##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549





Form 10-K


FOR ANNUAL AND TRANSITION REPORTS


PURSUANT TO SECTIONS 13 OR 15(d) OF THE


SECURITIES EXCHANGE ACT OF 1934


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|           |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended March 31, 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: 0-22993





INDUS INTERNATIONAL, INC.


(Exact name of Registrant as specified in its charter)


|                                                                                      |  |                                         
|------------------------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                                              |  | 94-3273443                              
|(State or Other Jurisdiction of
    Incorporation or Organization)                    |  | (I.R.S. Employer
    Identification No.)
|3301 Windy Ridge Parkway
    Atlanta, Georgia(Address of Principal Executive Offices) |  | 30339(Zip code)                         

Registrants telephone number, including area code:


(770)952-8444


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


None


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


Common Stock, $.001 par value


Series A Junior Participating Preferred Stock


(Title of Class)





þ o


o


þ o









DOCUMENTS INCORPORATED BY REFERENCE












---










INDUS INTERNATIONAL, INC.


FORM 10-K


FOR THE FISCAL YEAR ENDED MARCH 31, 2005


TABLE OF CONTENTS


|                                                              |  |                                                                                                                      |       |      |    | 
|------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- | ----- | ---- | -- | 
|                                                              |  |                                                                                                                      |       | Page |   
|                                                              |  |                                                                                                                      |       |      |   
|Documents Incorporated by Reference                           |  |                                                                                                                      | Cover |     
|Cautionary Statement Regarding
    Forward-Looking Statements |  |                                                                                                                      | 2     |     
|                                                             
|PART I                                                       
|Item 1.                                                       |  | Business                                                                                                             |       |      | 2  | 
|Item 2.                                                       |  | Properties                                                                                                           |       |      | 25 | 
|Item 3.                                                       |  | Legal Proceedings                                                                                                    |       |      | 25 | 
|Item 4.                                                       |  | Submission of Matters to a Vote of Security
    Holders                                                              |       |      | 25 | 
|                                                             
|PART II                                                      
|Item 5.                                                       |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |       |      | 26 | 
|Item 6.                                                       |  | Selected Financial Data                                                                                              |       |      | 27 | 
|Item 7.                                                       |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |       |      | 28 | 
|Item 7A.                                                      |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                       |       |      | 43 | 
|Item 8.                                                       |  | Financial Statements and Supplementary
    Data                                                                      |       |      | 44 | 
|Item 9.                                                       |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                             |       |      | 78 | 
|Item 9A.                                                      |  | Controls and Procedures                                                                                              |       |      | 78 | 
|Item 9B.                                                      |  | Other Information                                                                                                    |       |      | 82 | 
|                                                             
|PART III                                                     
|Item 10.                                                      |  | Directors and Executive Officers of the
    Registrant                                                               |       |      | 82 | 
|Item 11.                                                      |  | Executive Compensation                                                                                               |       |      | 83 | 
|Item 12.                                                      |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                   |       |      | 83 | 
|Item 13.                                                      |  | Certain Relationships and Related
    Transactions                                                                   |       |      | 83 | 
|Item 14.                                                      |  | Principal Accountant Fees and Services                                                                               |       |      | 83 | 
|                                                             
|PART IV                                                      
|Item 15.                                                      |  | Exhibits and Financial Statement
    Schedules                                                                       |       |      | 84 | 
|                                                              |  | Signatures                                                                                                           |       |      | 87 | 
|EX-21.1 LIST OF SUBSIDIARIES                                 
|EX-23.1 CONSENT OF INDEPENDENT ACCOUNTING FIRM               
|EX-31.1 SECTION 302 CERTIFICATION OF THE CEO                 
|EX-31.2 SECTION 302 CERTIFICATION OF THE CFO                 
|EX-32.1 SECTION 906 CERTIFICATION OF THE CEO                 
|EX-32.2 SECTION 906 CERTIFICATION OF THE CFO                 



1



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##### Table of Contents






CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS


This Annual Report on Form 10-K, as well as documents
incorporated herein by reference, may contain forward-looking
statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These
forward-looking statements are not based on historical facts,
but rather reflect managements current expectations
concerning future results and events. These forward-looking
statements generally can be identified by the use of phrases and
expressions such as believe, expect,
anticipate, intend, plan,
foresee, likely, will or
other similar words or phrases. These statements, which speak
only as of the date given, are subject to certain risks and
uncertainties that could cause actual results to differ
materially from our historical experience and our expectations
or projections. These risks include, but are not limited to,
projected growth in the emerging service delivery management
market, market acceptance of our service delivery management
strategy, current market conditions for our products and
services, the capital spending environment generally, our
ability to achieve growth in our Asset Suite, Customer Suite and
Service Suite products, market acceptance and the success of our
new products and enhancements and upgrades to our existing
products, the success of our product development strategy, our
competitive position, the ability to establish and retain
partnership arrangements, our ability to develop our indirect
sales channels, changes in our executive management team,
uncertainty relating to and the management of personnel changes,
the ability to realize the anticipated benefits of our recent
restructurings, timely development and introduction of new
products, releases and product enhancements, current economic
conditions, heightened security and war or terrorist acts in
countries of the world that affect our business, and other risks
identified in the section of this Report entitled
Description of Business  Factors Affecting
Future Performance, beginning on page 16. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which reflect managements opinions only as of
the date hereof. The Company undertakes no obligation to revise
or publicly release the results of any revision to these
forward-looking statements.





PART I







|        |         
|------- | --------
|Item 1. | Business

General






2



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##### Table of Contents





Service Delivery Management Background




The Indus Solution










| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Improve Asset Performance. Our products help
    organizations control and reduce all asset lifecycle costs, as
    well as budget and plan more accurately, by ensuring that assets
    operate at peak performance to avoid unnecessary downtime and
    shorten planned outages. This requires that the organization
    have real-time visibility into the health and condition of
    facilities, equipment and/or critical parts.
|
| |  | Maximize Financial Performance. Organizations must
    transition from reactive to proactive decision-making in order
    to optimize performance and maximize financial gain. Our
    products facilitate this                                                                                                                                                                                                                        

3



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | transition by providing the right tools to analyze and balance
    the financial impact of strategic and operational initiatives
    across the organization, and to determine best-case alternatives.                                                                                                                                                                                                             
|
| |  | Optimize Workforce Efficiency. Organizations must operate
    their workforces at optimum efficiency, addressing planned and
    unplanned work requests in a timely and efficient manner.
    Instant field communications and feedback is vital. Our products
    give organizations real-time visibility into resource
    availability, skill sets, parts, tools, customer requirements,
    and documentation.
|
| |  | Ensure Customer Loyalty. Customer loyalty is the most
    accurate barometer of superior performance. Our products enable
    organizations to instantly access and analyze enterprise-wide
    information, rapidly respond to customer requests and issues,
    make timely and appropriate decisions, and provide accurate
    billing and collection.                                                          
|
| |  | Streamline the Supply Chain. Our products help
    organizations operate their supply chain more efficiently, with
    better planning and streamlined logistics. Our products provide
    increased visibility into the availability of spare parts,
    optimize inventory levels, and reduce the number of suppliers,
    while helping to deliver the right parts to the right place at
    the right time.    

Business Strategy








| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Develop and Enhance Software Solutions.We intend to
    continue to focus our product development resources on the
    development and enhancement of our software solutions. We offer
    what we believe to be the broadest solution set in the SDM
    marketplace and the only suite offering best-in-class products
    for customer, asset, and field service management. In order to
    provide additional functionality and value to our products, we
    plan to continue to provide enhancements to existing products
    and to introduce new products to address evolving industry
    standards and market needs. We will identify further
    enhancements to our products and opportunities for new products
    through our Global Client Services organization as well as
    ongoing customer consulting engagements and implementations,
    interactions with our user groups and special interest groups
    and participation in industry standards and research committees,
    such as the Association for Services Management International,
    MIMOSA, and the Nuclear Energy Institute.                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | Expand Our Strategic Alliances and Indirect Sales
    Channels. We currently sell our products primarily through
    our direct sales force. We work on joint projects and joint
    sales initiatives on a case-by-case basis with industry-leading
    consultants and software systems implementers, including most of
    the large consulting firms, such as Accenture, IBM Global
    Services, Capgemini, BearingPoint and Deloitte Consulting. This
    allows us to supplement our direct sales force and professional
    services organization. We have been expanding our indirect sales
    channels through reseller agreements, marketing agreements and
    agreements with third-party software providers, particularly
    internationally. Our agreements with Peregrine Systems, Inc.,
    Materna GmbH Information & Communications, in Germany,
    A3 Systems Limited, a subsidiary of Yao De Computer Software
    Limited, in China, and Electric Power Development Company
    Limited (also known as JPower) in Japan, extend our market
    coverage and provide us with new business leads and access to
    trained implementation personnel. We also have strategic
    alliances with complementary software providers. These product
    partnerships, including our arrangements with NextAxiom
    Technology, Inc. (NextAxiom), Business Objects, Inc.
    (Business Objects), and Oracle Corporation
    (Oracle), extend our product footprints to best meet
    our customers requirements.
|
| | Expand International Sales.We believe that our products
    offer significant benefits for customers in international
    markets. We have more than 80 employees outside the United
    States, primarily in Europe and Asia Pacific, focused on
    international sales, servicing our international clients, and
    developing reseller                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

4



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | channels. In addition to offices in the United Kingdom, France,
    Japan, and Australia, we have established reseller and referral
    arrangements in countries across the globe, including China,
    South Africa, Hungary, Russia, Egypt, and Israel. Our
    international strategy includes leveraging the strength of our
    relationships with current customers that also have significant
    overseas operations and the pursuit of strategic marketing
    opportunities with international systems integrators and
    third-party software application providers that are
    complementary to our products.
|
| | Acquire or Invest in Complementary Businesses.We will
    continue to investigate strategic acquisitions of technologies,
    products, and businesses that may enable us to enhance and
    expand our SDM software products and service offerings. Where
    appropriate, we intend to investigate and pursue acquisitions
    that will provide us with complementary products and
    technologies, extend our presence into other vertical markets
    with similar operational challenges, and/or further solidify our
    leadership position within the emerging SDM market.                                        

Products






| |               
| | --------------
| | Customer Suite





| |            
| | -----------
| | Asset Suite

tm tm tm




5



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| |              
| | -------------
| | Service Suite





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | WorkCenter. Indus WorkCenter is the web-based
    order entry and management module. As the starting point of work
    and order processing, WorkCenter provides a variety of options
    and tools to accommodate the needs of both customers and service
    providers. With WorkCenter, call center representatives can
    initiate service requests, schedule service appointments, and
    check service status from any web browser. Appointment
    scheduling is immediate, and the service organization is
    notified automatically. Business rules and customer preferences
    ensure timely fulfillment by the most appropriate service
    provider.                                                                                                                                                            
|
| |  | WorkManager. Indus WorkManager helps manage the
    constantly changing dynamics of field service by furnishing
    dispatchers with a real-time graphical representation of people,
    places and things in an information and response portal. All
    updates and changes to the schedule can be viewed as they
    happen. Rule violations, cost and time overruns, and other
    performance indicators are highlighted for action. Visual cues
    and filters assist management personnel with understanding the
    status of all work at any time. Relationships between work
    orders, dependencies, and the parent/child relationship within a
    work order are evident. Integration with leading GPS systems
    further enhances understanding of where personnel are deployed
    and how they can be routed.
|
| |  | WorkMobile. Indus WorkMobile equips mobile service
    resources with real-time interactive wireless applications and
    access to organizational data. WorkMobile provides online
    web-based or wireless access, as well as offline/sync access.
    Handheld and wireless communication devices enable
    bi-directional updates that expedite service delivery. Service
    personnel have real-time access to schedules, customer details,
    and operational response rules. They can update, close or
    reschedule service orders from the field with current customer
    information.                                                                                                                                                                                                                           
|
| |  | WorkExecutive. Indus WorkExecutive is a planning,
    forecasting, and implementation tool that enables senior
    management to predict the business impact of all available
    execution alternatives and implement the one that is right for
    their business needs and objectives. Through management
    dashboards and reports, WorkExecutive provides the intelligence
    executives need to assess their execution strategy, performance,
    and organizational effectiveness. Factors such as the supply and
    demand of service personnel, response criteria and profitability
    are measured against key performance indicators and benchmark
    metrics.                                                                                                                                                  

6



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | WorkOptimizer. Indus
    WorkOptimizertm
    enhances operational achievements with optimization technology.
    The product employs proprietary algorithms to calculate and
    accommodate complex but known variables in the field service
    chain to help overcome operational inefficiencies and ensure the
    optimal balance between profitability, effectiveness, and
    customer satisfaction. Real-time logistical support will allow
    the organization to deploy field personnel with the right skills
    to the right place at the right time.



| |                              
| | -----------------------------
| | Indus Foundation Architecture

tm


Services


tm




| |                      
| | ---------------------
| | Professional Services







7



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| |                         
| | ------------------------
| | Indus Knowledge Delivery

tm




| |                       
| | ----------------------
| | Global Client Services





| |                
| | ---------------
| | Hosted Services





Sales and Marketing




| |                    
| | -------------------
| | Global Organization





| |   |                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Americas, with direct sales representatives in the United
    States and Canada, and strategic partnerships to expand the
    scope of sales opportunities.                                                                     
|
| |  | Europe, Middle East and Africa, with direct sales
    representatives in the United Kingdom and France, as well as
    partnerships which extend our selling capability into
    continental Europe, the Middle East and Africa.
|
| |  | Asia-Pacific, with direct sales coverage in Australia and
    Japan and strategic partnerships to expand the scope of sales
    opportunities.                                                                                  

8



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##### Table of Contents







| |   |                                                  
| | - | -------------------------------------------------
| |  | Utilities                                        
|
| |  | Water and waste treatment                        
|
| |  | Nuclear power generation                         
|
| |  | Fossil power generation                          
|
| |  | Hydroelectric power generation                   
|
| |  | Energy transmission and substations              
|
| |  | Energy distribution and delivery                 
|
| |  | Energy resource extraction and process industries
|
| |  | Chemical, petrochemical, oil and gas             
|
| |  | Metals and mining                                
|
| |  | Pulp, paper and forest products                  
|
| |  | Process manufacturing                            
|
| |  | Discrete manufacturing                           
|
| |  | Consumer packaged goods                          
|
| |  | Facilities management                            
|
| |  | Managed services                                 
|
| |  | Telecommunications                               
|
| |  | High-tech and electronics                        
|
| |  | Medical                                          





| |                                    
| | -----------------------------------
| | Sales Cycle and Customer Life Cycle





Product Development




9



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Strategic Relationships






| |                    
| | -------------------
| | Systems Integrators





| |                 
| | ----------------
| | Channel Partners



10



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| |                          
| | -------------------------
| | Software Product Partners









| |   |                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | NextAxiom  provides a highly differentiated
    software platform used to produce, consume and deploy software
    components as standard-based services. Business applications
    built upon these reusable components are significantly easier to
    tailor, manage and integrate with existing software assets.
|
| |  | Oracle  provides database platform as well as
    Oracle Financials integration. We are a member of the Oracle
    Partner Network, as a Certified Partner.                                                                                                                                                         
|
| |  | Business Objects  supports our Real-Time
    Performance Management (RPM) product enabling users to
    monitor and improve operational performance across the service
    delivery organization.                                                                                                                   

Customers






| |   |                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------
| |  | Utilities, including water and waste water treatment, power
    generation, and energy transmission and distribution;
|
| |  | Manufacturing;                                                                                                       
|
| |  | Chemical and petrochemical;                                                                                          
|
| |  | Oil and gas;                                                                                                         
|
| |  | Pulp and paper;                                                                                                      
|
| |  | Metals and mining;                                                                                                   
|
| |  | Telecommunications;                                                                                                  
|
| |  | Government and education;                                                                                            
|
| |  | Transportation;                                                                                                      
|
| |  | Consumer packaged goods;                                                                                             

11



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| |   |                  
| | - | -----------------
| |  | Medical; and     
|
| |  | Managed services.



