<PAGE>   1

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

     (MARK ONE)

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                       FOR THE QUARTER ENDED JUNE 30, 1999

                                       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: 000-24409


                     INTERNATIONAL INTEGRATION INCORPORATED
             (Exact Name of Registrant as Specified in Its Charter)

                                    DELAWARE
                          (State or Other Jurisdiction
                         Incorporation or Organization)

                                   04-3169145
                                (I.R.S. Employer
                               Identification No.)

                         101 MAIN STREET, CAMBRIDGE, MA
                    (Address of Principal Executive Offices)

                                      02142
                                   (Zip Code)

                                  617-250-2500
              (Registrant's Telephone Number, Including Area Code)

                                       N/A
         (Former Name, Former Address and Former Fiscal Year, if Changed
                               Since Last Report)

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 preceding 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 [ ]

As of August 9, 1999, there were 19,680,324 shares of Common Stock, $.01 par
value, outstanding.

================================================================================



<PAGE>   2



                INTERNATIONAL INTEGRATION INCORPORATED ("i-CUBE")

                                      INDEX

                                                                          PAGE
                                                                         NUMBER
                                                                         ------

PART I -- FINANCIAL INFORMATION:

Item 1.   Financial Statements

          Consolidated Balance Sheets as of June 30, 1999 and
          December 31, 1998                                                 3

          Consolidated Statements of Income for the Three and Six Months
          Ended June 30, 1999 and 1998                                      4

          Consolidated Statements of Cash Flows for the Six Months
          Ended June 30, 1999 and 1998                                      5

          Notes to Consolidated Financial Statements                        6

Item 2.   Management's Discussion and Analysis of Financial Condition
          And Results of Operations                                        8-15

PART II -- OTHER INFORMATION:

Item 2.   Changes in Securities and Use of Proceeds                         16

Item 4.   Submission of Matters of Security Holders                         16

Item 6.   Exhibits and Reports on Form 8-K                                  16

Signatures                                                                  17

Exhibit Index                                                               18

Exhibit 10  Material Contracts

Exhibit 27.1  Financial Data Schedule

Exhibit 27.2  Financial Data Schedule




                                       2
<PAGE>   3


                INTERNATIONAL INTEGRATION INCORPORATED ("i-CUBE")
                           CONSOLIDATED BALANCE SHEETS
                 (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                       JUNE 30,       DECEMBER 31,
                                                                         1999            1998
                                                                       --------       ------------

<S>                                                                   <C>              <C>
ASSETS
Current assets:
     Cash and cash equivalents                                        $ 36,422         $ 36,010
     Short-term investments                                              3,067            8,302
     Accounts  receivable,  net of  reserve of $ 255 and $180,          12,290            6,380
      respectively
     Unbilled revenues                                                   4,282            1,988
     Prepaid expenses and other current assets                           1,461            1,100
     Deferred income taxes                                                 300              157
                                                                      --------         --------
          Total current assets                                          57,822           53,937

Property and equipment, at cost:
     Computers and equipment                                             8,408            7,985
     Furniture and fixtures                                              1,521            1,494
                                                                      --------         --------
          Total property and equipment, at cost                          9,929            9,479

     Less- accumulated depreciation                                     (3,534)          (2,647)
                                                                      --------         --------
          Total property and equipment, net                              6,395            6,832

     Deferred income taxes                                              10,056               --
     Other assets                                                        1,326              273
                                                                      --------         --------
          Total assets                                                $ 75,599         $ 61,042
                                                                      ========         ========

LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:
     Accounts payable                                                 $  1,929         $  2,244
     Accrued expenses                                                    8,273            6,983
     Current portion of long-term obligations                              478              216
     Accrued income taxes                                                1,213              545
     Deferred revenues                                                   2,747            4,859
                                                                      --------         --------
          Total current liabilities                                     14,640           14,847

Long-term obligations                                                    1,752            1,997

Stockholders' equity:
     Preferred stock $0.01 par value; 1,000,000 shares
       authorized; no shares issued or outstanding                          --               --
     Common stock $0.01 par value; 100,000,000 shares
       authorized; 19,469,237 and 18,758,111 shares issued and
       outstanding at June 30, 1999 and December 31, 1998,
       respectively                                                        195              163
     Additional paid-in capital                                         42,688           30,642
     Note receivable from stockholder                                     (533)            (533)
     Retained earnings                                                  16,814           13,914
     Accumulated other comprehensive income                                 43               12
                                                                      --------         --------
          Total stockholders' equity                                    59,207           44,198
                                                                      --------         --------

          Total liabilities and stockholders' equity                  $ 75,599         $ 61,042
                                                                      ========         ========
</TABLE>


   The accompanying notes are an integral part of these consolidated financial
                                   statements


                                       3
<PAGE>   4

                INTERNATIONAL INTEGRATION INCORPORATED ("i-CUBE")
                        CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                     THREE MONTHS                   SIX MONTHS
                                                         ENDED                         ENDED
                                                        JUNE 30,                      JUNE 30,
                                                ----------------------        ----------------------
                                                  1999          1998            1999          1998
                                                -------        -------        -------        -------
<S>                                             <C>            <C>            <C>            <C>
Net revenues                                    $18,650        $14,023        $35,545        $26,848
Project personnel and software costs              8,562          7,052         16,156         13,381
                                                -------        -------        -------        -------
          Gross profit                           10,088          6,971         19,389         13,467

Operating expenses:
     Selling and marketing                        1,911          1,292          3,492          2,359
     General and administrative                   4,340          3,553          8,635          7,024
     Acquisition and restructuring costs          3,445            786          3,445            786
                                                -------        -------        -------        -------
          Total operating expenses                9,696          5,631         15,572         10,169
                                                -------        -------        -------        -------

