma
combination of Dynax and enherent business as if the combination had occurred at the beginning of
the periods presented compared with the actual results of operations of Dynax for the same
period. The unaudited pro forma condensed combined results of operations do not purport to
represent what the companies combined results of operations
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would have been if such transaction had occurred at the beginning of the periods
presented, and are not necessarily indicative of enherents future results.
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,Historical
    
    Pro forma
    
    Pro forma
    
    Pro forma2005
    
    2004
    
    2005
    
    2004Service revenue
    
    $
    6,840,108
    
    
    $
    6,817,247
    
    
    $
    13,656,292
    
    
    $
    13,135,638Equipment and
software revenue
    
    
    668,586
    
    
    
    344,113
    
    
    
    1,356,909
    
    
    
    2,187,585Total revenues
    
    
    7,508,694
    
    
    
    7,161,360
    
    
    
    15,013,201
    
    
    
    15,323,223Net income loss
    
    $
    (283,128
    )
    
    $
    (232,151
    )
    
    $
    (1,586,681
    )
    
    $
    (1,539,097
    )Net (loss) per
share  fully
diluted
    
    $
    (.01
    )
    
    $
    (.01
    )
    
    $
    (.04
    )
    
    $
    (.02
    )
  Upon consummation of the Merger, the enherent Preferred
Stockholders converted all preferred
shares and canceled all outstanding warrants in exchange for 8,500,000 shares of common stock and
subordinated secured notes in the aggregate principal amount of $1,600,000. The above pro forma
amounts give effect to the elimination of the preferred shares and the inclusion of the interest
on the $1,600,000 subordinated secured notes.4.
    
    Stock-Based Compensation:enherent accounts for stock options using the intrinsic value method set forth in Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and
accordingly, recognizes compensation expense only if the fair value of the underlying Common
Stock exceeds the exercise price of the stock option on the date of grant. As permitted by
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation
(SFAS 123), the Company continues to account for stock-based compensation in accordance with
APB Opinion No. 25 and has elected the pro forma disclosure alternative of SFAS No. 123.The following table illustrates the effect on net loss and loss per share if enherent had
applied the fair value recognition provisions of SFAS 123 instead of APB Opinion No. 25s
intrinsic value method to account for stock-based employee compensation:
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Three months ended
    
    Six months endedJune 30
    
    June 302005
    
    2004
    
    2005
    
    2004Net income (loss)
available to common
stockholders as reported
    
    $
    (283,128
    )
    
    $
    12,172
    
    
    $
    (870,731
    )
    
    $
    (197,678
    )Total stock option expense
determined under fair
value base method
    
    $
    34,000
    
    
    $
    52,000
    
    
    $
    42,000
    
    
    $
    104,000Pro forma net income (loss)
    
    $
    (317,128
    )
    
    $
    (39,828
    )
    
    $
    (912,731
    )
    
    $
    (301,678
    )Net income (loss) per
common share as reported:Basic
    
    $
    (.01
    )
    
    $
    
    
    
    $
    (.03
    )
    
    $
    (.01
    )Diluted
    
    $
    (.01
    )
    
    $
    
    
    
    $
    (.03
    )
    
    $
    (.01
    )Net income (loss) per
common share pro forma:Basic
    
    $
    (.01
    )
    
    $
    
    
    
    $
    (.03
    )
    
    $
    (.01
    )Diluted
    
    $
    (.01
    )
    
    $
    
    
    
    $
    (.03
    )
    
    $
    (.01
    )
 Pro forma information regarding net loss and loss per share is required by SFAS No. 123 and has
been determined as if enherent had accounted for its employees stock options under the fair
value method provided by SFAS No. 123. The fair value of the options was estimated at the date
of grant using the Black-Scholes option pricing model with the following assumptions for vested
and non-vested options:
 June 30Assumption
    
    2005
    
    2004Risk-free interest rate (approximately)
    
    
    5
    %
    
    
    4
    %Dividend yield
    
    
    0
    %
    
    
    0
    %Volatility factor of the expected market price of
enherents Common Stock (average)
    
    
    147
    %
    
    
    222
    %Average life years
    
    
    10
    
    
    
    10
 7




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5.
    