Competition






| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | Product quality, return on investment, performance, and
    functionality;                                  
|
| |  | Adaptability to new trends driven by technology and customer
    requirements;                              
|
| |  | Cost of internal product development as compared with cost of
    purchase of products from outside vendors;
|
| |  | Ease and speed of implementation;                                                                           
|
| |  | Cost of ongoing maintenance; and                                                                            
|
| |  | Time-to-market with, and market acceptance of, new products,
    enhancements, functionality and services.  







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Depth and breadth of products. We believe that no
    other software vendor offers the breadth of customer, asset, and
    field service management applications, coupled with the depth of
    functionality offered in our products.                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Scalability of our products. Our products are able
    to scale up to multiple thousands of users.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Substantial installed base. Over the past
    25 years, we have attained the leading market share
    position in the Tier 1 market (customers having
    annual revenues greater than $1 billion dollars) for asset
    management software products, especially among utilities and
    process manufacturers. This installed customer base provides us
    with a fertile source for selling our comprehensive SDM
    solutions, including our Customer Suite and Service Suite
    software products, as well as providing us with numerous client
    references that can help us close deals with new prospects.
|
| |  | Industry expertise. Our professional services are
    provided by experts with extensive industry experience. This
    experience and domain knowledge gained from prior
    implementations allows us to enhance new implementations with
    industry-specific best practices.                                                                                                                                                                                                                                                                                                                                         

12



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International Operations






Proprietary Rights and Licensing










13



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Employees




Executive Officers




|                          |  |     |    |  |                      |                                                     
|------------------------- |  | --- | -- |  | -------------------- | ----------------------------------------------------
|Name of Executive Officer |  | Age |    |  | Principal Occupation
|                          |  |     |    |  |                     
|Gregory J. Dukat          |  |     | 44 |  |                      | President and Chief Executive Officer               
|Thomas W. Williams        |  |     | 48 |  |                      | Executive Vice President and Chief Financial Officer
|John D. Gregg             |  |     | 56 |  |                      | Executive Vice President of Field Operations        
|Joseph T. Trino           |  |     | 56 |  |                      | Executive Vice President of Corporate Strategy      







14



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Employment Agreements




Exchange Act Reports


www.indus.com




15



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FACTORS AFFECTING FUTURE PERFORMANCE


Our operating results have fluctuated in the past and may
continue to fluctuate significantly from quarter-to-quarter
which could negatively affect our results of operations and our
stock price.






| |   |                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the variable size and timing of individual license transactions
    and services engagements;                                                                  
|
| |  | delays in maintenance renewals or non-renewals or cancellation
    of maintenance services;                                                                    
|
| |  | changes in the proportion of revenues attributable to license
    fees, hosting fees and services;                                                             
|
| |  | successful completion of customer funded development;                                                                                                          
|
| |  | changes in the level of operating expenses;                                                                                                                    
|
| |  | our success in, and costs associated with, developing,
    introducing and marketing new products;                                                             
|
| |  | delays associated with product development, including the
    development and introduction of new products and new releases of
    existing products;          
|
| |  | the development and introduction of new operating systems and/or
    technological changes in computer systems that require
    additional development efforts;
|
| |  | software defects and other product quality problems and the
    costs associated with solving those problems; and                                              
|
| |  | personnel changes, including changes in our management.                                                                                                        



If we are unable to maintain consistent profitability and
positive operating cash flow in future quarters, our business
and long-term prospects may be harmed.




If the market for service delivery management solutions does
not grow as anticipated or if our service delivery management
solutions are not accepted in the market, we may not be able to
grow our business.




16



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##### Table of Contents



If the market does not accept our new products and
enhancements or upgrades to our existing products that we launch
from time to time, our operating results and financial condition
would be materially adversely affected.




Demand for our Asset Suite and Customer Suite products may
grow slowly or decrease in upcoming quarters, which may impair
our business and could materially adversely affect our results
of operations and financial condition.




If we are not able to license software to more new customers
not currently using our software, our business and long-term
prospects could be adversely affected.




Our ability to use our net operating loss carryforwards to
reduce future consolidated taxable income is likely to be
subject to annual limitations under U.S. tax rules, which
could have a negative effect on financial results in future
periods.




17



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##### Table of Contents



If we experience delays in product development or the
introduction of new products or new versions of existing
products, our business and sales will be negatively affected.




Delays in implementation of our software or the performance
of our services may negatively affect our business.




We have experienced significant change in our board of
directors and our executive management team and the current
board and the executive management team have only recently begun
to work together.




Our success depends upon our ability to attract and retain
key personnel.




18



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Our failure to realize the expected benefits of our recent
restructurings, including anticipated cost savings, could result
in unfavorable financial results.






Our business may suffer from risks associated with growth
through acquisitions, should they occur.






| |   |                                                                             
| | - | ----------------------------------------------------------------------------
| |  | the assumption of unanticipated liabilities and contingencies;              
|
| |  | diversion of our managements attention;                                    
|
| |  | inability to achieve market acceptance of acquired
    products; and        
|
| |  | possible reduction of our reported asset values and earnings
    because of:



| |   |                                                            
| | - | -----------------------------------------------------------
| |  | goodwill impairment;                                       
|
| |  | increased interest costs;                                  
|
| |  | issuances of additional securities or debt; and            
|
| |  | difficulties in integrating acquired businesses and assets.

19



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| |   |                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------
| |  | properly maintain and take advantage of the business or value of
    any acquired business and assets;
|
| |  | identify suitable acquisition candidates;                                                             
|
| |  | complete any additional acquisitions; or                                                              
|
| |  | integrate any acquired businesses or assets into our operations.                                      

The strain on our management may negatively affect our
business and our ability to execute our business strategy.




The market for our products is highly competitive, and we may
be unable to maintain or increase our market share.






If we dont respond to rapid technological change and
evolving industry standards, we will be unable to compete
effectively.




20



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##### Table of Contents





Our growth is dependent, in part, upon the successful
development of our indirect sales channels.






If we fail to comply with laws or government regulations, we
may be subject to penalties and fines.




If we are unable to expand our international operations, our
operating results and financial condition could be materially
and adversely affected.




21



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##### Table of Contents





The success of our international operations is subject to
many uncertainties.






| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | costs and other difficulties in producing and gaining acceptance
    of localized versions of our products;        
|
| |  | cultural differences in the conduct of business;                                                                   
|
| |  | difficulties in staffing and managing foreign operations;                                                          
|
| |  | unfavorable exchange rate fluctuations;                                                                            
|
| |  | longer accounts receivable payment cycles;                                                                         
|
| |  | greater difficulty in accounts receivable collection;                                                              
|
| |  | seasonality due to the annual slow-down in European business
    activity during the third calendar quarter;       
|
| |  | unexpected changes in regulatory requirements and withholding
    taxes that restrict the repatriation of earnings;
|
| |  | tariffs and other trade barriers;                                                                                  
|
| |  | the burden of complying with a wide variety of foreign
    laws; and                                               
|
| |  | negative effects relating to hostilities, war or terrorist acts.                                                   



If we are not successful in Japan we may not be able to grow
revenue and it could have a negative effect on our operating
results and financial condition.




We have only limited protection of our proprietary rights and
technology.




22



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##### Table of Contents





We may not be successful in avoiding claims that we infringe
others proprietary rights.




As a result of our lengthy sales cycle and the large size of
our typical orders from new customers, any delays we experience
will affect our operating results.




Product liability claims made by our customers, whether
successful or not, could be expensive and could harm our
business.






23



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##### Table of Contents



Anti-takeover provisions in our charter documents and
Delaware law could prevent or delay a change in control of
Indus, even if a change of control would be beneficial to our
stockholders.








| |   |                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | authorization of a stockholder rights plan or poison
    pill to deter a takeover attempt;                                                                                       
|
| |  | authorization of blank check preferred stock that
    our board of directors could issue to thwart a takeover attempt;                                                           
|
| |  | limitations on the ability of stockholders to call special
    meetings of stockholders;                                                                                           
|
| |  | limitations on stockholder action by written consent; and                                                                                                                          
|
| |  | advance notice requirements for nominations for election to our
    board of directors or for proposing matters that can be acted
    upon by stockholders at stockholder meetings.



Investor confidence and share value may be adversely impacted
as a result of the material weakness in our internal controls
related to our accounting for leases.




OTHER RISKS




24



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##### Table of Contents








|        |           
|------- | ----------
|Item 2. | Properties



|                       |                                |               |                                                                                       |         |  |        |           |  |  |       | 
|---------------------- | ------------------------------ | ------------- | ------------------------------------------------------------------------------------- | ------- |  | ------ | --------- |  |  | ----- | 
|                       |                                |               |                                                                                       | Square  |  |        | Ownership | 
|Location               |                                | Principal Use |                                                                                       | Footage |  |        | Interest  | 
|                       |                                |               |                                                                                       |         |  |        |           | 
|Domestic Offices:      |                                |               |                                                                                       |         |  |        |           |  |  |      
|                       | Atlanta, GA                    |               | Corporate Headquarters, Research and Development, Sales and
    Marketing, Operations |         |  | 45,557 |           |  |  | Lease | 
|                       | Columbia, SC                   |               | Regional Operations, Research and Development, Sales and
    Marketing, Operations    |         |  | 80,000 |           |  |  | Own   | 
|                       | San Francisco, CA              |               | Regional Operations, Research and Development, Sales and
    Marketing, Operations    |         |  | 25,670 |           |  |  | Lease | 
|                       | Pittsburgh, PA                 |               | Regional Operations                                                                   |         |  | 5,245  |           |  |  | Lease | 
|International Offices: |                                |               |                                                                                       |         |  |        |           |  |  |      
|                       | Woking, Surrey, United Kingdom |               | Regional Operations                                                                   |         |  | 9,087  |           |  |  | Lease | 
|                       | Brisbane, Australia            |               | Regional Operations                                                                   |         |  | 5,382  |           |  |  | Lease | 
|                       | Paris, France                  |               | Regional Operations                                                                   |         |  | 6,660  |           |  |  | Lease | 










|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings










|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



25



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##### Table of Contents






PART II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities



|                                       |                |      |      |      |     |   |      |      | 
|-------------------------------------- | -------------- | ---- | ---- | ---- | --- | - | ---- | ---- | 
|                                       |                | High |      |      | Low |  
|                                       |                |      |      |      |     |  
|Transition period ended March 31, 2003 |                | $    | 2.20 |      |     | $ | 1.44 |     
|Year ended March 31, 2004              |                |      |      |      |     |   |      |     
|                                       | First Quarter  |      | $    | 2.60 |     |   | $    | 1.50 | 
|                                       | Second Quarter |      |      | 3.19 |     |   |      | 1.90 | 
|                                       | Third Quarter  |      |      | 3.30 |     |   |      | 2.19 | 
|                                       | Fourth Quarter |      |      | 3.99 |     |   |      | 2.78 | 
|Year ended March 31, 2005              |                |      |      |      |     |   |      |     
|                                       | First Quarter  |      | $    | 3.80 |     |   | $    | 1.91 | 
|                                       | Second Quarter |      |      | 2.18 |     |   |      | 1.23 | 
|                                       | Third Quarter  |      |      | 2.19 |     |   |      | 1.41 | 
|                                       | Fourth Quarter |      |      | 2.77 |     |   |      | 2.00 | 







Equity Compensation Plan Information




|                                                   |  |                             |           |  |                      |                                |      |                               |  |  |           | 
|-------------------------------------------------- |  | --------------------------- | --------- |  | -------------------- | ------------------------------ | ---- | ----------------------------- |  |  | --------- | 
|                                                   |  |                             |           |  |                      | (c) Number of Securities       |     
|                                                   |  |                             |           |  |                      | Remaining Available for Future |     
|                                                   |  | (a) Number of Securities to |           |  | (b) Weighted Average |                                |      | Issuance Under Equity         | 
|                                                   |  | be Issued Upon Exercise of  |           |  | Exercise Price of    |                                |      | Compensation Plans (Excluding | 
|                                                   |  | Outstanding Options,        |           |  | Outstanding Options, |                                |      | Securities Reflected in       | 
|Plan Category *                                    |  | Warrants and Rights         |           |  | Warrants and Rights  |                                |      | Column (a))                   | 
|                                                   |  |                             |           |  |                      |                                |      |                               | 
|Equity Compensation Plans Approved by Stockholders |  |                             | 9,864,847 |  |                      |                                | 2.92 |                               |  |  | 3,000,415 | 






|  |                                                                                           
|- | ------------------------------------------------------------------------------------------
|* | All of the Companys Equity Compensation Plans have been
    approved by its stockholders.