Operating income                                    392          1,340          3,817          3,298
Other income, net                                   347            117            768            232
                                                -------        -------        -------        -------
          Income before income taxes                739          1,457          4,585          3,530

Provision for income taxes                          267            966          1,685          1,843
                                                -------        -------        -------        -------
          Net income                            $   472        $   491        $ 2,900        $ 1,687
                                                =======        =======        =======        =======

Earnings per share:
     Basic                                      $  0.02        $  0.03        $  0.15        $  0.11
                                                =======        =======        =======        =======
     Diluted                                    $  0.02        $  0.02        $  0.13        $  0.09
                                                =======        =======        =======        =======

Weighted average shares outstanding:
     Basic                                       19,415         16,216         19,207         15,959
     Diluted                                     23,068         20,025         23,049         19,519
</TABLE>



   The accompanying notes are an integral part of these consolidated financial
                                   statements



                                       4
<PAGE>   5



                INTERNATIONAL INTEGRATION INCORPORATED ("i-CUBE")
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         SIX MONTHS
                                                                                            ENDED
                                                                                          JUNE 30,
                                                                                 -------------------------
                                                                                   1999             1998
                                                                                 --------         --------
<S>                                                                              <C>              <C>
Cash flows from operating activities:
     Net income                                                                  $  2,900         $  1,687
     Adjustments to reconcile net income to net cash provided by
       operating activities:
          Depreciation and amortization                                               926              730
          Provision for doubtful accounts                                              75               47
          Deferred income taxes                                                    (1,200)            (314)
          Tax benefit due to stock option exercise                                  1,200               --
          Changes in operating assets and liabilities:
               Accounts receivable                                                 (6,076)          (1,305)
               Unbilled revenues                                                   (2,294)          (1,426)
               Prepaid expenses and other current assets                             (387)             357
               Accounts payable                                                      (277)             698
               Accrued expenses                                                     1,372            2,110
               Accrued income taxes                                                   711              449
               Deferred revenues                                                   (2,026)             506
               Other                                                                 (140)            (513)
                                                                                 --------         --------
                    Net cash provided by (used in) operating activities            (5,216)           3,026

Cash flows from investing activities:
     Purchases of property and equipment                                             (685)          (1,016)
     Purchases of available for sale securities                                        --               (4)
     Sale and maturities of available for sale securities                           5,235               --
     Other                                                                             --             (438)
                                                                                 --------         --------
                    Net cash provided by (used in) investing activities             4,550           (1,458)

Cash flows from financing activities:
     Proceeds from bank loans                                                         142              149
     Repayment of long-term obligations                                               (17)             (57)
     Proceeds from issuance of common stock                                            --               23
     Proceeds from exercise of stock options                                          963              335
     Proceeds from initial public offering                                             --           28,719
                                                                                 --------         --------
                    Net cash provided by financing activities                       1,088           29,169

Effect of exchange rates on cash and cash equivalents                                 (10)              11
                                                                                 --------         --------
Net increase in cash and cash equivalents                                             412           30,748
Cash and cash equivalents, beginning of period                                     36,010           11,609
                                                                                 --------         --------
Cash and cash equivalents, end of period                                         $ 36,422         $ 42,357
                                                                                 ========         ========

Schedule of non-cash activities:
                    Tax benefit of step-up in basis for 1999 acquisitions        $  9,000
                                                                                 --------
</TABLE>



   The accompanying notes are an integral part of these consolidated financial
                                   statements


                                       5
<PAGE>   6


                INTERNATIONAL INTEGRATION INCORPORATED ("i-CUBE")
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
by International Integration Incorporated ("i-Cube" or the "Company") pursuant
to the rules and regulations of the Securities and Exchange Commission for
interim reporting. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements and should be read in conjunction with the Company's
consolidated financial statements and notes thereto on Form 10-K for the year
ended December 31, 1998. The accompanying consolidated financial statements
reflect all normal and recurring adjustments which are, in the opinion of
management, necessary for a fair presentation of results for these interim
periods presented. The results of operations for the three and six month periods
ended June 30, 1999 are not necessarily indicative of results to be expected for
the full year.

On May 25, 1999, the Company acquired all of the outstanding common stock of
Tomorrow's Technology Today, Inc., ("T3") in exchange for 89,640 shares of
i-Cube common stock. The Company's financial statements have been restated for
all prior periods presented to reflect the acquisition of T3, which was
accounted for as a pooling of interests.

On June 21, 1999, the Company acquired all of the outstanding common stock of
Report sent, Ltd. and its majority-owned subsidiary Conduit Communications Ltd.,
(collectively, "Conduit") in exchange for 2,396,752 shares of i-Cube common
stock. The Company's financial statements have been restated for all prior
periods presented to reflect the acquisition of Conduit, which was accounted for
as a pooling of interests.


2. EARNINGS PER SHARE

Basic earnings per share ("EPS") is computed by dividing net income by the
weighted average number of common shares outstanding for the period. Diluted EPS
is computed using the weighted average number of common shares outstanding plus
the dilutive effect of common stock equivalents (using the treasury stock
method).