    Recent Accounting Pronouncements:In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment. SFAS No.
123(R) will require that the compensation cost relating to share-based payment
transactions be recognized in financial statements. That cost will be measured based on the
fair value of the equity or liability instruments issued. SFAS No. 123(R) covers a wide range of
share-based compensation arrangements including share options, restricted share plans,
performance-based awards, share appreciation rights, and employee share purchase plans. SFAS
No. 123(R) replaces FASB Statement No. 123, Accounting for Stock-Based Compensation, and
supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS No. 123, as
originally issued in 1995, established as preferable a fair value-based method of accounting for
share-based payment transactions with employees. That Statement, however, permitted entities
the option of continuing to apply the guidance in APB Opinion No. 25, as long as the footnotes
to financial statements disclosed what net income would have been had the preferable fair
value-based method been used. Pursuant to an amendment to SFAS No. 123(R) adopted by the SEC in
April 2005, public entities will be required to apply SFAS No. 123(R) as of the first annual
reporting period that begins after June 15, 2005 (i.e., year ending December 31, 2006 for the
Company). The impact of the adoption of SFAS No. 123(R) cannot be predicted at this time
because it will depend on levels of share-based payments granted in the future. Had enherent
adopted SFAS No. 123(R) in prior periods, however, the impact of that Statement would have
approximated the impact of SFAS No. 123 as described in the disclosure of pro forma net income
(loss) and net income (loss) per share in the stock based compensation accounting policy
included in Note 4 above.6.
    
    Contingencies:In the normal course of business, various claims are made against the Company. At this time, in
the opinion of management, there are no pending claims the outcome of which are expected to
result in a material adverse effect on the consolidated financial position or results of
operations of the Company.
 8




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Overview
 General
    Basis of Discussion/Merger:
   9




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Critical Accounting Policies:
 Use of Estimates
  Revenue Recognition
  Consulting Services:
    Software :
  Equipment:
  10




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Accounts Receivable and Allowance for Doubtful Accounts
  Fixed Assets
  Goodwill and Other Intangible Assets
   Results of Operations:
 Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004
 Service Revenues :
    11




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Equipment and Software Revenues:
  For the six months ended
    
    Revenue
    
    Gross Profit
    
    Gross ProfitJune 30, 2005Hardware and Software Sales
    
    $
    1,184,804
    
    
    $
    182,087
    
    
    
    15.3
    %Rebates, bonuses and incentives
    
    
    95,878
    
    
    
    95,878
    
    
    
    100
    %Commissions from leases
    
    
    76,227
    
    
    
    76,227
    
    
    
    100
    %Total
    
    $
    1,356,909
    
    
    $
    354,192
    
    
    
    26.1
    %
 For the six months ended
    
    Revenue
    
    Gross Profit
    
    Gross ProfitJune 30, 2004Hardware and Software Sales
    
    $
    1,954,460
    
    
    $
    116,857
    
    
    
    6.0
    %Rebates, bonuses and incentives
    
    
    69,511
    
    
    
    69,511
    
    
    
    100
    %Commissions from leases
    
    
    163,614
    
    
    
    163,614
    
    
    
    100
    %Total
    
    $
    2,187,585
    
    
    $
    349,982
    
    
    
    16.0
    %
      Operating Expenses:
  12




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##### Table of Contents



Interest Expense:
  Provision for Income Taxes:
  Net Income (Loss)
  Loss Per Share:
  Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004
 Service Revenues:
    13




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##### Table of Contents



Equipment and Software Revenues:
  For the three months ended
    
    Revenue
    
    Gross Profit
    
    Gross ProfitJune 30, 2005Hardware and Software Sales
    
    $
    598,185
    
    
    $
    105,877
    
    
    
    17.7
    %Rebates, bonuses and incentives
    
    
    5,019
    
    
    
    5,019
    
    
    
    100
    %Commissions from leases
    
    
    65,382
    
    
    
    65,382
    
    
    
    100
    %Total
    
    $
    668,586
    
    
    $
    176,278
    
    
    
    26.4
    %
 For the three months ended
    
    Revenue
    
    Gross Profit
    
    Gross ProfitJune 30, 2004Hardware and Software Sales
    
    $
    329,468
    
    
    $
    58,013
    
    
    
    17.6
    %Rebates, bonuses and incentives
    
    
    8,703
    
    
    
    8,703
    
    
    
    100
    %Commissions from leases
    
    
    5.942
    
    
    
    5,942
    
    
    