26



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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data





|                              |                          |                                       |         |         |               |  |         |                       |         |             |               |         |        |               |        |        |               |  |         |        |        |  |         |         |        |  |         |         |        | 
|----------------------------- | ------------------------ | ------------------------------------- | ------- | ------- | ------------- |  | ------- | --------------------- | ------- | ----------- | ------------- | ------- | ------ | ------------- | ------ | ------ | ------------- |  | ------- | ------ | ------ |  | ------- | ------- | ------ |  | ------- | ------- | ------ | 
|                              |                          |                                       |         |         |               |  |         | Three Months          |         |             |               |         |        |               |       
|                              |                          |                                       |         | Ended   |               |  |        
|                              |                          | Years Ended December 31,              |         |         | March 31,     |  |         | Years Ended March 31, |        
|                              |                          |                                       |         |         |               |  |         |                       |        
|                              |                          | 2000                                  |         |         | 2001          |  |         | 2002                  |         |             | 2003          |         |        | 2003          |        |        | 2004          |  |         | 2005   |       
|                              |                          |                                       |         |         |               |  |         |                       |         |             |               |         |        |               |        |        |               |  |         |        |       
|                              |                          | (As restated)                         |         |         | (As restated) |  |         | (As restated)         |         |             | (As restated) |         |        | (As restated) |        |        | (As restated) |  |         |       
|                              |                          |                                       |         |         |               |  |         |                       |         | (Unaudited) |               |         |        |               |       
|                              |                          | (In thousands, except per share data) |        
|Statement of Operations data: |                          |                                       |         |         |               |  |         |                       |         |             |               |         |        |               |        |        |               |  |         |        |        |  |         |        
|Revenue:                      |                          |                                       |         |         |               |  |         |                       |         |             |               |         |        |               |        |        |               |  |         |        |        |  |         |         |        |  |         |        
|                              | Software license fees    |                                       | $       | 12,622  |               |  | $       | 21,005                |         |             | $             | 15,527  |        |               | $      | 2,637  |               |  | $       | 13,936 |        |  | $       | 23,917  |        |  | $       | 31,866  |       
|                              | Services:                |                                       |         |         |               |  |         |                       |         |             |               |         |        |               |        |        |               |  |         |        |        |  |         |         |        |  |         |         |       
|                              |                          | Support, outsourcing and hosting      |         |         | 34,154        |  |         |                       | 35,637  |             |               |         | 36,780 |               |        |        | 10,614        |  |         |        | 38,751 |  |         |         | 59,536 |  |         |         | 59,543 | 
|                              |                          | Consulting, training and other        |         |         | 98,913        |  |         |                       | 119,372 |             |               |         | 64,858 |               |        |        | 13,983        |  |         |        | 59,269 |  |         |         | 62,933 |  |         |         | 50,760 | 
|                              |                          |                                       |         |         |               |  |         |                       |         |             |               |         |        |               |        |        |               |  |         |        |       
|                              | Total services           |                                       |         | 133,067 |               |  |         | 155,009               |         |             |               | 101,638 |        |               |        | 24,597 |               |  |         | 98,020 |        |  |         | 122,469 |        |  |         | 110,303 |       
|                              |                          |                                       |         |         |               |  |         |                       |         |             |               |         |        |               |        |        |               |  |         |        |       
|Total revenue                 |                          |                                       | 145,689 |         |               |  | 176,014 |                       |         |             | 117,165       |         |        |               | 27,234 |        |               |  | 111,956 |        |        |  | 146,386 |         |        |  | 142,169 |        
|                              |                          |                                       |         |         |               |  |         |                       |         |             |               |         |        |               |        |        |               |  |         |        |       
|Cost of revenue:              |                          |                                       |         |         |               |  |         |                       |         |             |               |         |        |               |        |        |               |  |         |        |        |  |         |         |        |  |         |        
|                              | Software license fees(1) |                                       |         | 9,592   |               |  |         | 1,378                 |         |             |               | 2,997   |        |               |        | 226    |               |  |         | 3,109  |        |  |         | 999     |        |  |         | 3,737   |       
|                              | Services:                |                                       |         |         |               |  |         |                       |         |             |               |         |        |               |        |        |               |  |         |        |        |  |         |         |        |  |         |         |       
|                              |                          | Support, outsourcing and hosting      |         |         | 8,680         |  |         |                       | 8,242   |             |               |         | 11,150 |               |        |        | 4,175         |  |         |        | 13,194 |  |         |         | 20,265 |  |         |         | 16,975 | 
|                              |                          | Consulting, training and other        |         |         | 73,203        |  |         |                       | 71,816  |             |               |         | 44,842 |               |        |        | 11,001        |  |         |        | 42,293 |  |         |         | 46,342 |  |         |         | 38,995 | 
|                              |                          |                                       |         |         |               |  |         |                       |         |             |               |         |        |               |        |        |               |  |         |        |       
|                              | Total services           |                                       |         | 81,883  |               |  |         | 80,058                |         |             |               | 55,992  |        |               |        | 15,176 |               |  |         | 55,487 |        |  |         | 66,607  |        |  |         | 55,970  |       
|                              |                          |                                       |         |         |               |  |         |                       |         |             |               |         |        |               |        |        |               |  |         |        |       
|Total cost of revenue         |                          |                                       | 91,475  |         |               |  | 81,436  |                       |         |             | 58,989        |         |        |               | 15,402 |        |               |  | 58,596  |        |        |  | 67,606  |         |        |  | 59,707  |        
|                              |                          |                                       |         |         |               |  |         |                       |         |             |               |         |        |               |        |        |               |  |         |        |       
|Gross margin                  |                          |                                       | 54,214  |         |               |  | 94,578  |                       |         |             | 58,176        |         |        |               | 11,832 |        |               |  | 53,360  |        |        |  | 78,780  |         |        |  | 82,462  |        
|                              |                          |                                       |         |         |               |  |         |                       |         |             |               |         |        |               |        |        |               |  |         |        |       

27



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|                                         |                            |                                       |         |        |               |   |         |                       |         |             |               |        |        |               |        |        |               |   |         |        |        |   |         |        |        |   |        |        |        | 
|---------------------------------------- | -------------------------- | ------------------------------------- | ------- | ------ | ------------- | - | ------- | --------------------- | ------- | ----------- | ------------- | ------ | ------ | ------------- | ------ | ------ | ------------- | - | ------- | ------ | ------ | - | ------- | ------ | ------ | - | ------ | ------ | ------ | 
|                                         |                            |                                       |         |        |               |   |         | Three Months          |         |             |               |        |        |               |       
|                                         |                            |                                       |         | Ended  |               |   |        
|                                         |                            | Years Ended December 31,              |         |        | March 31,     |   |         | Years Ended March 31, |        
|                                         |                            |                                       |         |        |               |   |         |                       |        
|                                         |                            | 2000                                  |         |        | 2001          |   |         | 2002                  |         |             | 2003          |        |        | 2003          |        |        | 2004          |   |         | 2005   |       
|                                         |                            |                                       |         |        |               |   |         |                       |         |             |               |        |        |               |        |        |               |   |         |        |       
|                                         |                            | (As restated)                         |         |        | (As restated) |   |         | (As restated)         |         |             | (As restated) |        |        | (As restated) |        |        | (As restated) |   |         |       
|                                         |                            |                                       |         |        |               |   |         |                       |         | (Unaudited) |               |        |        |               |       
|                                         |                            | (In thousands, except per share data) |        
|Operating expenses:                      |                            |                                       |         |        |               |   |         |                       |         |             |               |        |        |               |        |        |               |   |         |        |        |   |         |        |        |   |        |       
|                                         | Research and development   |                                       |         | 51,985 |               |   |         | 49,720                |         |             |               | 45,750 |        |               |        | 8,713  |               |   |         | 41,756 |        |   |         | 34,960 |        |   |        | 31,956 |       
|                                         | Sales and marketing        |                                       |         | 49,709 |               |   |         | 30,363                |         |             |               | 29,945 |        |               |        | 6,546  |               |   |         | 28,927 |        |   |         | 33,334 |        |   |        | 30,619 |       
|                                         | General and administrative |                                       |         | 21,098 |               |   |         | 17,468                |         |             |               | 13,306 |        |               |        | 3,957  |               |   |         | 14,590 |        |   |         | 21,226 |        |   |        | 15,125 |       
|                                         | Restructuring expenses     |                                       |         | 1,418  |               |   |         | 10,188                |         |             |               | 8,199  |        |               |        | 1,968  |               |   |         | 6,771  |        |   |         | 44     |        |   |        | 10,430 |       
|                                         |                            |                                       |         |        |               |   |         |                       |         |             |               |        |        |               |        |        |               |   |         |        |       
|                                         |                            | Total operating expenses              |         |        | 124,210       |   |         |                       | 107,739 |             |               |        | 97,200 |               |        |        | 21,184        |   |         |        | 92,044 |   |         |        | 89,564 |   |        |        | 88,130 | 
|                                         |                            |                                       |         |        |               |   |         |                       |         |             |               |        |        |               |        |        |               |   |         |        |       
|Loss from operations                     |                            |                                       | (69,996 | )      |               |   | (13,161 | )                     |         |             | (39,024       | )      |        |               | (9,352 | )      |               |   | (38,684 | )      |        |   | (10,784 | )      |        |   | (5,668 | )     
|Other income (expense), net              |                            |                                       | 3,712   |        |               |   | 2,412   |                       |         |             | 1,303         |        |        |               | (50    | )      |               |   | 1,058   |        |        |   | (554    | )      |        |   | (285   | )     
|                                         |                            |                                       |         |        |               |   |         |                       |         |             |               |        |        |               |        |        |               |   |         |        |       
|Loss before taxes                        |                            |                                       | (66,284 | )      |               |   | (10,749 | )                     |         |             | (37,721       | )      |        |               | (9,402 | )      |               |   | (37,626 | )      |        |   | (11,338 | )      |        |   | (5,953 | )     
|Provision (benefit) for income taxes     |                            |                                       | (6,666  | )      |               |   | 36      |                       |         |             | (3,944        | )      |        |               | 277    |        |               |   | (3,669  | )      |        |   | 623     |        |        |   | 112    |       
|                                         |                            |                                       |         |        |               |   |         |                       |         |             |               |        |        |               |        |        |               |   |         |        |       
|Net loss                                 |                            | $                                     | (59,618 | )      |               | $ | (10,785 | )                     |         | $           | (33,777       | )      |        | $             | (9,679 | )      |               | $ | (33,957 | )      |        | $ | (11,961 | )      |        | $ | (6,065 | )     
|                                         |                            |                                       |         |        |               |   |         |                       |         |             |               |        |        |               |        |        |               |   |         |        |       
|Net loss per share:                      |                            |                                       |         |        |               |   |         |                       |         |             |               |        |        |               |        |        |               |   |         |        |        |   |         |        |        |   |        |       
|                                         | Basic                      |                                       | $       | (1.74  | )             |   | $       | (0.31                 | )       |             | $             | (0.96  | )      |               | $      | (0.26  | )             |   | $       | (0.95  | )      |   | $       | (0.24  | )      |   | $      | (0.11  | )     
|                                         |                            |                                       |         |        |               |   |         |                       |         |             |               |        |        |               |        |        |               |   |         |        |       
|                                         | Diluted                    |                                       | $       | (1.74  | )             |   | $       | (0.31                 | )       |             | $             | (0.96  | )      |               | $      | (0.26  | )             |   | $       | (0.95  | )      |   | $       | (0.24  | )      |   | $      | (0.11  | )     
|                                         |                            |                                       |         |        |               |   |         |                       |         |             |               |        |        |               |        |        |               |   |         |        |       
|Shares used in computing per share data: |                            |                                       |         |        |               |   |         |                       |         |             |               |        |        |               |        |        |               |   |         |        |        |   |         |        |        |   |        |       
|                                         | Basic                      |                                       |         | 34,248 |               |   |         | 34,857                |         |             |               | 35,237 |        |               |        | 37,210 |               |   |         | 35,838 |        |   |         | 49,455 |        |   |        | 57,259 |       
|                                         |                            |                                       |         |        |               |   |         |                       |         |             |               |        |        |               |        |        |               |   |         |        |       
|                                         | Diluted                    |                                       |         | 34,248 |               |   |         | 34,857                |         |             |               | 35,237 |        |               |        | 37,210 |               |   |         | 35,838 |        |   |         | 49,455 |        |   |        | 57,259 |       
|                                         |                            |                                       |         |        |               |   |         |                       |         |             |               |        |        |               |        |        |               |   |         |        |       

|                           |  |                |         |  |                |   |         |               |  |   |               |  |  |               |         |   |      |   |         |  |  |   |         | 
|-------------------------- |  | -------------- | ------- |  | -------------- | - | ------- | ------------- |  | - | ------------- |  |  | ------------- | ------- | - | ---- | - | ------- |  |  | - | ------- | 
|                           |  | December 31,   |         |  | March 31,      |  
|                           |  |                |         |  |                |  
|                           |  | 2000           |         |  | 2001           |   |         | 2002          |  |   | 2003          |  |  | 2004          |         |   | 2005 |  
|                           |  |                |         |  |                |   |         |               |  |   |               |  |  |               |         |   |      |  
|                           |  | (As restated)  |         |  | (As restated)  |   |         | (As restated) |  |   | (As restated) |  |  | (As restated) |         |   |     
|                           |  | (In thousands) |         |  | (In thousands) |  
|Balance sheet data:        |  |                |         |  |                |   |         |               |  |   |               |  |  |               |         |   |      |   |         |  |  |   |         | 
|Working capital            |  | $              | 43,355  |  |                | $ | 43,283  |               |  | $ | 14,145        |  |  | $             | (17,104 | ) |      | $ | 1,655   |  |  | $ | 3,683   | 
|Total assets               |  |                | 141,576 |  |                |   | 139,965 |               |  |   | 101,712       |  |  |               | 145,831 |   |      |   | 133,436 |  |  |   | 121,105 | 
|Short-term debt            |  |                | 71      |  |                |   | 4       |               |  |   | 266           |  |  |               | 24,790  |   |      |   | 814     |  |  |   | 968     | 
|Long-term debt             |  |                | 71      |  |                |   |        |               |  |   | 124           |  |  |               | 52      |   |      |   | 10,299  |  |  |   | 9,530   | 
|Total stockholders equity |  |                | 68,114  |  |                |   | 59,393  |               |  |   | 26,709        |  |  |               | 27,081  |   |      |   | 45,600  |  |  |   | 40,413  | 






|    |                                                                                           
|--- | ------------------------------------------------------------------------------------------
|(1) | Includes a $6.8 million write down of third-party software
    available for sale in 2000.






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



28



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Critical Accounting Policies








| |                    
| | -------------------
| | Revenue Recognition





29



---



##### Table of Contents











| |                                                            
| | -----------------------------------------------------------
| | Accounts Receivable and Allowance for Doubtful
    Accounts







30



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##### Table of Contents







| |                                            
| | -------------------------------------------
| | Valuation of Intangible Assets and Goodwill









| |              
| | -------------
| | Restructuring





31



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##### Table of Contents









Results of Operations




| |                                    
| | -----------------------------------
| | Restatement of Financial Statements







32



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##### Table of Contents







| |                  
| | -----------------
| | Operating Results





Year Ended March 31, 2004 Compared to the Year Ended
March 31, 2005


Revenue


|                                 |                             |                     |         |      |           |   |         |        |   |  |       |    | 
|-------------------------------- | --------------------------- | ------------------- | ------- | ---- | --------- | - | ------- | ------ | - |  | ----- | -- | 
|                                 |                             | Twelve Months Ended |         |      |          
|                                 |                             |                     |         |      | %         |  
|                                 |                             | 3/31/2004           |         |      | 3/31/2005 |   |         | Change |  
|                                 |                             |                     |         |      |           |   |         |        |  
|                                 |                             | (In thousands)      |         |      |          
|Software license fees            |                             | $                   | 23,917  |      |           | $ | 31,866  |        |   |  | 33.2  | % 
|                                 | Percentage of total revenue |                     |         | 16.3 | %         |   |         | 22.4   | % |  |       |    | 
|Support, outsourcing and hosting |                             |                     | 59,536  |      |           |   | 59,543  |        |   |  | 0.0   | % 
|                                 | Percentage of total revenue |                     |         | 40.7 | %         |   |         | 41.9   | % |  |       |    | 
|Consulting, training and other   |                             |                     | 62,933  |      |           |   | 50,760  |        |   |  | (19.3 | )%
|                                 | Percentage of total revenue |                     |         | 43.0 | %         |   |         | 35.7   | % |  |       |    | 
|                                 |                             |                     |         |      |           |   |         |        |  
|Total revenue                    |                             | $                   | 146,386 |      |           | $ | 142,169 |        |   |  |       |   
|                                 |                             |                     |         |      |           |   |         |        |  



Software license fees:


33



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Support, outsourcing and hosting:


Consulting, training and other:


Cost of Revenue


|                                         |                                                |                     |        |      |           |   |        |        |   |  |       |    | 
|---------------------------------------- | ---------------------------------------------- | ------------------- | ------ | ---- | --------- | - | ------ | ------ | - |  | ----- | -- | 
|                                         |                                                | Twelve Months Ended |        |      |          
|                                         |                                                |                     |        |      | %         |  
|                                         |                                                | 3/31/2004           |        |      | 3/31/2005 |   |        | Change |  
|                                         |                                                |                     |        |      |           |   |        |        |  
|                                         |                                                | (As restated)       |        |      |           |   |       
|                                         |                                                | (In thousands)      |        |      |          
|Cost of software license fees            |                                                | $                   | 999    |      |           | $ | 3,737  |        |   |  | 274.1 | % 
|                                         | Percentage of software license revenue         |                     |        | 4.2  | %         |   |        | 11.7   | % |  |       |    | 
|Cost of support, outsourcing and hosting |                                                |                     | 20,265 |      |           |   | 16,975 |        |   |  | (16.2 | )%
|                                         | Percentage of support, outsourcing and hosting |                     |        | 34.0 | %         |   |        | 28.5   | % |  |       |    | 
|Cost of consulting, training and other   |                                                |                     | 46,342 |      |           |   | 38,995 |        |   |  | (15.9 | )%
|                                         | Percentage of consulting, training and other   |                     |        | 73.6 | %         |   |        | 76.8   | % |  |       |    | 
|                                         |                                                |                     |        |      |           |   |        |        |  
|Total cost of revenue                    |                                                | $                   | 67,606 |      |           | $ | 59,707 |        |   |  |       |   
|                                         |                                                |                     |        |      |           |   |        |        |  



Cost of software license fees:


Cost of services revenue  customer support,
outsourcing and hosting:


34



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Cost of services revenue  consulting, training and
other:


Operating Expenses


|                           |                             |                     |        |      |           |   |        |        |   |  |       |    | 
|-------------------------- | --------------------------- | ------------------- | ------ | ---- | --------- | - | ------ | ------ | - |  | ----- | -- | 
|                           |                             | Twelve Months Ended |        |      |          
|                           |                             |                     |        |      | %         |  
|                           |                             | 3/31/2004           |        |      | 3/31/2005 |   |        | Change |  
|                           |                             |                     |        |      |           |   |        |        |  
|                           |                             | (As restated)       |        |      |           |   |       
|                           |                             | (In thousands)      |        |      |          
|Research and development   |                             | $                   | 34,960 |      |           | $ | 31,956 |        |   |  | (8.6  | )%
|                           | Percentage of total revenue |                     |        | 23.9 | %         |   |        | 22.5   | % |  |       |    | 
|Sales and marketing        |                             |                     | 33,334 |      |           |   | 30,619 |        |   |  | (8.1  | )%
|                           | Percentage of total revenue |                     |        | 22.8 | %         |   |        | 21.5   | % |  |       |    | 
|General and administrative |                             |                     | 21,226 |      |           |   | 15,125 |        |   |  | (28.7 | )%
|                           | Percentage of total revenue |                     |        | 14.5 | %         |   |        | 10.6   | % |  |       |    | 
|Restructuring expense      |                             |                     | 44     |      |           |   | 10,430 |        |   |  | >100% |   
|                           | Percentage of total revenue |                     |        | 0.0  | %         |   |        | 7.3    | % |  |       |    | 
|                           |                             |                     |        |      |           |   |        |        |  
|Total operating expense    |                             | $                   | 89,564 |      |           | $ | 88,130 |        |   |  |       |   
|                           |                             |                     |        |      |           |   |        |        |  

Research and development:


Sales and marketing:


General and administrative:


Restructuring expenses:


35



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Interest Income (Expense), Other Income and Provision for
Income Taxes


|                           |                             |                     |      |      |           |   |      |        |    |  |       |    | 
|-------------------------- | --------------------------- | ------------------- | ---- | ---- | --------- | - | ---- | ------ | -- |  | ----- | -- | 
|                           |                             | Twelve Months Ended |      |      |          
|                           |                             |                     |      |      | %         |  
|                           |                             | 3/31/2004           |      |      | 3/31/2005 |   |      | Change |   
|                           |                             |                     |      |      |           |   |      |        |   
|                           |                             | (In thousands)      |      |      |          
|Interest expense, net      |                             | $                   | (655 | )    |           | $ | (470 | )      |    |  | 28.2  | % 
|                           | Percentage of total revenue |                     |      | (0.4 | )%        |   |      | (0.3   | )% |  |       |    | 
|Other income, net          |                             |                     | 101  |      |           |   | 185  |        |    |  | 83.2  | % 
|                           | Percentage of total revenue |                     |      | 0.1  | %         |   |      | 0.1    | %  |  |       |    | 
|Provision for income taxes |                             |                     | 623  |      |           |   | 112  |        |    |  | (82.0 | )%
|                           | Percentage of total revenue |                     |      | 0.4  | %         |   |      | 0.1    | %  |  |       |    | 

Interest expense, net:


Other income, net:


Provision for income taxes:


Twelve-Month Period Ended March 31, 2003 Compared to
the Year Ended March 31, 2004


Revenue


|                                 |                             |                     |         |      |           |   |         |        |   |  |      |   | 
|-------------------------------- | --------------------------- | ------------------- | ------- | ---- | --------- | - | ------- | ------ | - |  | ---- | - | 
|                                 |                             | Twelve Months Ended |         |      |          
|                                 |                             |                     |         |      | %         |  
|                                 |                             | 3/31/2003           |         |      | 3/31/2004 |   |         | Change |  
|                                 |                             |                     |         |      |           |   |         |        |  
|                                 |                             | (Unaudited)         |         |      |           |   |        
|                                 |                             | (In thousands)      |         |      |          
|Software license fees            |                             | $                   | 13,936  |      |           | $ | 23,917  |        |   |  | 71.6 | %
|                                 | Percentage of total revenue |                     |         | 12.5 | %         |   |         | 16.3   | % |  |      |   | 
|Support, outsourcing and hosting |                             |                     | 38,751  |      |           |   | 59,536  |        |   |  | 53.6 | %
|                                 | Percentage of total revenue |                     |         | 34.6 | %         |   |         | 40.7   | % |  |      |   | 
|Consulting, training and other   |                             |                     | 59,269  |      |           |   | 62,933  |        |   |  | 6.2  | %
|                                 | Percentage of total revenue |                     |         | 52.9 | %         |   |         | 43.0   | % |  |      |   | 
|                                 |                             |                     |         |      |           |   |         |        |  
|Total revenue                    |                             | $                   | 111,956 |      |           | $ | 146,386 |        |   |  |      |  
|                                 |                             |                     |         |      |           |   |         |        |  

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Software license fees:


Support, outsourcing and hosting:


Consulting, training and other:


Cost of Revenue


|                                         |                                                |                     |        |      |               |   |        |        |   |  |       |    | 
|---------------------------------------- | ---------------------------------------------- | ------------------- | ------ | ---- | ------------- | - | ------ | ------ | - |  | ----- | -- | 
|                                         |                                                | Twelve Months Ended |        |      |              
|                                         |                                                |                     |        |      | %             |  
|                                         |                                                | 3/31/2003           |        |      | 3/31/2004     |   |        | Change |  
|                                         |                                                |                     |        |      |               |   |        |        |  
|                                         |                                                | (As restated)       |        |      | (As restated) |   |        |       
|                                         |                                                | (Unaudited)         |        |      |               |   |       
|                                         |                                                | (In thousands)      |        |      |              
|Cost of software license fees            |                                                | $                   | 3,109  |      |               | $ | 999    |        |   |  | (67.9 | )%
|                                         | Percentage of software license revenue         |                     |        | 22.3 | %             |   |        | 4.2    | % |  |       |    | 
|Cost of support, outsourcing and hosting |                                                |                     | 13,194 |      |               |   | 20,265 |        |   |  | 53.6  | % 
|                                         | Percentage of support, outsourcing and hosting |                     |        | 34.0 | %             |   |        | 34.0   | % |  |       |    | 
|Cost of consulting, training and other   |                                                |                     | 42,293 |      |               |   | 46,342 |        |   |  | 9.6   | % 
|                                         | Percentage of consulting, training and other   |                     |        | 71.4 | %             |   |        | 73.6   | % |  |       |    | 
|                                         |                                                |                     |        |      |               |   |        |        |  
|Total cost of revenue                    |                                                | $                   | 58,596 |      |               | $ | 67,606 |        |   |  |       |   
|                                         |                                                |                     |        |      |               |   |        |        |  

Cost of software license fees:


Cost of services revenue  customer support,
outsourcing and hosting:


Cost of services revenue  consulting, training and
other:


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Operating Expenses


|                           |                             |                     |        |      |               |   |        |        |   |  |       |    | 
|-------------------------- | --------------------------- | ------------------- | ------ | ---- | ------------- | - | ------ | ------ | - |  | ----- | -- | 
|                           |                             | Twelve Months Ended |        |      |              
|                           |                             |                     |        |      | %             |  
|                           |                             | 3/31/2003           |        |      | 3/31/2004     |   |        | Change |  
|                           |                             |                     |        |      |               |   |        |        |  
|                           |                             | (As Restated)       |        |      | (As Restated) |   |        |       
|                           |                             | (Unaudited)         |        |      |               |   |       
|                           |                             | (In thousands)      |        |      |              
|Research and development   |                             | $                   | 41,756 |      |               | $ | 34,960 |        |   |  | (16.3 | )%
|                           | Percentage of total revenue |                     |        | 37.3 | %             |   |        | 23.9   | % |  |       |    | 
|Sales and marketing        |                             |                     | 28,927 |      |               |   | 33,334 |        |   |  | 15.2  | % 
|                           | Percentage of total revenue |                     |        | 25.8 | %             |   |        | 22.8   | % |  |       |    | 
|General and administrative |                             |                     | 14,590 |      |               |   | 21,226 |        |   |  | 45.5  | % 
|                           | Percentage of total revenue |                     |        | 13.0 | %             |   |        | 14.5   | % |  |       |    | 
|Restructuring expense      |                             |                     | 6,771  |      |               |   | 44     |        |   |  | (99.4 | )%
|                           | Percentage of total revenue |                     |        | 6.0  | %             |   |        | 0.0    | % |  |       |    | 
|                           |                             |                     |        |      |               |   |        |        |  
|Total operating expense    |                             | $                   | 92,044 |      |               | $ | 89,564 |        |   |  |       |   
|                           |                             |                     |        |      |               |   |        |        |  

Research and development:


Sales and marketing:


General and administrative:


Restructuring expenses:


38



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Interest Income (Expense), Other Income and Provision for
Income Taxes


|                                     |                             |                     |        |      |           |   |      |        |    |  |        |    | 
|------------------------------------ | --------------------------- | ------------------- | ------ | ---- | --------- | - | ---- | ------ | -- |  | ------ | -- | 
|                                     |                             | Twelve Months Ended |        |      |          
|                                     |                             |                     |        |      | %         |  
|                                     |                             | 3/31/2003           |        |      | 3/31/2004 |   |      | Change |   
|                                     |                             |                     |        |      |           |   |      |        |   
|                                     |                             | (Unaudited)         |        |      |           |   |     
|                                     |                             | (In thousands)      |        |      |          
|Interest income (expense), net       |                             | $                   | 705    |      |           | $ | (655 | )      |    |  | (192.9 | )%
|                                     | Percentage of total revenue |                     |        | 0.6  | %         |   |      | (0.4   | )% |  |        |    | 
|Other income, net                    |                             |                     | 353    |      |           |   | 101  |        |    |  | (71.4  | )%
|                                     | Percentage of total revenue |                     |        | 0.3  | %         |   |      | 0.1    | %  |  |        |    | 
|Provision (benefit) for income taxes |                             |                     | (3,669 | )    |           |   | 623  |        |    |  | (117.0 | )%
|                                     | Percentage of total revenue |                     |        | (3.3 | )%        |   |      | 0.4    | %  |  |        |    | 

Interest income (expense), net:


Other income, net:


Provision for income taxes:


Liquidity and Capital Resources








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Cash of $1.3 million was provided from operating
    activities, stratified into two categories: (1) cash
    activity associated with day-to-day business activities; and
    (2) cash payments associated with the Companys
    business restructurings and other items. Relative to the former
    category, the Company generated $9.3 million of cash from
    day-to-day business activities. Relative to the latter category,
    the Company made cash payments of $7.5 million in
    settlement of current and prior business restructuring
    obligations and $0.5 million in settlement of a lawsuit
    involving the Department of Energy.
|
| |  | The Company replenished cash available for use by
    $9.3 million during the second half of fiscal year 2005.
    Favorable collections of cash on account and substantial
    realization of the financial benefits of                                                                                                                                                                                                                                                                                                                                                                                                                                  

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | the restructuring activities implemented during the first half
    of the year are the principal reasons. The Company generated net
    income in the second half of fiscal year 2005 of
    $6.1 million, including a net restructuring benefit of
    $1.0 million for the period.                                                                                                                                                                                                                                                                       
|
| |  | Cash of $4.3 million was used in investing activities,
    including the restriction of $0.4 million in cash to
    support additional standby letters of credit, $3.4 million
    in capital expenditures, and $0.5 in purchase price adjustments
    associated with the acquisition of Wishbone. Capital
    expenditures consist of amounts to build-out consolidated office
    space in the Companys headquarters in Atlanta, GA and
    purchases of computers and equipment to ensure consistency in
    business operations and customer success.
|
| |  | Cash of $0.2 million was used in financing activities. Debt
    payments of $1.1 million exceeded proceeds from stock
    option exercises of $0.9 million.                                                                                                                                                                                                                                                                                                                                                                                                



| |                 
| | ----------------
| | Restricted Cash:





| |                       
| | ----------------------
| | Acquisition Financing:







| |               
| | --------------
| | Cash Analysis:



40



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New Accounting Pronouncements










Off-Balance Sheet Arrangements and Aggregate Contractual
Obligations




| |                                
| | -------------------------------
| | Off-Balance Sheet Arrangements:



41



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| |                         
| | ------------------------
| | Contractual Obligations:





|                                   |                                |                                             |        |           |        |   |       |           |       |   |           |        |  |         |        |       |  |   |       |       | 
|---------------------------------- | ------------------------------ | ------------------------------------------- | ------ | --------- | ------ | - | ----- | --------- | ----- | - | --------- | ------ |  | ------- | ------ | ----- |  | - | ----- | ----- | 
|                                   |                                | Payments due by Period as of March 31, 2005 |       
|                                   |                                |                                             |       
|                                   |                                |                                             |        | Less Than |        |   |       |           | After |  
|Contractual Obligations            |                                | Total                                       |        |           | 1 Year |   |       | 1-3 Years |       |   | 3-5 Years |        |  | 5 Years |       
|                                   |                                |                                             |        |           |        |   |       |           |       |   |           |        |  |         |       
|Long-term debt, including interest |                                | $                                           | 12,382 |           |        | $ | 1,413 |           |       | $ | 2,677     |        |  | $       | 8,292  |       |  | $ |      |      
|                                   | Operating lease obligations(1) |                                             |        | 25,123    |        |   |       | 5,976     |       |   |           | 10,648 |  |         |        | 4,592 |  |   |       | 3,907 | 
|                                   | Purchase obligation(2)         |                                             |        | 1,428     |        |   |       | 519       |       |   |           | 909    |  |         |        |      |  |   |       |      | 
|                                   | Other long-term liabilities(3) |                                             |        | 8,021     |        |   |       |          |       |   |           | 5,682  |  |         |        | 1,333 |  |   |       | 1,006 | 
|                                   |                                |                                             |        |           |        |   |       |           |       |   |           |        |  |         |       
|Total                              |                                | $                                           | 46,954 |           |        | $ | 7,908 |           |       | $ | 19,916    |        |  | $       | 14,217 |       |  | $ | 4,913 |      
|                                   |                                |                                             |        |           |        |   |       |           |       |   |           |        |  |         |       






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Operating lease obligations are presented net of income from
    subleases in effect at March 31, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(2) | The Company has a commitment to purchase development services
    expertise in the form of labor hours, which the business is
    utilizing in its development efforts. The purchase commitment
    extends through December 22, 2007. During the remainder of
    the term of the commitment, the business will purchase
    approximately $1.4 million of labor hours at agreed upon
    labor rates, which approximate the Companys fully absorbed
    labor rates. The timing of payment of the actual amounts is
    estimated over the remaining period and may differ based on when
    these services are actually used.
|   
|(3) | Other long-term liabilities represents restructuring accruals
    and are presented net of expected sublease income in the
    aggregate amount of $6.8 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 





| |                  
| | -----------------
| | Indemnifications:



42



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|         |                                                                
|-------- | ---------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risks



| |                                   
| | ----------------------------------
| | Foreign Exchange Rate Sensitivity:





43



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|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

INDUS INTERNATIONAL, INC.