The following table reconciles the denominator of the basic and diluted earnings
per share computation as shown on the Consolidated Statements of Income (in
thousands):

<TABLE>
<CAPTION>
                                                 THREE MONTHS       SIX MONTHS
                                                    ENDED             ENDED
                                                   JUNE 30,          JUNE 30,
                                               ---------------   ---------------
                                                1999     1998     1999     1998
                                               ------   ------   ------   ------
                                                 (UNAUDITED)      (UNAUDITED)
<S>                                            <C>      <C>      <C>      <C>
Basic common shares outstanding .............  19,415   16,216   19,207   15,959
Stock options ...............................   3,653    3,809    3,842    3,560
                                               ------   ------   ------   ------

Diluted common and common equivalent shares..  23,068   20,025   23,049   19,519
                                               ======   ======   ======   ======
</TABLE>


                                       6
<PAGE>   7


3. COMPREHENSIVE INCOME

The components of other comprehensive income for the Company generally include
foreign currency translation adjustments and unrealized gains and losses on
marketable securities classified as available-for-sale. The computation of
comprehensive income is as follows (in thousands):

<TABLE>
<CAPTION>
                                          THREE MONTHS           SIX MONTHS
                                              ENDED                 ENDED
                                             JUNE 30,              JUNE 30,
                                          --------------      ------------------
                                          1999      1998       1999       1998
                                          ----      ----      ------      ------
                                           (UNAUDITED)             (UNAUDITED)
<S>                                       <C>       <C>       <C>         <C>
Net income .........................      $472      $491      $2,900      $1,687
Other comprehensive income .........         7       (10)         31         (4)
                                          ----      ----      ------      ------

Total comprehensive income .........      $479      $481      $2,931      $1,683
                                          ====      ====      ======      ======
</TABLE>


4. RECLASSIFICATIONS

Certain prior period amounts have been reclassified to conform to current period
presentation.

5. ACQUISITIONS

On May 25, 1999, the Company acquired all of the outstanding common stock of
Tomorrow's Technology Today, Inc., ("T3") in exchange for 89,640 shares of
i-Cube common stock. The Company's financial statements have been restated for
all prior periods presented to reflect the acquisition of T3, which was
accounted for as a pooling of interests.

On June 21, 1999, the Company acquired all of the outstanding capital stock of
Conduit in exchange for 2,396,752 shares of the Company's common stock. The
Company's financial statements have been restated for all prior periods
presented to reflect the acquisition of Conduit, which was accounted for as a
pooling of interests. Costs, which consist mainly of investment banking,
accounting and legal fees as well as certain restructuring costs related to the
acquisition, approximated $3.4 million, have been reflected in the consolidated
statements of income and comprehensive income for the quarter ended June 30,
1999.

The results of operations for the separate enterprises and the combined amounts
presented in the accompanying Consolidated Financial Statements are summarized
below (in thousands):

<TABLE>
<CAPTION>
                                                         SIX MONTHS
                                                            ENDED
                                                          JUNE 30,
                                                  -----------------------
                                                    1999           1998
                                                  -------        --------
<S>                                               <C>            <C>
Net revenues:
   i-Cube                                         $26,809        $ 18,729
   Conduit                                          8,327           7,821
   T3                                                 409             298
                                                  -------        --------
   Combined                                       $35,545        $ 26,848

Net income (loss):
   i-Cube                                         $ 2,364        $  2,953
   Conduit                                            435          (1,361)
   T3                                                 101              95
                                                  -------        --------
   Combined                                       $ 2,900        $  1,687
</TABLE>


6. SUBSEQUENT EVENT

On August 10, 1999, the Company announced that it had signed a definitive
agreement to merge with Razorfish, a New York City-based information
technology firm that provides Digital Change Management(sm) solutions. Under
terms of the agreement, approved by each company's board of directors, each
share of the Company will be exchanged for 0.875 shares of Razorfish, and
Razorfish will be the surviving entity. The Company anticipates that the
transaction will be accounted for as a pooling of interests.


                                       7

<PAGE>   8


                INTERNATIONAL INTEGRATION INCORPORATED ("I-CUBE")
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

OVERVIEW


The Company is an information technology ("IT") solutions provider specializing
in consulting, electronic business, and transformation services for the complex
IT environments inherent in the world's leading organizations. Since 1992, the
Company has helped clients leverage their current business processes and
technology infrastructure to create competitive advantage. The Company's
solutions are based on open standards and architectures that are independent of
any single vendor's hardware, software, or middleware. Fusing strategy, design,
and technology, i-Cube implements complete solutions for the digital world. The
Company makes use of i-Structure, a set of methodologies and tools which embody
"best" practices in application development, project management, testing, and
deployment. Utilizing a fixed-time/fixed-price model and a unique client teaming
approach, the Company delivers solutions quickly, with full knowledge transfer
to the client.

The Company derives substantially all of its revenues from consulting,
electronic business and transformation services. The Company's services are
principally provided on a fixed-time/fixed-price basis; however, as a result of
the Conduit acquisition, a portion of the Company's revenues are derived from
time and materials based contracts. In developing the fixed price of a project,
the Company follows a process that assesses the technical complexity of the
project, the nature of the work, the functions to be performed, the resources
required to complete the engagement, and the extent to which the Company will
deploy its internally-developed software tools to deliver the solution. The
Company recognized revenues from fixed-time/fixed-price and time and
materials-based contracts on the percentage-of-completion method of accounting.

For its fixed time/fixed price and larger projects, the Company's contracts
typically call for an advance payment from its customers upon signing, with
additional payments required upon the attainment of project milestones. For its
time and materials and smaller projects, the Company typically receives payment
ratably over the duration of the engagement. Deferred revenues consist
principally of amounts billed in advance for the Company's technology consulting
contracts that will be recognized upon performance and amounts billed to
customers in excess of revenues recognized to-date.

During the six months ended June 30, 1999, no single customer accounted for 10%
of the Company's net revenues. During the comparable period in 1998, revenues
from three clients accounted for 17%, 13% and 10% of the Company's net
revenues. The percentage of revenues coming from the top five clients decreased
from 57% for the six months ended June 30, 1998 to 40% during the comparable
period in 1999. The loss of one or more customers could have a material adverse
effect on the Company's business, financial condition, and results of
operations. Although the Company's strategy is to broaden its customer base,
there can be no assurance that such customer concentration will actually
diminish, and the Company anticipates that its results of operations in any
given period will continue to depend to a significant extent upon contracts
with a small number of customers. See "Certain Factors That May Affect Future
Results".