    100
    %Total
    
    $
    344,113
    
    
    $
    72,658
    
    
    
    21.1
    %
     Operating Expenses:
  Interest Expense:
  14




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##### Table of Contents



Provision for Income Taxes:
  Net Income (Loss )
  Net Income (Loss) per share:
  Liquidity and Capital Resources:
    15




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16




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##### Table of Contents



Off-Balance Sheet Arrangement:
  Contractual Obligations and Commercial Commitments:
  Payments due by PeriodLess than
    
    1-3
    
    3-5
    
    More thanContractual Obligations
    
    Total
    
    1 Year
    
    Years
    
    Years
    
    5 YearsLong-Term Debt Obligations
    
    
    7,927,614
    
    
    
    4,034,427
    
    
    
    2,336,935
    
    
    
    1,556,252
    
    
    
    Capital Lease Obligations
    
    
    46,572
    
    
    
    46,572
    
    
    
    
    
    
    
    
    
    
    
    Operating Lease Obligations
    
    
    814,000
    
    
    
    409,240
    
    
    
    404,760
    
    
    
    
    
    
    
    Total
    
    
    8,788,186
    
    
    
    4,490,239
    
    
    
    2,741,695
    
    
    
    1,556,252
    
    
    
    
 Forward-looking and Cautionary Statements:
 Many possible events or factors could affect enherents future financial results and
performance, causing enherents results or performance to differ materially from those expressed in
enherents forward-looking statements.
 17




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
     18




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item. 4. Submission of Matters to a Vote of Security Holders.
   Class III Director
    
    Affirmative Votes
    
    Withheld VotesPamela Fredette
    
    
    27,724,068
    
    
    
    143,509
  Director
    
    Class
    
    TermThomas Minerva
Faith Griffin
Douglas Catalano
Douglas Mellinger
    
    I
II
II
I
    
    Expires 2007
Expires 2006
Expires 2006
Expires 2007
  
 Item. 5. Other Information.
   19




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##### Table of Contents



Item 6. Exhibits.
  20




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##### Table of Contents



SIGNATURES
  enherent Corp.DATE
August 12, 2005
    
    BY
    
    /s/ PAMELA A. FREDETTEPamela A. FredetteChairman, Chief Executive Officer and PresidentDATE
August 12, 2005
    
    BY
    
    /s/ JAMES LiggettJames LiggettPrincipal Financial Officer
 S-1




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Exhibit2.1
    
    Agreement and Plan of Merger dated as of October 12, 2004, by and
between the Company and Dynax Solutions, Inc. (Incorporated by
reference to Exhibit 2.1 of the Companys Quarterly Report on
Form 10-Q filed November 15, 2004).2.2
    
    First Amendment to Agreement and Plan of Merger dated as of
November 4, 2004, by and between the Company and Dynax Solutions,
Inc. (Incorporated by reference to Exhibit 2.2 of the Companys
Quarterly Report on Form 10-Q filed November 15, 2004).3.1
    
    Restated Certificate of Incorporation (Incorporated by reference
to Exhibit 4.1 of the Companys Form S-8 filed January 22, 1998).3.2
    
    Certificate of Amendment of Restated Certificate of Incorporation
of the Company (Incorporated by reference to Exhibit 3.1 of the
Companys Annual Report on Form 10-K filed April 4, 2001).3.3
    
    Certificate of Amendment of Restated Certificate of Incorporation
of the Company as filed with the Secretary of State of Delaware
on April 1, 2005 (Incorporated by reference to the Companys
Current Report on Form 8-K filed on April 6, 2005).3.4
    
    Certificate of Merger merging Dynax Solutions, Inc. into the
Company as filed with the Secretary of State of Delaware on April
1, 2005 (Incorporated by reference to the Companys Current
Report on Form 8-K filed on April 6, 2005).3.5
    
    Amended and Restated Bylaws, as amended through April 22, 2005
(Incorporated by reference to Exhibit 3.1 of the Companys
Current Report on Form 8-K filed April 27, 2005).4.1
    
    Form of Certificate of Common Stock (Incorporated by reference to
Exhibit 4.1 of the Companys Annual Report on Form 10-K filed
March 22, 2002).4.2
    