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                                                                     |  |   
|---------------------------------------------------------------------------------------------------- |  | --
|REPORT OF INDEPENDENT REGISTERED PUBLIC
    ACCOUNTING FIRM ON THE CONSOLIDATED FINANCIAL STATEMENTS |  | 45
|CONSOLIDATED BALANCE SHEETS                                                                          |  | 46
|CONSOLIDATED STATEMENTS OF OPERATIONS                                                                |  | 47
|CONSOLIDATED STATEMENT OF
    STOCKHOLDERS EQUITY                                                   |  | 48
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                |  | 49
|NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS                                                       |  | 50

44



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
THE


CONSOLIDATED FINANCIAL STATEMENTS

















| |                          
| | -------------------------
| | /s/ Ernst & Young
    LLP





45



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INDUS INTERNATIONAL, INC.


CONSOLIDATED BALANCE SHEETS


|                                     |                                                                                                                                                |                                                    |        |          |                |   |        |          |         |  
|------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------- | ------ | -------- | -------------- | - | ------ | -------- | ------- | -
|                                     |                                                                                                                                                | March 31, 2004                                     |        |          | March 31, 2005 |  
|                                     |                                                                                                                                                |                                                    |        |          |                |  
|                                     |                                                                                                                                                | (As restated)                                      |        |          |               
|                                     |                                                                                                                                                | (In thousands)                                     |       
|ASSETS                              
|Current assets:                      |                                                                                                                                                |                                                    |        |          |                |   |        |         
|                                     | Cash and cash equivalents                                                                                                                      |                                                    | $      | 31,081   |                |   | $      | 27,779   |        
|                                     | Restricted cash                                                                                                                                |                                                    |        | 70       |                |   |        | 194      |        
|                                     | Billed accounts receivable, net of allowance for doubtful
    accounts of $912 and $562 at March 31, 2004 and
    March 31, 2005, respectively |                                                    |        | 21,201   |                |   |        | 17,225   |        
|                                     | Unbilled accounts receivable                                                                                                                   |                                                    |        | 9,074    |                |   |        | 12,240   |        
|                                     | Other current assets                                                                                                                           |                                                    |        | 4,033    |                |   |        | 3,672    |        
|                                     |                                                                                                                                                |                                                    |        |          |                |  
|                                     |                                                                                                                                                | Total current assets                               |        |          | 65,459         |   |        |          | 61,110  |  
|Property and equipment, net          |                                                                                                                                                |                                                    | 34,682 |          |                |   | 30,755 |         
|Capitalized software, net            |                                                                                                                                                |                                                    | 7,689  |          |                |   | 5,014  |         
|Goodwill                             |                                                                                                                                                |                                                    | 6,956  |          |                |   | 7,442  |         
|Acquired intangible assets, net      |                                                                                                                                                |                                                    | 12,562 |          |                |   | 10,536 |         
|Restricted cash, non-current         |                                                                                                                                                |                                                    | 5,492  |          |                |   | 5,821  |         
|Other assets                         |                                                                                                                                                |                                                    | 596    |          |                |   | 427    |         
|                                     |                                                                                                                                                |                                                    |        |          |                |  
|                                     |                                                                                                                                                | Total assets                                       |        | $        | 133,436        |   |        | $        | 121,105 |  
|                                     |                                                                                                                                                |                                                    |        |          |                |  
|                                    
|LIABILITIES AND STOCKHOLDERS EQUITY
|Current liabilities:                 |                                                                                                                                                |                                                    |        |          |                |   |        |         
|                                     | Current portion of note payable                                                                                                                |                                                    | $      | 767      |                |   | $      | 767      |        
|                                     | Accounts payable                                                                                                                               |                                                    |        | 6,806    |                |   |        | 4,208    |        
|                                     | Accrued liabilities                                                                                                                            |                                                    |        | 17,974   |                |   |        | 19,213   |        
|                                     | Deferred revenue                                                                                                                               |                                                    |        | 38,257   |                |   |        | 33,239   |        
|                                     |                                                                                                                                                |                                                    |        |          |                |  
|                                     |                                                                                                                                                | Total current liabilities                          |        |          | 63,804         |   |        |          | 57,427  |  
|Income tax payable                   |                                                                                                                                                |                                                    | 4,389  |          |                |   | 3,137  |         
|Note payable, net of current portion |                                                                                                                                                |                                                    | 10,299 |          |                |   | 9,530  |         
|Other liabilities                    |                                                                                                                                                |                                                    | 9,344  |          |                |   | 10,598 |         
|Stockholders equity:                |                                                                                                                                                |                                                    |        |          |                |   |        |         
|                                     | Preferred stock, $.001 par value                                                                                                               |                                                    |        |          |                |   |        |          |        
|                                     |                                                                                                                                                | Shares authorized: 10 million; shares issued: none |        |          |               |   |        |          |        |  
|                                     | Common stock, $.001 par value                                                                                                                  |                                                    |        |          |                |   |        |          |        
|                                     |                                                                                                                                                | Shares authorized: 100 million                     |        |          |                |   |        |          |         |  
|                                     |                                                                                                                                                | Shares issued: March 31, 2004  57,059,416         |        |          |                |   |        |          |         |  
|                                     |                                                                                                                                                | Shares issued: March 31, 2005  57,534,289         |        |          | 57             |   |        |          | 58      |  
|                                     | Additional paid-in capital                                                                                                                     |                                                    |        | 164,431  |                |   |        | 165,280  |        
|                                     | Treasury stock                                                                                                                                 |                                                    |        |          |                |   |        |          |        
|                                     |                                                                                                                                                | Shares: March 31, 2004  935,500                   |        |          |                |   |        |          |         |  
|                                     |                                                                                                                                                | Shares: March 31, 2005  935,500                   |        |          | (4,681         | ) |        |          | (4,681  | )
|                                     | Deferred compensation                                                                                                                          |                                                    |        | (50      | )              |   |        |         |        
|                                     | Accumulated deficit                                                                                                                            |                                                    |        | (115,257 | )              |   |        | (121,322 | )      
|                                     | Accumulated other comprehensive income                                                                                                         |                                                    |        | 1,100    |                |   |        | 1,078    |        
|                                     |                                                                                                                                                |                                                    |        |          |                |  
|                                     |                                                                                                                                                | Total stockholders equity                         |        |          | 45,600         |   |        |          | 40,413  |  
|                                     |                                                                                                                                                |                                                    |        |          |                |  
|                                     |                                                                                                                                                | Total liabilities and stockholders equity         |        | $        | 133,436        |   |        | $        | 121,105 |  
|                                     |                                                                                                                                                |                                                    |        |          |                |  



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##### Table of Contents






INDUS INTERNATIONAL, INC.


CONSOLIDATED STATEMENTS OF OPERATIONS


|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |         |        |   |         |         |        | 
|---------------------------------------- | -------------------------- | ------------------------------------- | ------- | ------------ | ------------- | - | ------ | ------------- | ------ | - | ------- | ------- | ------ | - | ------- | ------- | ------ | 
|                                         |                            |                                       |         | Three Months |               |   |       
|                                         |                            | Year Ended                            |         |              | Ended         |   |        | Years Ended   |       
|                                         |                            | December 31,                          |         |              | March 31,     |   |        | March 31,     |       
|                                         |                            |                                       |         |              |               |   |        |               |       
|                                         |                            | 2002                                  |         |              | 2003          |   |        | 2004          |        |   | 2005    |        
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|                                         |                            | (As restated)                         |         |              | (As restated) |   |        | (As restated) |        |   |        
|                                         |                            | (In thousands, except per share data) |        
|Revenue:                                 |                            |                                       |         |              |               |   |        |               |        |   |         |         |        |   |         |        
|                                         | Software license fees      |                                       | $       | 15,527       |               |   | $      | 2,637         |        |   | $       | 23,917  |        |   | $       | 31,866  |       
|                                         | Services:                  |                                       |         |              |               |   |        |               |        |   |         |         |        |   |         |         |       
|                                         |                            | Support, outsourcing and hosting      |         |              | 36,780        |   |        |               | 10,614 |   |         |         | 59,536 |   |         |         | 59,543 | 
|                                         |                            | Consulting, training and other        |         |              | 64,858        |   |        |               | 13,983 |   |         |         | 62,933 |   |         |         | 50,760 | 
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|                                         | Total services             |                                       |         | 101,638      |               |   |        | 24,597        |        |   |         | 122,469 |        |   |         | 110,303 |       
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|Total revenue                            |                            |                                       | 117,165 |              |               |   | 27,234 |               |        |   | 146,386 |         |        |   | 142,169 |        
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|Cost of revenue:                         |                            |                                       |         |              |               |   |        |               |        |   |         |         |        |   |         |        
|                                         | Software license fees      |                                       |         | 2,997        |               |   |        | 226           |        |   |         | 999     |        |   |         | 3,737   |       
|                                         | Services:                  |                                       |         |              |               |   |        |               |        |   |         |         |        |   |         |         |       
|                                         |                            | Support, outsourcing and hosting      |         |              | 11,150        |   |        |               | 4,175  |   |         |         | 20,265 |   |         |         | 16,975 | 
|                                         |                            | Consulting, training and other        |         |              | 44,842        |   |        |               | 11,001 |   |         |         | 46,342 |   |         |         | 38,995 | 
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|                                         | Total services             |                                       |         | 55,992       |               |   |        | 15,176        |        |   |         | 66,607  |        |   |         | 55,970  |       
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|Total cost of revenue                    |                            |                                       | 58,989  |              |               |   | 15,402 |               |        |   | 67,606  |         |        |   | 59,707  |        
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|Gross margin                             |                            |                                       | 58,176  |              |               |   | 11,832 |               |        |   | 78,780  |         |        |   | 82,462  |        
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|Operating expenses:                      |                            |                                       |         |              |               |   |        |               |        |   |         |         |        |   |         |        
|                                         | Research and development   |                                       |         | 45,750       |               |   |        | 8,713         |        |   |         | 34,960  |        |   |         | 31,956  |       
|                                         | Sales and marketing        |                                       |         | 29,945       |               |   |        | 6,546         |        |   |         | 33,334  |        |   |         | 30,619  |       
|                                         | General and administrative |                                       |         | 13,306       |               |   |        | 3,957         |        |   |         | 21,226  |        |   |         | 15,125  |       
|                                         | Restructuring expenses     |                                       |         | 8,199        |               |   |        | 1,968         |        |   |         | 44      |        |   |         | 10,430  |       
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|                                         |                            | Total operating expenses              |         |              | 97,200        |   |        |               | 21,184 |   |         |         | 89,564 |   |         |         | 88,130 | 
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|Loss from operations                     |                            |                                       | (39,024 | )            |               |   | (9,352 | )             |        |   | (10,784 | )       |        |   | (5,668  | )      
|Interest and other income                |                            |                                       | 1,362   |              |               |   | 86     |               |        |   | 700     |         |        |   | 475     |        
|Interest expense                         |                            |                                       | (59     | )            |               |   | (136   | )             |        |   | (1,254  | )       |        |   | (760    | )      
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|Loss before income taxes                 |                            |                                       | (37,721 | )            |               |   | (9,402 | )             |        |   | (11,338 | )       |        |   | (5,953  | )      
|Provision (benefit) for income taxes     |                            |                                       | (3,944  | )            |               |   | 277    |               |        |   | 623     |         |        |   | 112     |        
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|Net loss                                 |                            | $                                     | (33,777 | )            |               | $ | (9,679 | )             |        | $ | (11,961 | )       |        | $ | (6,065  | )      
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|Net loss per share:                      |                            |                                       |         |              |               |   |        |               |        |   |         |         |        |   |         |        
|                                         | Basic                      |                                       | $       | (0.96        | )             |   | $      | (0.26         | )      |   | $       | (0.24   | )      |   | $       | (0.11   | )     
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|                                         | Diluted                    |                                       | $       | (0.96        | )             |   | $      | (0.26         | )      |   | $       | (0.24   | )      |   | $       | (0.11   | )     
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|Shares used in computing per share data: |                            |                                       |         |              |               |   |        |               |        |   |         |         |        |   |         |        
|                                         | Basic                      |                                       |         | 35,237       |               |   |        | 37,210        |        |   |         | 49,455  |        |   |         | 57,259  |       
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        
|                                         | Diluted                    |                                       |         | 35,237       |               |   |        | 37,210        |        |   |         | 49,455  |        |   |         | 57,259  |       
|                                         |                            |                                       |         |              |               |   |        |               |        |   |         |        



47



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##### Table of Contents






INDUS INTERNATIONAL, INC.


CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY


|                                                         |                                                           |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |        |         |   |        |     |       |   |        |         |         |  
|-------------------------------------------------------- | --------------------------------------------------------- | ---------------------------------------- | ------ | ----- | ------- | - | -- | -------- | - | ------- | -------- | ------ | ----------- | ----- | ------ | ------ | ------------- | - | ------ | ------------- | - | - | -------- | ------ | ------- | - | ------ | --- | ----- | - | ------ | ------- | ------- | -
|                                                         |                                                           |                                          |        |       |         |   |    | Deferred |   |         |          |        | Accumulated |       |        | Total  |              
|                                                         |                                                           | Common Stock                             |        |       | Addl   |   |    |          |   | Compen- |          |        | Accumu-     |       |        | Other  |               |   | Stock- |              
|                                                         |                                                           |                                          |        |       | Paid-In |   |    | Treasury |   |         | sation & |        |             | lated |        |        | Comprehensive |   |        | holders      |  
|                                                         |                                                           | Shares                                   |        |       | Amount  |   |    | Capital  |   |         | Stock    |        |             | Other |        |        | Deficit       |   |        | Income/(Loss) |   |   | Equity   |       
|                                                         |                                                           |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |       
|                                                         |                                                           | (In thousands)                           |       
|Balance, December 31, 2001, as previously reported       |                                                           |                                          | 35,211 |       |         | $ | 35 |          |   | $       | 123,671  |        |             | $     | (2,181 | )      |               | $ | (212   | )             |   | $ | (58,287  | )      |         | $ | (2,080 | )   |       | $ | 60,946 |        
|                                                         | Prior period adjustment (see Note 2)                      |                                          |        |      |         |   |    |         |   |         |          |       |             |       |        |       |               |   |        |              |   |   |          | (1,553 | )       |   |        |    |       |   |        | (1,553  | )      
|                                                         |                                                           |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |       
|Balance, December 31, 2001 (as restated, see
    Note 2) |                                                           |                                          | 35,211 |       |         |   | 35 |          |   |         | 123,671  |        |             |       | (2,181 | )      |               |   | (212   | )             |   |   | (59,840  | )      |         |   | (2,080 | )   |       |   | 59,393 |        
|                                                         | Exercise of stock options                                 |                                          |        | 291   |         |   |    | 1        |   |         |          | 1,041  |             |       |        |       |               |   |        |              |   |   |          |       |         |   |        |    |       |   |        | 1,042   |        
|                                                         | Sale of common stock under Employee Stock Purchase Plan   |                                          |        | 168   |         |   |    |         |   |         |          | 459    |             |       |        |       |               |   |        |              |   |   |          |       |         |   |        |    |       |   |        | 459     |        
|                                                         | Notes receivable from stockholder                         |                                          |        |      |         |   |    |         |   |         |          |       |             |       |        |       |               |   |        | 55            |   |   |          |       |         |   |        |    |       |   |        | 55      |        
|                                                         | Warrant exercise                                          |                                          |        | 68    |         |   |    |         |   |         |          | 198    |             |       |        |       |               |   |        |              |   |   |          |       |         |   |        |    |       |   |        | 198     |        
|                                                         | Benefit from Carryback of Net Operating Loss              |                                          |        |      |         |   |    |         |   |         |          | 182    |             |       |        |       |               |   |        |              |   |   |          |       |         |   |        |    |       |   |        | 182     |        
|                                                         | Purchase of treasury stock                                |                                          |        | (500  | )       |   |    |         |   |         |          |       |             |       |        | (2,500 | )             |   |        |              |   |   |          |       |         |   |        |    |       |   |        | (2,500  | )      
|                                                         | Amortization of deferred compensation                     |                                          |        |      |         |   |    |         |   |         |          | 57     |             |       |        |       |               |   |        | 53            |   |   |          |       |         |   |        |    |       |   |        | 110     |        
|                                                         | Comprehensive loss:                                       |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |        |         |   |        |     |       |   |        |         |        
|                                                         |                                                           | Net loss                                 |        |       |        |   |    |          |  |         |          |        |            |       |        |        |              |   |        |               |  |   |          |        | (33,777 | ) |        |     |      |   |        |         | (33,777 | )
|                                                         |                                                           | Unrealized gain on marketable securities |        |       |        |   |    |          |  |         |          |        |            |       |        |        |              |   |        |               |  |   |          |        |        |   |        |     | 27    |   |        |         | 27      |  
|                                                         |                                                           | Foreign currency translation             |        |       |        |   |    |          |  |         |          |        |            |       |        |        |              |   |        |               |  |   |          |        |        |   |        |     | 1,520 |   |        |         | 1,520   |  
|                                                         |                                                           |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |       
|                                                         | Total comprehensive loss                                  |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |        |         |   |        |     |       |   |        | (32,230 | )      
|                                                         |                                                           |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |       
|Balance, December 31, 2002 (as restated, see
    Note 2) |                                                           |                                          | 35,238 |       |         |   | 36 |          |   |         | 125,608  |        |             |       | (4,681 | )      |               |   | (104   | )             |   |   | (93,617  | )      |         |   | (533   | )   |       |   | 26,709 |        
|                                                         | Exercise of stock options                                 |                                          |        | 1     |         |   |    |         |   |         |          | 2      |             |       |        |       |               |   |        |              |   |   |          |       |         |   |        |    |       |   |        | 2       |        
|                                                         | Issuance of common stock in private placement transaction |                                          |        | 6,827 |         |   |    | 6        |   |         |          | 9,669  |             |       |        |       |               |   |        |              |   |   |          |       |         |   |        |    |       |   |        | 9,675   |        
|                                                         | Amortization of deferred compensation                     |                                          |        |      |         |   |    |         |   |         |          |       |             |       |        |       |               |   |        | 25            |   |   |          |       |         |   |        |    |       |   |        | 25      |        
|                                                         | Comprehensive loss:                                       |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |        |         |   |        |     |       |   |        |         |        
|                                                         | Net loss                                                  |                                          |        |      |         |   |    |         |   |         |          |       |             |       |        |       |               |   |        |              |   |   |          | (9,679 | )       |   |        |    |       |   |        | (9,679  | )      
|                                                         | Foreign currency translation                              |                                          |        |      |         |   |    |         |   |         |          |       |             |       |        |       |               |   |        |              |   |   |          |       |         |   |        | 349 |       |   |        | 349     |        
|                                                         |                                                           |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |       
|                                                         | Total comprehensive loss                                  |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |        |         |   |        |     |       |   |        | (9,330  | )      
|                                                         |                                                           |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |       
|Balance, March 31, 2003 (as restated, see
    Note 2)    |                                                           |                                          | 42,066 |       |         |   | 42 |          |   |         | 135,279  |        |             |       | (4,681 | )      |               |   | (79    | )             |   |   | (103,296 | )      |         |   | (184   | )   |       |   | 27,081 |        
|                                                         | Exercise of stock options                                 |                                          |        | 130   |         |   |    |         |   |         |          | 153    |             |       |        |       |               |   |        |              |   |   |          |       |         |   |        |    |       |   |        | 153     |        
|                                                         | Sale of common stock under Employee Stock Purchase Plan   |                                          |        | 72    |         |   |    |         |   |         |          | 148    |             |       |        |       |               |   |        |              |   |   |          |       |         |   |        |    |       |   |        | 148     |        
|                                                         | Issuance of common stock in private placement transaction |                                          |        | 5,000 |         |   |    | 5        |   |         |          | 14,492 |             |       |        |       |               |   |        |              |   |   |          |       |         |   |        |    |       |   |        | 14,497  |        
|                                                         | Issuance of stock from convertible notes                  |                                          |        | 9,792 |         |   |    | 10       |   |         |          | 13,930 |             |       |        |       |               |   |        |              |   |   |          |       |         |   |        |    |       |   |        | 13,940  |        
|                                                         | Issuance of options in connection with acquisitions       |                                          |        |      |         |   |    |         |   |         |          | 429    |             |       |        |       |               |   |        | (29           | ) |   |          |       |         |   |        |    |       |   |        | 400     |        
|                                                         | Amortization of deferred compensation                     |                                          |        |      |         |   |    |         |   |         |          |       |             |       |        |       |               |   |        | 58            |   |   |          |       |         |   |        |    |       |   |        | 58      |        
|                                                         | Comprehensive loss:                                       |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |        |         |   |        |     |       |   |        |         |        
|                                                         |                                                           | Net loss                                 |        |       |        |   |    |          |  |         |          |        |            |       |        |        |              |   |        |               |  |   |          |        | (11,961 | ) |        |     |      |   |        |         | (11,961 | )
|                                                         |                                                           | Unrealized gain on marketable securities |        |       |        |   |    |          |  |         |          |        |            |       |        |        |              |   |        |               |  |   |          |        |        |   |        |     | (70   | ) |        |         | (70     | )
|                                                         |                                                           | Foreign currency translation             |        |       |        |   |    |          |  |         |          |        |            |       |        |        |              |   |        |               |  |   |          |        |        |   |        |     | 1,354 |   |        |         | 1,354   |  
|                                                         |                                                           |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |       
|                                                         | Total comprehensive loss                                  |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |        |         |   |        |     |       |   |        | (10,677 | )      
|                                                         |                                                           |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |       
|Balance, March 31, 2004 (as restated, see
    Note 2)    |                                                           |                                          | 57,060 |       |         |   | 57 |          |   |         | 164,431  |        |             |       | (4,681 | )      |               |   | (50    | )             |   |   | (115,257 | )      |         |   | 1,100  |     |       |   | 45,600 |        
|                                                         | Exercise of stock options                                 |                                          |        | 222   |         |   |    |         |   |         |          | 407    |             |       |        |       |               |   |        |              |   |   |          |       |         |   |        |    |       |   |        | 407     |        
|                                                         | Sale of common stock under Employee Stock Purchase Plan   |                                          |        | 253   |         |   |    | 1        |   |         |          | 451    |             |       |        |       |               |   |        |              |   |   |          |       |         |   |        |    |       |   |        | 452     |        
|                                                         | Common stock issuance costs                               |                                          |        |      |         |   |    |          |   |         |          | (58    | )           |       |        |        |               |   |        |               |   |   |          |        |         |   |        |     |       |   |        | (58     | )      
|                                                         | Accelerated stock option vesting                          |                                          |        |      |         |   |    |         |   |         |          | 45     |             |       |        |       |               |   |        |              |   |   |          |       |         |   |        |    |       |   |        | 45      |        
|                                                         | Option valuation for non-employee grant                   |                                          |        |      |         |   |    |         |   |         |          | 4      |             |       |        |       |               |   |        |              |   |   |          |       |         |   |        |    |       |   |        | 4       |        
|                                                         | Amortization of deferred compensation                     |                                          |        |      |         |   |    |         |   |         |          |       |             |       |        |       |               |   |        | 50            |   |   |          |       |         |   |        |    |       |   |        | 50      |        
|                                                         | Comprehensive loss:                                       |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |        |         |   |        |     |       |   |        |         |        
|                                                         |                                                           | Net loss                                 |        |       |        |   |    |          |  |         |          |        |            |       |        |        |              |   |        |               |  |   |          |        | (6,065  | ) |        |     |      |   |        |         | (6,065  | )
|                                                         |                                                           | Foreign currency translation             |        |       |        |   |    |          |  |         |          |        |            |       |        |        |              |   |        |               |  |   |          |        |        |   |        |     | (22   | ) |        |         | (22     | )
|                                                         |                                                           |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |       
|                                                         | Total comprehensive loss                                  |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |        |         |   |        |     |       |   |        | (6,087  | )      
|                                                         |                                                           |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |       
|Balance, March 31, 2005                                  |                                                           |                                          | 57,535 |       |         | $ | 58 |          |   | $       | 165,280  |        |             | $     | (4,681 | )      |               | $ |       |               |   | $ | (121,322 | )      |         | $ | 1,078  |     |       | $ | 40,413 |        
|                                                         |                                                           |                                          |        |       |         |   |    |          |   |         |          |        |             |       |        |        |               |   |        |               |   |   |          |       