The Company's revenues and earnings may fluctuate from quarter to quarter based
on the number, size, and scope of projects in which the Company is engaged, the
contractual terms and degree of completion of such projects, any delays incurred
in connection with a project, the accuracy of estimates of resources required to
complete ongoing projects, general economic conditions, and other factors. See
"Certain Factors That May Affect Future Results".



                                       8
<PAGE>   9


RESULTS OF OPERATIONS

The following table sets forth certain items included in the Company's
Consolidated Statements of Income as a percentage of net revenues for the
periods indicated:

<TABLE>
<CAPTION>
                                               THREE MONTHS        SIX MONTHS
                                                   ENDED              ENDED
                                                  JUNE 30,           JUNE 30,
                                              --------------      -------------
                                              1999      1998      1999     1998
                                              ----      ----      ----     ----
                                               (unaudited)          (unaudited)
<S>                                           <C>       <C>       <C>       <C>
Net revenues                                  100%      100%      100%      100%
Project personnel and software costs           46        50        45        50
                                              ---       ---       ---       ---
     Gross profit                              54        50        55        50
Operating expenses:
  Selling and marketing                        10         9        10         9
  General and administrative                   23        25        24        26
 Acquisition and restructuring costs           19         6        10         3
                                              ---       ---       ---       ---
          Total operating expenses             52        40        44        38
                                              ---       ---       ---       ---
Operating income                                2        10        11        12
Other income, net                               2         1         2         1
                                              ---       ---       ---       ---
     Income before income taxes                 4        11        13        13
Provision for income taxes                      1         7         5         7
                                              ---       ---       ---       ---
     Net income                                 3%        4%        8%        6%
                                              ===       ===       ===       ===
</TABLE>


NET REVENUES

The Company's net revenues increased by $4.7 million, or 33%, to $18.7 million
in the three months ended June 30, 1999 from $14.0 million for the comparable
period in 1998. Net revenues increased by $8.7 million, or 32% to $35.5 million
in the first six months of 1999 from $26.8 million for the comparable period in
1998. This increase in net revenues was primarily attributable to an increased
volume of projects from new customers and the leveraging of existing client
relationships to obtain repeat business. During the six- month period ended June
30, 1999, the Company's five largest customers accounted for 40% of net revenues
as compared to 57% for the six-month period ended June 30, 1998. In the
six-month periods ended June 30, 1999 and 1998, the Company had zero and three
customers, respectively, that each accounted for 10% or more of net revenues.

PROJECT PERSONNEL AND SOFTWARE COSTS

Project personnel and software costs consist primarily of compensation and
related costs of personnel dedicated to customer assignments and personnel
assigned to developing and enhancing the Company's methodologies and
technologies deployed during the project delivery process. Project personnel and
software costs also include fees paid to subcontractors for work performed in
connection with projects and non-reimbursed project travel expenses. Project
personnel and software costs increased 21% to $8.6 million for the three months
ended June 30, 1999 from $7.1 million for the comparable period in 1998. As a
percentage of net revenues, these costs were 46% and 50%, respectively in the
three months ended June 30, 1999 and 1998. Project personnel and software costs
increased 21% to $16.2 million for the six months ended June 30, 1999 from $13.4
million for the comparable period in 1998. As a percentage of net revenues,
these costs were 45% and 50%, respectively in the six months ended June 30, 1999
and 1998. The absolute dollar increase in project personnel and software costs
for the three and six month periods was primarily attributable to the hiring of
additional and more experienced personnel required to deliver the Company's
services and increases in per person compensation costs. The percentage decline
in project personnel and software costs for the periods was mainly the result of
a decline in the number of project personnel and software employees as compared
to the total number of employees. Project personnel headcount, which includes
contractors and employees working over 20 hours per week, increased to 335 at
June 30, 1999 from 260 at June 30, 1998.

SELLING AND MARKETING

Selling and marketing costs consist primarily of compensation and related costs
of sales and marketing personnel, travel expenses, and marketing programs and
promotion costs. Selling and marketing costs increased 48%, to $1.9 million, for
the three months ended June 30, 1999 from $1.3 million for the comparable period
in 1998. As a percentage of net revenues, these costs were 10% and 9% for the
three months ended June 30, 1999 and 1998, respectively. Selling and marketing
costs increased 48%, to $3.5 million, for the



                                       9
<PAGE>   10


six months ended June 30, 1999 from $2.4 million for the comparable period in
1998. As a percentage of net revenues, these costs were 10% and 9% for the six
months ended June 30, 1999 and 1998, respectively. The absolute and percentage
increases in selling and marketing costs were primarily attributable to
increased spending on promotional activities and increases in selling and
marketing personnel. Selling and marketing personnel, which includes contractors
and employees working over 20 hours per week, increased to 30 at June 30, 1999
from 24 at June 30, 1998.

GENERAL AND ADMINISTRATIVE

General and administrative costs consist primarily of compensation and related
costs of the Company's management and administrative functions, including
finance and accounting, human resources, internal information technology, and
the costs of the Company's facilities and other general corporate expenses.
General and administrative costs increased 22%, to $4.3 million, for the three
months ended June 30, 1999 from $3.6 million for the comparable period in 1998.
As a percentage of net revenues, these costs were 23% and 25% for the three
months ended June 30, 1999 and 1998, respectively. General and administrative
costs increased 23%, to $8.6 million, for the six months ended June 30, 1999
from $7.0 million for the comparable period in 1998. As a percentage of net
revenues, these costs were 24% and 26% for the six months ended June 30, 1999
and 1998, respectively. The decline in general and administrative costs as a
percentage of net revenues reflects slower relative hiring of and more efficient
utilization of administrative staff as well as more efficient space utilization
of the Company's facilities in 1999. The increase in general and administrative
costs in absolute dollars was primarily attributable to an increase in general
and administrative personnel. General and administrative employees, which
include contractors and employees working over 20 hours per week, increased to
70 at June 30, 1999 from 56 at June 30, 1998.