    Securities Purchase Agreement dated as of April 13, 2000, by and
among the Company and the Investors named therein (Incorporated
by reference to Exhibit 99.1 of the Companys Current Report on
Form 8-K filed April 14, 2000).4.3
    
    Preferred Stock Agreement dated as of October 28, 2004, by and
among the Company and the Preferred Stockholders named therein
(Incorporated by reference to Exhibit 4.5 of the Companys
Quarterly Report on Form 10-Q filed November 15, 2004).10.1
    
    Employment Agreement dated April 1, 2005 between Lori Stanley and
the Company (Incorporated by reference to Exhibit 10.5 of the
Companys Current Report on Form 8-K filed on April 6, 2005).10.2
    
    Employment Agreement dated April 1, 2005 between Roger DiPiano
and the Company (Incorporated by reference to Exhibit 10.6 of the
Companys Current Report on Form 8-K filed on April 6, 2005).10.3
    
    Amended and Restated 1996 Stock Incentive Plan (Incorporated by
reference to Exhibit 10.1 of the Companys Form S-8 filed January
22, 1998).10.4
    
    Stock Purchase Agreement dated as of April 1, 2004, by and
between the Company and Primesoft, LLC (Incorporated by reference
to Exhibit 10.4 of the Companys Quarterly Report on Form 10-Q
filed May 7, 2004).
 E-1




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.5
    
    Promissory Note dated April 1, 2004, by and between the Company
and Primesoft, LLC (Incorporated by reference to Exhibit 10.5 of
the Companys Quarterly Report on Form 10-Q filed May 7, 2004).10.6
    
    Non-Qualified Stock Option Agreement dated September 14, 2004, by
and between the Company and Douglas Mellinger (Incorporated by
reference to Exhibit 10.4 of the Companys Quarterly Report on
Form 10-Q filed November 15, 2004).10.7
    
    Agreement dated September 14, 2004, by and between the Company
and Douglas Mellinger (Incorporated by reference to Exhibit 10.5
of the Companys Quarterly Report on Form 10-Q filed November 15,
2004).10.8
    
    Restricted Stock Agreement dated October 5, 2004, by and between
the Company and Douglas Catalano (Incorporated by reference to
Exhibit 10.6 of the Companys Quarterly Report on Form 10-Q filed
November 15, 2004).10.9
    
    Amended and Restated Credit Agreement among the Company, certain
subsidiaries listed therein, Ableco Finance LLC and certain
lenders party thereto dated as of April 1, 2005 (Incorporated by
reference to Exhibit 10.2 of the Companys Current Report on Form
8-K filed on April 6, 2005).10.10
    
    Intercreditor and Subordination Agreement among the Company,
certain subsidiaries listed therein, Ableco Finance LLC and
certain lenders party thereto dated as of April 1, 2005
(Incorporated by reference to Exhibit 10.3 of the Companys
Current Report on Form 8-K filed on April 6, 2005).10.11
    
    Consulting Agreement dated April 1, 2005 between Douglas Catalano
and the Company (Incorporated by reference to Exhibit 10.4 of the
Companys Current Report on Form 8-K filed on April 6, 2005).10.12
    
    Employment Agreement dated April 1, 2005 between David Green and
the Company (Incorporated by reference to Exhibit 10.7 of the
Companys Current Report on Form 8-K filed on April 6, 2005).10.13
    
    2005 Stock Incentive Plan, adopted June 2, 2005, including forms
of Grant Agreements (Incorporated by reference to Exhibit 10.1 of
the Companys Current Report on Form 8-K filed on June 7, 2005).10.14
    
    Employment Agreement executed on June 8, 2005, but effective
April 1, 2005 between Pamela Fredette and the Company
(Incorporated by reference to Exhibit 10.1 of the Companys
Current Report on Form 8-K filed on June 10, 2005).10.15
    
    2005 Management Incentive Compensation Plan, adopted May 10, 2005
(filed herewith).10.16
    
    Director Compensation Plan, adopted May 10, 2005 (filed herewith).31.1
    
    Certification of the Chief Executive Officer pursuant to 15
U.S.C. Section 7241, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).31.2
    
    Certification of the Principal Financial Officer pursuant to 15
U.S.C. Section 7241, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).32.1
    
    Certification of the Chief Executive Officer pursuant to 18
U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (filed herewith).32.2
    
    Certification of the Principal Financial Officer pursuant to 18
U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (filed herewith).
 E-2