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##### Table of Contents






INDUS INTERNATIONAL, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |        |         |   |        |     |        |  
|--------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------- | ------- | ------ | ------------- | - | ------- | ------------- | ------ | - | ------- | ------ | ------- | - | ------ | --- | ------ | -
|                                                                                              |                                              |                                       |         | Three  |               |   |         |               |       
|                                                                                              |                                              |                                       |         | Months |               |   |        
|                                                                                              |                                              | Year Ended                            |         |        | Ended         |   |         | Years Ended   |       
|                                                                                              |                                              | December 31,                          |         |        | March 31,     |   |         | March 31,     |       
|                                                                                              |                                              |                                       |         |        |               |   |         |               |       
|                                                                                              |                                              | 2002                                  |         |        | 2003          |   |         | 2004          |        |   | 2005    |       
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|                                                                                              |                                              | (As restated)                         |         |        | (As restated) |   |         | (As restated) |        |   |        
|                                                                                              |                                              | (In thousands)                        |        
|Cash flows from operating activities:                                                         |                                              |                                       |         |        |               |   |         |               |        |   |         |        |         |   |        |    
|Net loss                                                                                      |                                              | $                                     | (33,777 | )      |               | $ | (9,679  | )             |        | $ | (11,961 | )      |         | $ | (6,065 | )  
|Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities: |                                              |                                       |         |        |               |   |         |               |        |   |         |        |         |   |        |    
|                                                                                              |                                              | Depreciation and amortization         |         |        | 8,556         |   |         |               | 2,333  |   |         |        | 10,941  |   |        |     | 12,540 |  
|                                                                                              |                                              | Provision for doubtful accounts       |         |        | (2,267        | ) |         |               | (336   | ) |         |        | (3,548  | ) |        |     | (362   | )
|                                                                                              |                                              | Amortization of deferred compensation |         |        | 53            |   |         |               | 25     |   |         |        | 29      |   |        |     | 50     |  
|                                                                                              |                                              | (Gain) loss on sale of fixed assets   |         |        | 205           |   |         |               | 84     |   |         |        | (29     | ) |        |     | (17    | )
|                                                                                              | Changes in operating assets and liabilities: |                                       |         |        |               |   |         |               |        |   |         |        |         |   |        |     |       
|                                                                                              |                                              | Billed accounts receivable            |         |        | 11,217        |   |         |               | 7,055  |   |         |        | 9,849   |   |        |     | 4,501  |  
|                                                                                              |                                              | Unbilled accounts receivable          |         |        | 11,255        |   |         |               | (4,279 | ) |         |        | 3,888   |   |        |     | (3,073 | )
|                                                                                              |                                              | Income tax receivable                 |         |        | (3,693        | ) |         |               | 60     |   |         |        | 4,504   |   |        |     | 557    |  
|                                                                                              |                                              | Other current assets                  |         |        | 1,587         |   |         |               | (670   | ) |         |        | 1,714   |   |        |     | (151   | )
|                                                                                              |                                              | Other assets                          |         |        | (405          | ) |         |               | 81     |   |         |        | 475     |   |        |     | 149    |  
|                                                                                              |                                              | Accounts payable                      |         |        | (984          | ) |         |               | (298   | ) |         |        | 1,414   |   |        |     | (2,616 | )
|                                                                                              |                                              | Income taxes payable                  |         |        | 2,788         |   |         |               | 286    |   |         |        | (409    | ) |        |     | (1,240 | )
|                                                                                              |                                              | Accrued restructuring                 |         |        | 3,205         |   |         |               | 2,219  |   |         |        | (3,653  | ) |        |     | 3,649  |  
|                                                                                              |                                              | Other accrued liabilities             |         |        | (7,910        | ) |         |               | (1,291 | ) |         |        | (3,278  | ) |        |     | (1,402 | )
|                                                                                              |                                              | Deferred revenue                      |         |        | (3,055        | ) |         |               | 2,362  |   |         |        | (13,290 | ) |        |     | (5,218 | )
|                                                                                              |                                              | Other                                 |         |        | 254           |   |         |               |       |   |         |        |        |   |        |     |       |  
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|Net cash provided by (used in) operating activities                                           |                                              |                                       | (12,971 | )      |               |   | (2,048  | )             |        |   | (3,354  | )      |         |   | 1,302  |    
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|Cash flows from investing activities:                                                         |                                              |                                       |         |        |               |   |         |               |        |   |         |        |         |   |        |    
|Purchase of marketable securities                                                             |                                              |                                       | (52,953 | )      |               |   | (8,993  | )             |        |   | (1,949  | )      |         |   |       |    
|Sale of marketable securities                                                                 |                                              |                                       | 52,399  |        |               |   | 12,411  |               |        |   | 2,706   |        |         |   |       |    
|(Increase) decrease in restricted cash                                                        |                                              |                                       | (5,159  | )      |               |   | (6      | )             |        |   | 78      |        |         |   | (449   | )  
|Acquisition of business, net of cash acquired                                                 |                                              |                                       |        |        |               |   | (29,020 | )             |        |   | (14,910 | )      |         |   | (486   | )  
|Capitalized software                                                                          |                                              |                                       |        |        |               |   | (371    | )             |        |   | (7,318  | )      |         |   | (3     | )  
|Acquisition of property and equipment                                                         |                                              |                                       | (4,533  | )      |               |   | (667    | )             |        |   | (4,158  | )      |         |   | (3,394 | )  
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|Net cash used in investing activities                                                         |                                              |                                       | (10,246 | )      |               |   | (26,646 | )             |        |   | (25,551 | )      |         |   | (4,332 | )  
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|Cash flows from financing activities:                                                         |                                              |                                       |         |        |               |   |         |               |        |   |         |        |         |   |        |    
|Net proceeds of note payable                                                                  |                                              |                                       |        |        |               |   |        |               |        |   | 11,066  |        |         |   |       |    
|Payment of note payable and capital leases                                                    |                                              |                                       | (170    | )      |               |   | (64     | )             |        |   | (280    | )      |         |   | (1,077 | )  
|Proceeds from issuance of convertible notes, net of issuance
    costs                        |                                              |                                       |        |        |               |   | 13,716  |               |        |   |        |        |         |   |       |    
|Proceeds from issuance of common stock, net of issuance costs                                 |                                              |                                       | 1,938   |        |               |   | 9,677   |               |        |   | 15,450  |        |         |   | 849    |    
|Changes in stockholder receivables                                                            |                                              |                                       | 55      |        |               |   |        |               |        |   |        |        |         |   |       |    
|Purchase of treasury stock                                                                    |                                              |                                       | (2,500  | )      |               |   |        |               |        |   |        |        |         |   |       |    
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|Net cash provided by (used in) financing activities                                           |                                              |                                       | (677    | )      |               |   | 23,329  |               |        |   | 26,236  |        |         |   | (228   | )  
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|Effect of exchange rate differences on cash                                                   |                                              |                                       | 1,520   |        |               |   | 505     |               |        |   | 1,083   |        |         |   | (44    | )  
|Net decrease in cash and cash equivalents                                                     |                                              |                                       | (22,374 | )      |               |   | (4,860  | )             |        |   | (1,586  | )      |         |   | (3,302 | )  
|Cash and cash equivalents at beginning of period                                              |                                              |                                       | 59,901  |        |               |   | 37,527  |               |        |   | 32,667  |        |         |   | 31,081 |    
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|Cash and cash equivalents at end of period                                                    |                                              | $                                     | 37,527  |        |               | $ | 32,667  |               |        | $ | 31,081  |        |         | $ | 27,779 |    
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|Supplemental disclosures of cash flow information:                                            |                                              |                                       |         |        |               |   |         |               |        |   |         |        |         |   |        |    
|Interest paid                                                                                 |                                              | $                                     | 59      |        |               | $ | 10      |               |        | $ | 1,424   |        |         | $ | 756    |    
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|Income taxes paid                                                                             |                                              | $                                     | 315     |        |               | $ | 81      |               |        | $ | 111     |        |         | $ | 760    |    
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|Income tax refunds                                                                            |                                              | $                                     | 3,703   |        |               | $ |        |               |        | $ | 4,792   |        |         | $ | 4      |    
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|Supplemental noncash financing activities:                                                    |                                              |                                       |         |        |               |   |         |               |        |   |         |        |         |   |        |    
|Acquisition of IUS business:                                                                  |                                              |                                       |         |        |               |   |         |               |        |   |         |        |         |   |        |    
|                                                                                              | Fair value of assets acquired                |                                       |         |        |               |   | $       | 51,462        |        |   | $       | (55    | )       |   | $      |    |       
|                                                                                              | Fair value of liabilities assumed            |                                       |         |        |               |   |         | (25,697       | )      |   |         | 10,000 |         |   |        |    |       
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|Net assets acquired                                                                           |                                              |                                       |         |        |               |   | 25,765  |               |        |   | 9,945   |        |         |   |       |    
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|                                                                                              | Due from seller                              |                                       |         |        |               |   |         | 3,255         |        |   |         | (3,255 | )       |   |        |    |       
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|Net acquisition-related cash paid                                                             |                                              |                                       |         |        |               | $ | 29,020  |               |        | $ | 6,690   |        |         | $ |       |    
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|Acquisition of Wishbone Systems business:                                                     |                                              |                                       |         |        |               |   |         |               |        |   |         |        |         |   |        |    
|                                                                                              | Fair value of assets acquired                |                                       |         |        |               |   |         |               |        |   | $       | 8,632  |         |   | $      | 486 |       
|                                                                                              | Fair value of liabilities assumed            |                                       |         |        |               |   |         |               |        |   |         | (412   | )       |   |        |    |       
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       
|Net assets acquired, less cash                                                                |                                              |                                       |         |        |               |   |         |               |        | $ | 8,220   |        |         | $ | 486    |    
|                                                                                              |                                              |                                       |         |        |               |   |         |               |        |   |         |       



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INDUS INTERNATIONALS, INC.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS







|   |                                                       
|-- | ------------------------------------------------------
|1. | Nature of Business and Significant Accounting Policies



| |                          
| | -------------------------
| | Organization and Business



| |         
| | --------
| | Business







| |                      
| | ---------------------
| | Significant Customers





| |                                
| | -------------------------------
| | Significant Accounting Policies



| |                      
| | ---------------------
| | Basis of Presentation





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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                    
| | -------------------
| | Revenue Recognition











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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










| |                             
| | ----------------------------
| | Foreign Currency Translation





| |                             
| | ----------------------------
| | Concentration of Credit Risk







|                                        |  |            |       |  |            |  |       |           |  |  |             |   |  |   |       | 
|--------------------------------------- |  | ---------- | ----- |  | ---------- |  | ----- | --------- |  |  | ----------- | - |  | - | ----- | 
|                                        |  | Balance at |       |  | Charged to |  |       | Changes  |  |  |            
|                                        |  | Beginning  |       |  | Costs and  |  |       | Add       |  |  | Balance at  |  
|Allowance for Doubtful Accounts         |  | of Year    |       |  | Expenses   |  |       | (Deduct)  |  |  | End of Year |  
|                                        |  |            |       |  |            |  |       |           |  |  |             |  
|Year Ended March 31, 2005               |  | $          | 912   |  |            |  | (98   | )         |  |  | (252        | ) |  | $ | 562   | 
|Year Ended March 31, 2004               |  | $          | 4,375 |  |            |  | (289  | )         |  |  | (3,174      | ) |  | $ | 912   | 
|Three-month period Ended March 31, 2003 |  | $          | 3,445 |  |            |  | 1,049 |           |  |  | (119        | ) |  | $ | 4,375 | 
|Year Ended December 31, 2002            |  | $          | 5,713 |  |            |  | (807  | )         |  |  | (1,461      | ) |  | $ | 3,445 | 



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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                
| | ---------------
| | Restricted Cash





| |                       
| | ----------------------
| | Property and Equipment







| |                           
| | --------------------------
| | Software Development Costs





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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                      
| | ---------------------
| | Internal-Use Software





| |                                      
| | -------------------------------------
| | Acquisition-Related Intangible assets





|                                     |  |           |        |  
|------------------------------------ |  | --------- | ------ | -
|                                     |  | March 31, |       
|                                     |  | 2005      |       
|                                     |  |           |       
|Acquired trademarks                  |  | $         | 730    |  
|Acquired technology                  |  |           | 2,870  |  
|Acquired contracts and customer base |  |           | 10,920 |  
|                                     |  |           |       
|Total acquired intangible assets     |  |           | 14,520 |  
|Less accumulated amortization        |  |           | (3,984 | )
|                                     |  |           |       
|Net intangible assets                |  | $         | 10,536 |  
|                                     |  |           |       



|           |  |   |        | 
|---------- |  | - | ------ | 
|2006       |  | $ | 1,470  | 
|2007       |  |   | 1,432  | 
|2008       |  |   | 1,383  | 
|2009       |  |   | 814    | 
|2010       |  |   | 657    | 
|Thereafter |  |   | 4,780  | 
|           |  |   |       
|           |  | $ | 10,536 | 
|           |  |   |       

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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                        
| | -----------------------
| | Goodwill and Impairment









| |              
| | -------------
| | Notes Payable





| |                                
| | -------------------------------
| | Guarantees and Indemnifications





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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












| |                  
| | -----------------
| | Advertising Costs





| |                    
| | -------------------
| | Segment Information





| |             
| | ------------
| | Income Taxes



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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |               
| | --------------
| | Per Share Data





|                                                                                |                        |               |         |              |               |   |        |                       |  |   |         |   |  |   |        |   | 
|------------------------------------------------------------------------------- | ---------------------- | ------------- | ------- | ------------ | ------------- | - | ------ | --------------------- |  | - | ------- | - |  | - | ------ | - | 
|                                                                                |                        |               |         | Three Months |               |   |       
|                                                                                |                        | Year Ended    |         |              | Ended         |   |        | Years Ended March 31, | 
|                                                                                |                        | March 31,     |         |              | March 31,     |   |        |                       | 
|                                                                                |                        | 2002          |         |              | 2003          |   |        | 2004                  |  |   | 2005    |  
|                                                                                |                        |               |         |              |               |   |        |                       |  |   |         |  
|                                                                                |                        | (As restated) |         |              | (As restated) |   |        | (As restated)         |  |   |        
|Net loss                                                                        |                        | $             | (33,777 | )            |               | $ | (9,679 | )                     |  | $ | (11,961 | ) |  | $ | (6,065 | )
|                                                                                |                        |               |         |              |               |   |        |                       |  |   |         |  
|Weighted average shares of common stock outstanding                             |                        |               | 35,237  |              |               |   | 37,210 |                       |  |   | 49,455  |   |  |   | 57,259 |  
|                                                                                |                        |               |         |              |               |   |        |                       |  |   |         |  
|Basic net loss per share                                                        |                        | $             | (0.96   | )            |               | $ | (0.26  | )                     |  | $ | (0.24   | ) |  | $ | (0.11  | )
|                                                                                |                        |               |         |              |               |   |        |                       |  |   |         |  
|Calculation of shares outstanding for computing diluted net loss
    per share: |                        |               |         |              |               |   |        |                       |  |   |         |   |  |   |        |  
|Shares used in computing basic net loss per share                               |                        |               | 35,237  |              |               |   | 37,210 |                       |  |   | 49,455  |   |  |   | 57,259 |  
|Shares to reflect the effect of the assumed exercise of:                        |                        |               |         |              |               |   |        |                       |  |   |         |   |  |   |        |  
|                                                                                | Employee stock options |               |         |             |               |   |        |                      |  |   |         |  |  |   |        |  | 
|                                                                                | Warrants               |               |         |             |               |   |        |                      |  |   |         |  |  |   |        |  | 
|                                                                                | Convertible notes      |               |         |             |               |   |        |                      |  |   |         |  |  |   |        |  | 
|                                                                                |                        |               |         |              |               |   |        |                       |  |   |         |  
|Shares used in computing diluted net loss per share                             |                        |               | 35,237  |              |               |   | 37,210 |                       |  |   | 49,455  |   |  |   | 57,259 |  
|                                                                                |                        |               |         |              |               |   |        |                       |  |   |         |  
|Diluted net loss per share                                                      |                        | $             | (0.96   | )            |               | $ | (0.26  | )                     |  | $ | (0.24   | ) |  | $ | (0.11  | )
|                                                                                |                        |               |         |              |               |   |        |                       |  |   |         |  





| |                 
| | ----------------
| | Use of Estimates



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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                         
| | ------------------------
| | Stock-Based Compensation





|                                                                                                           |             |               |         |              |               |   |         |                       |   |   |         |       |   |   |        |       |  
|---------------------------------------------------------------------------------------------------------- | ----------- | ------------- | ------- | ------------ | ------------- | - | ------- | --------------------- | - | - | ------- | ----- | - | - | ------ | ----- | -
|                                                                                                           |             |               |         | Three Months |               |   |        
|                                                                                                           |             | Year Ended    |         |              | Ended         |   |         | Years Ended March 31, |  
|                                                                                                           |             | March 31,     |         |              | March 31,     |   |         |                       |  
|                                                                                                           |             | 2002          |         |              | 2003          |   |         | 2004                  |   |   | 2005    |      
|                                                                                                           |             |               |         |              |               |   |         |                       |   |   |         |      
|                                                                                                           |             | (As restated) |         |              | (As restated) |   |         | (As restated)         |   |   |        
|Net loss as reported                                                                                       |             | $             | (33,777 | )            |               | $ | (9,679  | )                     |   | $ | (11,961 | )     |   | $ | (6,065 | )    
|Add: Total stock-based compensation expense determined under the
    intrinsic value method                |             |               | 34      |              |               |   | 16      |                       |   |   | 38      |       |   |   | 33     |      
|Deduct: Total stock-based compensation expense determined under
    fair-value based method for all awards |             |               | (4,809  | )            |               |   | (1,509  | )                     |   |   | (4,616  | )     |   |   | (3,934 | )    
|                                                                                                           |             |               |         |              |               |   |         |                       |   |   |         |      
|Pro forma net loss                                                                                         |             | $             | (38,552 | )            |               | $ | (11,172 | )                     |   | $ | (16,539 | )     |   | $ | (9,966 | )    
|                                                                                                           |             |               |         |              |               |   |         |                       |   |   |         |      
|Loss per share:                                                                                            |             |               |         |              |               |   |         |                       |   |   |         |       |   |   |        |      
|Basic:                                                                                                     |             |               |         |              |               |   |         |                       |   |   |         |       |   |   |        |      
|                                                                                                           | As reported |               | $       | (0.96        | )             |   | $       | (0.26                 | ) |   | $       | (0.24 | ) |   | $      | (0.11 | )
|                                                                                                           |             |               |         |              |               |   |         |                       |   |   |         |      
|                                                                                                           | Pro forma   |               | $       | (1.09        | )             |   | $       | (0.30                 | ) |   | $       | (0.33 | ) |   | $      | (0.17 | )
|                                                                                                           |             |               |         |              |               |   |         |                       |   |   |         |      
|Diluted:                                                                                                   |             |               |         |              |               |   |         |                       |   |   |         |       |   |   |        |      
|                                                                                                           | As reported |               | $       | (0.96        | )             |   | $       | (0.26                 | ) |   | $       | (0.24 | ) |   | $      | (0.11 | )
|                                                                                                           |             |               |         |              |               |   |         |                       |   |   |         |      
|                                                                                                           | Pro forma   |               | $       | (1.09        | )             |   | $       | (0.30                 | ) |   | $       | (0.33 | ) |   | $      | (0.17 | )
|                                                                                                           |             |               |         |              |               |   |         |                       |   |   |         |      
|Shares used in computing per share data (as reported and pro
    forma):                                   |             |               |         |              |               |   |         |                       |   |   |         |       |   |   |        |      
|Basic                                                                                                      |             |               | 35,237  |              |               |   | 37,210  |                       |   |   | 49,455  |       |   |   | 57,259 |      
|                                                                                                           |             |               |         |              |               |   |         |                       |   |   |         |      
|Diluted                                                                                                    |             |               | 35,237  |              |               |   | 37,210  |                       |   |   | 49,455  |       |   |   | 57,259 |      
|                                                                                                           |             |               |         |              |               |   |         |                       |   |   |         |      