ACQUISITION AND RESTRUCTURING COSTS

Acquisition and restructuring costs in 1999 consist mainly of investment
banking, accounting and legal fees as well as certain restructuring costs
related to the acquisition of Conduit and T3 and approximated $3.4 million
during the quarter. Acquisition and restructuring costs in 1998 consist mainly
of certain restructuring costs at Conduit.

OTHER INCOME, NET

Other income, net consists primarily of interest income from the Company's cash,
cash equivalents, and short-term investment balances, interest expense
associated with fixed asset purchases made under the Company's equipment line of
credit and obligations under capital leases and interest expense associated with
notes payable. Other income, net was $0.3 million and $0.1 million for the three
months ended June 30, 1999 and 1998, respectively. Other income, net was $0.8
million and $0.2 million for the six months ended June 30, 1999 and 1998,
respectively. The increase in other income, net was principally due to the
increase in cash, cash equivalents, and short-term investments, which included
net proceeds from the Company's initial public offering in the second quarter of
1998. The Company invests its cash, cash equivalents, and short-term investments
primarily in overnight repurchase agreements, short-term U.S. Treasury and
Agency bonds, and short-term commercial paper.

PROVISION FOR INCOME TAXES

The Company's effective rate for federal, state and international income taxes
was 36% and 66% for the three months ended June 30, 1999 and 1998. The Company's
effective rate for federal, state and international income taxes was 37% and 52%
for the six months ended June 30, 1999 and 1998. Conduit's losses in 1998 were
not tax benefitted and had the impact of increasing the Company's effective tax
rate in 1998.

LIQUIDITY AND CAPITAL RESOURCES

Prior to its initial public offering, the Company met its working capital
requirements through cash generated from operations. In June 1998, the Company
completed its initial public offering of common stock resulting in net proceeds
to the Company of approximately $27.9 million. The Company also maintains a $5.0
million revolving line of credit (the "Line") with Silicon Valley Bank, which
expires in September 1999. Under the Line, the Company may borrow the lesser of
$5.0 million or 75% of eligible accounts receivable, as defined in the loan
agreement. The Company is required to comply with certain operational and
financial covenants under the Line if there are borrowings under the Line. At
June 30, 1999 the Company was in compliance with these requirements and no
borrowings have been made under the Line.


                                       10

<PAGE>   11
 In May 1998, the Company entered into a loan agreement with a major financial
institution for $1.4 million. The principal balance is payable over 12 years in
quarterly installments and bears interest at LIBOR +2% (8.8% at June 30, 1999).
These quarterly installments increase throughout the term of the loan. The
Company is required to comply with certain financial covenants under this loan
agreement. At June 30, 1999, the Company was in compliance with these
requirements. At June 30, 1999, $1.2 million was outstanding under the loan
agreement.

The Company's cash and cash equivalents balances increased to $36.4 million at
June 30, 1999 from $36.0 million at December 31, 1998. The Company's working
capital was $43.2 million at June 30, 1999 as compared to $39.1 million at
December 31, 1998.

The Company's operating activities used cash from operations of $5.2 million for
the six months ended June 30, 1999 as compared to providing cash of $3.0 million
for the comparable period in 1998. The increase in cash used in operations was
due principally to an increase in accounts receivable of $6.1 million as
compared to $1.3 million in the comparable period in 1998, an increase in
unbilled revenues of $2.3 million as compared to $1.4 million in the comparable
period in 1998, a decrease in accounts payable of $0.3 million as compared to an
increase of $0.7 million in the comparable period in 1998, and a decrease in
deferred revenues of $2.0 million as compared to an increase of $0.5 million in
the comparable period in 1998. The increases in cash used in operations for the
six months ended June 30, 1999 as compared to the six months ended June 30, 1998
were partially offset by an increase in net income of $1.2 million from the
prior year period and an increase in accrued income taxes of $0.7 million as
compared to an increase of $0.4 million for the comparable period in 1998. The
increase in accounts receivable and unbilled revenues and the decrease in
deferred revenues from December 31, 1998 to June 30, 1999 resulted from the
timing of milestone billings on some of the Company's large fixed-price
contracts and billings from a number of new engagements that were started near
the end of the second quarter of 1999.

The Company's investing activities provided cash of $4.6 million for the six
months ended June 30, 1999 as compared to having used cash of $1.5 million in
the comparable period of 1998. Cash provided by investing activities during the
six months ended June 30, 1999 consisted of maturities of short-term investments
and was partially offset by purchases of property and equipment used to support
the growing base of employees.

The Company's financing activities provided cash of $1.1 million for the six
months ended June 30, 1999 which mainly represents the proceeds from the
exercise of stock options. For the comparable period in 1998, cash provided by
financing activities consisted principally of proceeds from the Company's
initial public offering.

YEAR 2000

In the past, many information technology products were designed with two digit
year codes that did not recognize century and millennium fields. As a result,
these hardware and software products may not function or may give incorrect
results with respect to dates after December 31, 1999. This problem is generally
referred to as the "Year 2000" problem or issue. Substantially every company in
the computer or information technology industries, as well as every company
which relies on computer systems or which utilizes products which include
embedded technology face the Year 2000 issue.

The Company has completed the process of assessing its exposure to the Year 2000
problem. Generally, the Company has assessed its Year 2000 exposure in four
major areas: (i) problems arising from systems previously developed for
customers; (ii) delays in existing projects by the Company's customers as they
shift internal resources to complete their Year 2000 mitigation, and delays in
the purchasing patterns of clients and potential clients with respect to new
projects; (iii) Year 2000 problems faced by the Company's material suppliers
which could have an impact on the Company's business, results of operations or
financial condition; and (iv) Year 2000 problems existent in the Company's
internal information technology ("IT") systems and non-IT systems.

The Company has completed the assessment of systems previously developed for
customers and believes that they are Year 2000 compliant. However, there can be
no assurances that the Company's systems do not contain undetected errors or
defects associated


                                       11
<PAGE>   12


with Year 2000 compliance issues, or that third party software included in the
systems developed by the Company do not contain Year 2000 problems. Certain of
the Company's agreements with its customers contain warranties that the systems
developed by the Company will not experience Year 2000 problems. To the extent
that a problem arises, the Company may be required to expend funds to remedy the
problem or, if asserted, to pay damages incurred by the customer as a result of
such failure. In addition, to the extent that a Year 2000 problem is identified
in a system developed under a contract without a Year 2000 warranty, the Company
may nevertheless expend resources to remedy the problem, in certain
circumstances, at its own cost. Although the Company's contracts with its
customers generally contain provisions which seek to insulate the Company from,
or limit the amount of, any liability arising from claims asserted against the
Company, there can be no assurance that any such limitations would be upheld in
favor of the Company. The Company is aware of a growing number of lawsuits
against other providers of IT services. Because of the unprecedented nature of
such litigation, it is uncertain to what extent the Company may be affected by
such litigation. Due to the complexity of the Year 2000 issue, upon any failure
of critical client systems or processes that may be directly or indirectly
connected or related to systems or software designed, developed, customized, or
implemented by the Company as described above, the Company may be subjected to
claims regardless of whether the failure is related to the services provided by
the Company. If asserted, such claims (including the associated defense costs)
could have a material adverse effect on the Company's business, operating
results, and financial condition.

The Company is continually monitoring its major customers to determine their
Year 2000 readiness and the likelihood that the customers will delay scheduled
or in-process contracts, or defer future contracts with the Company, in order to
allocate more IT resources to solving their Year 2000 problems. In addition, the
Company continually seeks feedback from its salespersons as to the impact that
the Year 2000 readiness of prospective customers may have on the Company's
future revenues. There can be no assurance that the Company's customers and
prospective customers will not delay scheduled, in-process, or future projects
as a result of their own Year 2000 remediation efforts. Any such delays could
have a material adverse impact on the Company's business, operating results, and
financial condition.

The Company has completed the process of determining the nature and extent of
the work required, if any, to make its internal IT systems Year 2000 compliant.
The Company's internal IT systems consist principally of its accounting and
human resources software. The licensor of the software has indicated to the
Company in writing that the products are Year 2000 compliant. Based on currently
available information, the Company believes the expense associated with making
its internal IT systems Year 2000 compliant will be immaterial and has provided
for the enhancement of these systems in its operating and capital budgets for
the current fiscal year. However, if Year 2000 issues of which the Company is
not currently aware arise and are not remediated on time, or if the Company is
required to pay for any required updating, modification or replacement of the
Company's information systems, the Year 2000 issue could have a material adverse
impact on the Company's business, operating results, and financial condition.
The Company has also completed the assessment of its utilization of non-IT
systems which contain embedded technology such as microcontrollers. Based upon
currently available information, the Company believes the expense associated
with making its non-IT systems Year 2000 compliant will be immaterial and has
provided for the enhancement of these systems in its operating and capital
budgets for the current fiscal year. In addition to the Company's internal
systems, the Company relies on third party vendors in the conduct of its
business. The Company has received assurances from its material vendors and
suppliers that there will be no interruption of service as a result of the Year
2000 issue. However, there can be no assurance that we will not experience
interruptions of service due to the Year 2000 issue resulting in a material
adverse effect on the Company. In addition, the failure on the part of the
accounting systems of the Company's clients due to the Year 2000 issue could
result in a delay in the payment of invoices issued by the Company for services
and expenses. A failure of the accounting systems of a significant number of the
Company's clients would have a material adverse effect on the Company.

Through June 30, 1999, the Company had not incurred material costs directly
relating to the remediation of Year 2000 problems. Pending further progress in
its assessment of its exposure to the Year 2000 problem, as described in the
preceding paragraphs, the Company is unable to estimate the costs of remediating
the Year 2000 problem that it may incur in the future.

The Securities and Exchange Commission has asked publicly-traded companies to
include a reasonable description of their most reasonably likely worst case Year
2000 scenario. As of the date of this report, the Company is uncertain as to
such scenario, although the Company believes that it may include a situation
where one of the Company's significant clients asks the Company to delay or stop
work on an ongoing project due to the client's internal Year 2000 issues. The
Company intends to address this uncertainty by continuing to assess its exposure
to the Year 2000 problem, as described above. The Company intends to consider
this scenario in its financial and strategic planning for 1999 and 2000,
including in its projected personnel needs and other areas. As of June 30,
1999, the Company is not able to estimate revenue lost due to Year 2000 issues.


                                       12
<PAGE>   13
The Company has not yet established a contingency plan for addressing the most
reasonably likely worst case Year 2000 scenario. The Company intends to
establish such a plan to the extent the Company believes it necessary to do so,
based on the impact that such scenario is expected to have on the Company's
business, operating results, and financial condition.

SAFE HARBOR PROVISION

This Form 10-Q includes forward-looking statements (statements that are not
historical facts) such as statements about the Company's announced merger with
Razorfish, future net revenues and profits, capital expenditures, liquidity
sources and needs, working capital needs, increases in personnel and related
costs, opening additional offices, general and administrative expenses, sales
and marketing expenses, issues arising out of the Year 2000 problem and other
costs, in absolute terms, and as a percentage of net revenues. These
forward-looking statements are subject to several risks and uncertainties and
the Company's actual future results may differ significantly from those stated
in any forward looking statements for a variety of reasons, including those set
forth below in "Certain Factors That May Affect Future Results". The Company
makes no commitments to disclose any revisions to forward-looking statements, or
any facts, events or circumstances that may occur after the date of this Form
10-Q that may have an impact on the forward-looking statements.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

The following important factors, among others, could cause actual results to
differ materially from those indicated in forward-looking statements made in
this Quarterly Report on Form 10-Q and presented elsewhere by management from
time to time.

The Company has entered into a Merger Agreement with Razorfish, Inc. and a
subsidiary of Razorfish, Inc., pursuant to which, subject to the terms and
conditions of the Merger Agreement, the Company would become a wholly-owned
subsidiary of Razorfish. There can be no assurance that the Merger will be
consummated. If the Merger is not consummated, there can be no assurance that
the Company's results of operations and financial condition will not have been
adversely affected by the Merger negotiations or the announcement of the Merger,
by the passage of time following the signing of the Merger Agreement, or by
other factors. If the Merger is consummated, stockholders of the Company will
become stockholders of Razorfish, and as such will have the risks associated
with an investment in that company.

The Company has completed, and may in the future pursue, acquisitions of
companies, technologies or assets that complement the Company's business. The
successful integration of acquired companies, technologies and assets, including
Conduit and T3, is important to the future financial performance of the Company.
The anticipated benefits of such acquisitions may not be achieved unless, among
other things, the operations of acquired companies, technologies and assets, are
successfully combined with those of the Company in a timely manner. The
diversion of the attention of management, and any difficulties encountered in
the transition process, could have an adverse impact on the revenues and
operating results of the combined enterprise. There can be no assurance that the
Company will be able to successfully integrate such acquisitions into the
operations of the Company.

The Company's results of operations have varied significantly in the past and
may vary significantly in the future, on a quarterly and annual basis, as a
result of a variety of factors, many of which are outside the Company's control.
The Company's expense levels are based, in significant part, on anticipated
contract requirements and on other expectations of future revenues and are
relatively fixed in the short-term. Consequently, if revenue levels are below
expectations, including without limitation as a result of an unanticipated delay
in or termination of a customer engagement, expense levels could be
disproportionately high as a percentage of net revenues, and the Company's
business, financial condition, and results of operations would be materially
adversely affected.

The Company has historically derived, and may in the future derive, a
significant amount of its net revenues from major engagements with a relatively
small number of customers. Although the Company's largest customers have varied
from period to period, the Company anticipates that its results of operations in
any given period will continue to depend to a significant extent upon large
contracts with a small number of customers. The loss of or a reduction in the
level of services provided to one or more major customers would have a material
adverse effect on the Company's business, financial condition, and results of
operations. Furthermore, if a major customer were unable or unwilling to proceed
with a project or to pay the Company for its services on a timely basis, the
Company's business, financial condition, and results of operations could be
materially adversely affected.

Many of the Company's projects are large, complex engagements that are performed
by the Company over extended periods of time. The Company is generally paid for
these projects in installments, based on the achievement of certain milestones.
The Company's ability to successfully complete these projects and to earn the
milestone payments is based on factors within and outside the Company's control.
Furthermore, because of the significant numbers of IT professionals assigned by
the Company to these large projects, unexpected early terminations of any of
such engagements could result in underutilization of project personnel until
such persons can be redeployed to other projects. Conversely, an unexpected
delay in the completion of a major engagement could result in a delay in the
redeployment of project personnel to new assignments for which the Company is
contractually committed to achieve milestones on a timely basis. The Company's
failure or inability to meet a customer's expectations in the performance of its
services could give rise to claims against the Company or damage the Company's
reputation and adversely affect its ability to attract new

                                       13
<PAGE>   14


business.

The Company generally undertakes projects on a fixed-time/fixed-price basis, and
warrants defined project deliverables as specified in mutually agreed upon
statements of work. In making proposals for fixed-time/fixed-price contracts,
the Company relies on its estimated costs and timing for completing the project.
Any increased or unexpected costs or unanticipated delays in connection with the
performance of fixed-time/fixed-price contracts, including delays caused by
factors outside the Company's control, could affect the profitability of these
contracts and have a material adverse effect on the Company's business,
financial condition, and results of operations.

The Company's business, financial condition, and results of operations may be
adversely affected by the Year 2000 problems described above.

The Company has experienced growth in net revenues and expansion of its
operations which have placed, and are expected to continue to place, significant
demands on the Company's managerial, operational, and financial resources. If
the Company's management is unable to manage growth effectively, the Company's
business, financial condition, and results of operations would be materially
adversely affected.

The Company's success depends to a significant extent on its ability to attract,
train, motivate, and retain highly-skilled IT professionals, particularly
project managers, software engineers, and other senior technical personnel.
There is currently a shortage of, and significant competition for, software
development and other IT professionals with the advanced technological skills
necessary to perform the services offered by the Company. This shortage has
caused wages for such professionals to increase, which increases operating costs
to IT service providers such as the Company. An inability to hire a sufficient
number of qualified employees or an inability to retain employees could have a
material adverse effect on the Company's business, financial condition, and
results of operations. In addition, even if the Company is able to expand its
team of highly-skilled IT professionals, the resources required to attract and
retain such employees may adversely affect the Company's operating margins.

The time between the date of initial contact with a potential customer and the
execution of a contract with that customer is often lengthy, typically ranging
from six weeks for smaller engagements to nine months or more for the Company's
larger engagements, and is subject to delays over which the Company has little
or no control, including customers' budgetary constraints, customers' internal
acceptance reviews, the success and continued internal support of customers' own
development efforts, and the possibility of cancellation or delay of projects by
customers. During such sales cycle, the Company may expend substantial funds and
management resources and yet not obtain project awards or revenues.

The Company's success may depend on its ability to make strategic acquisitions
from time to time. The competition to acquire appropriate companies is fierce,
with the result that the acquisition prices for these Companies may be high. In
addition, the high stock prices of publicly traded technology companies, that
are comparables for companies the Company may wish to acquire, have further
driven up the prices of potential acquisition candidates. As a result, there can
be no assurances that the Company will be able to make strategic acquisitions at
favorable prices, if at all.

The market for the Company's services is characterized by innovation and rapid
technological change, evolving industry standards, and changing customer
preferences. Both the needs of potential customers and the technologies
available for meeting those needs can change significantly within a short period
of time. The Company has derived a significant portion of its revenues from
projects based primarily on client/server architectures. These technologies are
continuing to develop and are subject to rapid change. Any factors negatively
affecting the acceptance of such technologies could have a material adverse
effect on the Company's business, financial condition, and results of
operations.

The Company's future will depend, in part, on its ability to continually enhance
its services, to develop services that address the needs of its customers and
potential customers, and to continue to improve its i-Structure methodologies
and technologies. There can be no assurance that the Company will be successful
in developing and marketing services that respond to technological changes, that
the Company will enhance its i-Structure methodologies and technologies on a
timely or cost-effective basis, or that the Company's services, methodologies,
and technologies will adequately meet the requirements of the marketplace.

The Company's future success depends to a significant extent on its executive
officers. The loss of the services of any one or more of these individuals could
have a material adverse effect on the Company's business, financial condition,
and results of operations.


                                       14
<PAGE>   15


The Company operates in a highly competitive and rapidly changing market and
competes with a variety of organizations that offer services similar to those
offered by the Company. Many of these competitors have significantly greater
financial, technical, sales and marketing resources and greater name recognition
than the Company. There can be no assurance that the Company will be able to
continue to compete successfully with its existing competitors or that it will
be able to compete successfully with new competitors.

The Company's success and its ability to compete is dependent, in part, upon its
proprietary rights, including its rights in i-Structure methodologies and
technologies. The Company relies primarily on a combination of copyright,
trademark, and trade secret laws to establish and protect its proprietary
rights. There can be no assurance that such measures will be adequate to protect
the Company's proprietary rights. Although the Company believes that its
services and technologies do not infringe the intellectual property rights of
others, there can be no assurance that infringement claims will not be asserted
against the Company in the future.

The Company's agreements with its customers typically contain provisions
designed to limit the Company's exposure to claims relating to the Company's
professional services and the applications developed by it. However, it is
possible that the limitation of liability provisions contained in the Company's
agreements may not adequately protect the Company or be effective under the laws
of certain jurisdictions. A liability claim brought against the Company could
have a material adverse effect on the Company's business, financial condition,
and results of operations.

Software applications as complex as those developed by the Company frequently
contain errors or defects, especially when first implemented. Any such defects
or errors could result in delayed or lost revenues, adverse customer reaction,
negative publicity regarding the Company and its services, and harm to the
Company's reputation, or could require expensive corrections, any of which could
have a material adverse effect on the Company's business, financial condition,
and results of operations.

The Company is subject to a number of risks that can adversely affect its
international operations, including difficulties administering its business
globally, managing foreign operations, currency fluctuations, restrictions
against the repatriation of earnings, the burdens of complying with a wide
variety of foreign laws, the uncertainty of laws and enforcement in certain
jurisdictions relating to the protection of intellectual property rights and
multiple and possibly overlapping tax structures. The Company recently expanded
its international operations with the acquisition of Conduit on June 21, 1999.



                                       15
<PAGE>   16


PART II. OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

In connection with the Company's acquisition of Conduit, the Company issued a
total of 2,396,752 shares of its common stock on June 21, 1999 to the former
stockholders of Conduit as consideration for all of the outstanding capital
stock Conduit. This transaction was exempt from registration requirements
pursuant to Regulation D and Regulation S under the Securities Act of 1933, as
amended.

In connection with the Company's acquisition of T3, the Company issued a total
of 89,640 shares of its common stock on May 25, 1999 to the former stockholder
of T3 as consideration for all of the outstanding capital stock of T3. This
transaction was exempt from registration requirements pursuant to Section 4(2)
of the Securities Act of 1933, as amended.

ITEM 4. SUBMISSION OF MATTERS OF SECURITY HOLDERS

The annual meeting of stockholders of the Company was held on May 20, 1999. The
stockholders of the Company elected members of the Board of Directors and
ratified the selection of PricewaterhouseCoopers LLP as the Company's auditors
for 1999.

                        NUMBER OF SHARES OF COMMON STOCK

<TABLE>
<CAPTION>
                                                                        BROKER
                                      FOR       AGAINST    ABSTAINED  NON-VOTERS
                                      ---       -------    ---------  ----------
<S>                                <C>           <C>         <C>
    Lawrence P. Begley             15,035,450                 1,600
    Gregory S. Young               15,025,186                11,914

    Selection of
    PricewaterhouseCoopers LLP     15,022,717    3,300       11,033
</TABLE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

    (a) Exhibits:

        Documents listed below are being filed as exhibits herewith.

        Exhibit 27.1  Financial Data Schedule

        Exhibit 27.2  Financial Data Schedule

    (b) Reports on Form 8-K:

        On July 2, 1999, the Company filed a form 8-K , setting forth
        information under Item 5 ("Other Events"). The event reported was the
        closing of the Conduit acquisition.



                                       16
<PAGE>   17



                                   SIGNATURES

Pursuant to the requirements 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.

Dated: August 15, 1999

INTERNATIONAL INTEGRATION INCORPORATED

               By: /s/ Lawrence P. Begley
                  --------------------------
               Lawrence P. Begley
               Executive Vice President
               & Chief Financial Officer
               (Principal Financial Officer)




                                       17

<PAGE>   18




                INTERNATIONAL INTEGRATION INCORPORATED ("i-CUBE")
                                  EXHIBIT INDEX



              Exhibit No.         Description
              -----------     -------------------------
              10              Material Contracts
              27.1            Financial Data Schedule
              27.2            Financial Data Schedule



                                       18