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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                 
| | --------------------------------
| | Recent Accounting Pronouncements







Stock-Based Compensation




|   |                                                                                             
|-- | --------------------------------------------------------------------------------------------
|2. | Restatement of Financial Statements for Accounting for Leases
    and Leasehold Improvements



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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








60



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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Statement of Operations Data


|                                         |         |                                       |         |        |                    |   |     |                |   |            |          |        |   |      |        |        |          |            |      |          |  |   |        |        |   |          |         |        |   |   |     |      |  |   |         |        |  
|---------------------------------------- | ------- | ------------------------------------- | ------- | ------ | ------------------ | - | --- | -------------- | - | ---------- | -------- | ------ | - | ---- | ------ | ------ | -------- | ---------- | ---- | -------- |  | - | ------ | ------ | - | -------- | ------- | ------ | - | - | --- | ---- |  | - | ------- | ------ | -
|                                         |         | Year Ended                            |         |        | Three Months Ended |   |     | Year Ended     |  
|                                         |         | December 31, 2002                     |         |        | March 31, 2003     |   |     | March 31, 2004 |  
|                                         |         |                                       |         |        |                    |   |     |                |  
|                                         |         | As                                    |         |        |                    |   | As  |                |   |            |          | As     |   |      |       
|                                         |         | Previously                            |         |        |                    |   | As  |                |   | Previously |          |        |   |      | As     |        |          | Previously |      |          |  |   | As     |       
|                                         |         | Reported                              |         |        | Adjs               |   |     | Restated       |   |            | Reported |        |   | Adjs |        |        | Restated |            |      | Reported |  |   | Adjs   |        |   | Restated |        
|                                         |         |                                       |         |        |                    |   |     |                |   |            |          |        |   |      |        |        |          |            |      |          |  |   |        |        |   |          |        
|                                         |         | (In thousands, except per share data) |        
|Support, outsourcing and hosting costs   |         | $                                     | 11,149  |        |                    | $ | 1   |                |   | $          | 11,150   |        |   | $    | 4,177  |        |          | $          | (2   | )        |  | $ | 4,175  |        |   | $        | 20,275  |        |   | $ | (10 | )    |  | $ | 20,265  |       
|Consulting, training and other costs     |         |                                       | 44,838  |        |                    |   | 4   |                |   |            | 44,842   |        |   |      | 11,006 |        |          |            | (5   | )        |  |   | 11,001 |        |   |          | 46,365  |        |   |   | (23 | )    |  |   | 46,342  |       
|Research and development                 |         |                                       | 45,745  |        |                    |   | 5   |                |   |            | 45,750   |        |   |      | 8,717  |        |          |            | (4   | )        |  |   | 8,713  |        |   |          | 34,977  |        |   |   | (17 | )    |  |   | 34,960  |       
|Sales and marketing                      |         |                                       | 29,942  |        |                    |   | 3   |                |   |            | 29,945   |        |   |      | 6,549  |        |          |            | (3   | )        |  |   | 6,546  |        |   |          | 33,350  |        |   |   | (16 | )    |  |   | 33,334  |       
|General and administrative               |         |                                       | 13,305  |        |                    |   | 1   |                |   |            | 13,306   |        |   |      | 3,959  |        |          |            | (2   | )        |  |   | 3,957  |        |   |          | 21,237  |        |   |   | (11 | )    |  |   | 21,226  |       
|Restructuring expenses                   |         |                                       | 8,199   |        |                    |   |    |                |   |            | 8,199    |        |   |      | 2,166  |        |          |            | (198 | )        |  |   | 1,968  |        |   |          | 44      |        |   |   |    |      |  |   | 44      |       
|Net loss                                 |         | $                                     | (33,763 | )      |                    | $ | (14 | )              |   | $          | (33,777  | )      |   | $    | (9,893 | )      |          | $          | 214  |          |  | $ | (9,679 | )      |   | $        | (12,038 | )      |   | $ | 77  |      |  | $ | (11,961 | )     
|Loss per share:                          |         |                                       |         |        |                    |   |     |                |   |            |          |        |   |      |        |        |          |            |      |          |  |   |        |        |   |          |         |        |   |   |     |      |  |   |         |       
|                                         | Basic   |                                       | $       | (0.96  | )                  |   | $   | (0.00          | ) |            | $        | (0.96  | ) |      | $      | (0.27  | )        |            | $    | 0.01     |  |   | $      | (0.26  | ) |          | $       | (0.24  | ) |   | $   | 0.00 |  |   | $       | (0.24  | )
|                                         |         |                                       |         |        |                    |   |     |                |   |            |          |        |   |      |        |        |          |            |      |          |  |   |        |        |   |          |        
|                                         | Diluted |                                       | $       | (0.96  | )                  |   | $   | (0.00          | ) |            | $        | (0.96  | ) |      | $      | (0.27  | )        |            | $    | 0.01     |  |   | $      | (0.26  | ) |          | $       | (0.24  | ) |   | $   | 0.00 |  |   | $       | (0.24  | )
|                                         |         |                                       |         |        |                    |   |     |                |   |            |          |        |   |      |        |        |          |            |      |          |  |   |        |        |   |          |        
|Shares used in computing per share data: |         |                                       |         |        |                    |   |     |                |   |            |          |        |   |      |        |        |          |            |      |          |  |   |        |        |   |          |         |        |   |   |     |      |  |   |         |       
|                                         | Basic   |                                       |         | 35,237 |                    |   |     |                |   |            |          | 35,237 |   |      |        | 37,210 |          |            |      |          |  |   |        | 37,210 |   |          |         | 49,455 |   |   |     |      |  |   |         | 49,455 |  
|                                         |         |                                       |         |        |                    |   |     |                |   |            |          |        |   |      |        |        |          |            |      |          |  |   |        |        |   |          |        
|                                         | Diluted |                                       |         | 35,237 |                    |   |     |                |   |            |          | 35,237 |   |      |        | 37,210 |          |            |      |          |  |   |        | 37,210 |   |          |         | 49,455 |   |   |     |      |  |   |         | 49,455 |  
|                                         |         |                                       |         |        |                    |   |     |                |   |            |          |        |   |      |        |        |          |            |      |          |  |   |        |        |   |          |        

Balance Sheet Data


|                                           |  |                |          |   |      |   |        |             |  |   |          |  
|------------------------------------------ |  | -------------- | -------- | - | ---- | - | ------ | ----------- |  | - | -------- | -
|                                           |  | March 31, 2004 |         
|                                           |  |                |         
|                                           |  | As             |          |   |     
|                                           |  | Previously     |          |   |     
|                                           |  | Reported       |          |   | Adjs |   |        | As Restated | 
|                                           |  |                |          |   |      |   |        |             | 
|                                           |  | (In thousands) |         
|ASSETS                                    
|Total current assets                       |  | $              | 65,459   |   |      | $ |       |             |  | $ | 65,459   |  
|Property and equipment, net                |  |                | 32,919   |   |      |   | 1,763  |             |  |   | 34,682   |  
|Other non-current assets, net              |  |                | 33,295   |   |      |   |       |             |  |   | 33,295   |  
|                                           |  |                |          |   |      |   |        |             | 
|Total assets                               |  | $              | 131,673  |   |      | $ | 1,763  |             |  | $ | 133,436  |  
|                                           |  |                |          |   |      |   |        |             | 
|                                          
|LIABILITIES AND STOCKHOLDERS EQUITY      
|Total current liabilities                  |  | $              | 63,501   |   |      | $ | 303    |             |  | $ | 63,804   |  
|Note payable, net of current portion       |  |                | 10,299   |   |      |   |       |             |  |   | 10,299   |  
|Other non-current liabilities              |  |                | 10,997   |   |      |   | 2,736  |             |  |   | 13,733   |  
|Accumulated deficit                        |  |                | (113,981 | ) |      |   | (1,276 | )           |  |   | (115,257 | )
|Other stockholders equity                 |  |                | 160,857  |   |      |   |       |             |  |   | 160,857  |  
|                                           |  |                |          |   |      |   |        |             | 
|Total liabilities and stockholders equity |  | $              | 131,673  |   |      | $ | 1,763  |             |  | $ | 133,436  |  
|                                           |  |                |          |   |      |   |        |             | 

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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Statements of Cash Flows Data


|                                      |  |                   |         |   |                    |   |      |                |  |            |          |    |  |      |         |   |          |            |      |          |  |   |         |   |  |          |         |   |  |   |      |   |  |   |         |  
|------------------------------------- |  | ----------------- | ------- | - | ------------------ | - | ---- | -------------- |  | ---------- | -------- | -- |  | ---- | ------- | - | -------- | ---------- | ---- | -------- |  | - | ------- | - |  | -------- | ------- | - |  | - | ---- | - |  | - | ------- | -
|                                      |  | Year Ended        |         |   | Three Months Ended |   |      | Year Ended     | 
|                                      |  | December 31, 2002 |         |   | March 31, 2003     |   |      | March 31, 2004 | 
|                                      |  |                   |         |   |                    |   |      |                | 
|                                      |  | As                |         |   |                    |   | As   |                |  |            |          | As |  |      |        
|                                      |  | Previously        |         |   |                    |   | As   |                |  | Previously |          |    |  |      | As      |   |          | Previously |      |          |  |   | As      |  
|                                      |  | Reported          |         |   | Adjs               |   |      | Restated       |  |            | Reported |    |  | Adjs |         |   | Restated |            |      | Reported |  |   | Adjs    |   |  | Restated |        
|                                      |  |                   |         |   |                    |   |      |                |  |            |          |    |  |      |         |   |          |            |      |          |  |   |         |   |  |          |        
|                                      |  | (In thousands)    |        
|Net loss                              |  | $                 | (33,763 | ) |                    | $ | (14  | )              |  | $          | (33,777  | )  |  | $    | (9,893  | ) |          | $          | 214  |          |  | $ | (9,679  | ) |  | $        | (12,038 | ) |  | $ | 77   |   |  | $ | (11,961 | )
|Depreciation and amortization         |  |                   | 8,541   |   |                    |   | 15   |                |  |            | 8,556    |    |  |      | 2,332   |   |          |            | 1    |          |  |   | 2,333   |   |  |          | 10,918  |   |  |   | 23   |   |  |   | 10,941  |  
|Change in other accrued liabilities   |  |                   | (8,449  | ) |                    |   | 539  |                |  |            | (7,910   | )  |  |      | (1,076  | ) |          |            | (215 | )        |  |   | (1,291  | ) |  |          | (3,643  | ) |  |   | 365  |   |  |   | (3,278  | )
|Net cash used in operating activities |  |                   | (13,510 | ) |                    |   | 539  |                |  |            | (12,971  | )  |  |      | (2,048  | ) |          |            |     |          |  |   | (2,048  | ) |  |          | (3,819  | ) |  |   | 465  |   |  |   | (3,354  | )
|Acquisition of property and equipment |  |                   | (3,994  | ) |                    |   | (539 | )              |  |            | (4,533   | )  |  |      | (667    | ) |          |            |     |          |  |   | (667    | ) |  |          | (3,693  | ) |  |   | (465 | ) |  |   | (4,158  | )
|Net cash used in investing activities |  |                   | (9,707  | ) |                    |   | (539 | )              |  |            | (10,246  | )  |  |      | (26,646 | ) |          |            |     |          |  |   | (26,646 | ) |  |          | (25,086 | ) |  |   | (465 | ) |  |   | (25,551 | )



|   |                       
|-- | ----------------------
|3. | Restructuring Expenses







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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Company headquarters relocation and MoD project
suspension:


|                             |                     |               |     |      |           |   |   |            |   |   |        |        |   |   |        |        |  
|---------------------------- | ------------------- | ------------- | --- | ---- | --------- | - | - | ---------- | - | - | ------ | ------ | - | - | ------ | ------ | -
|                             |                     | Severance and |     |      |           |   |   |            |  
|                             |                     | Related Costs |     |      | Equipment |   |   | Facilities |   |   | Total  |       
|                             |                     |               |     |      |           |   |   |            |   |   |        |       
|Balance at December 31, 2001 |                     | $             | 174 |      |           | $ |  |            |   | $ | 7,332  |        |   | $ | 7,506  |       
|                             |                     |               |     |      |           |   |   |            |   |   |        |       
|                             | Payments in 2002    |               |     | (762 | )         |   |   | (953       | ) |   |        | (3,100 | ) |   |        | (4,815 | )
|                             | Accruals in 2002    |               |     |     |           |   |   |           |   |   |        | 1,720  |   |   |        | 1,720  |  
|                             | Adjustments in 2002 |               |     | 593  |           |   |   | 953        |   |   |        | 4,755  |   |   |        | 6,301  |  
|                             |                     |               |     |      |           |   |   |            |   |   |        |       
|Balance at December 31, 2002 |                     |               | 5   |      |           |   |  |            |   |   | 10,707 |        |   |   | 10,712 |       
|                             |                     |               |     |      |           |   |   |            |   |   |        |       
|                             | Payments in 2003    |               |     |     |           |   |   |           |   |   |        | (622   | ) |   |        | (622   | )
|                             | Accruals in 2003    |               |     |     |           |   |   |           |   |   |        | 2,166  |   |   |        | 2,166  |  
|                             | Adjustments in 2003 |               |     |     |           |   |   |           |   |   |        |       |   |   |        |       |  
|                             |                     |               |     |      |           |   |   |            |   |   |        |       
|Balance at March 31, 2003    |                     |               | 5   |      |           |   |  |            |   |   | 12,251 |        |   |   | 12,256 |       
|                             |                     |               |     |      |           |   |   |            |   |   |        |       
|                             | Payments in 2004    |               |     |     |           |   |   |           |   |   |        | (3,023 | ) |   |        | (3,023 | )
|                             | Accruals in 2004    |               |     |     |           |   |   |           |   |   |        | 44     |   |   |        | 44     |  
|                             | Adjustments in 2004 |               |     |     |           |   |   |           |   |   |        |       |   |   |        |       |  
|                             |                     |               |     |      |           |   |   |            |   |   |        |       
|Balance at March 31, 2004    |                     |               | 5   |      |           |   |  |            |   |   | 9,272  |        |   |   | 9,277  |       
|                             |                     |               |     |      |           |   |   |            |   |   |        |       
|                             | Payments in 2005    |               |     |     |           |   |   |           |   |   |        | (2,897 | ) |   |        | (2,897 | )
|                             | Accruals in 2005    |               |     |     |           |   |   |           |   |   |        | 44     |   |   |        | 44     |  
|                             | Adjustments in 2005 |               |     | (5   | )         |   |   |           |   |   |        | 617    |   |   |        | 612    |  
|                             |                     |               |     |      |           |   |   |            |   |   |        |       
|Balance at March 31, 2005    |                     | $             |    |      |           | $ |  |            |   | $ | 7,036  |        |   | $ | 7,036  |       
|                             |                     |               |     |      |           |   |   |            |   |   |        |       

Office and business consolidation:


|                          |                     |               |     |        |            |   |       |        |   |   |       |        |  
|------------------------- | ------------------- | ------------- | --- | ------ | ---------- | - | ----- | ------ | - | - | ----- | ------ | -
|                          |                     | Severance and |     |        |            |   |      
|                          |                     | Related Costs |     |        | Facilities |   |       | Total  |  
|                          |                     |               |     |        |            |   |       |        |  
|Balance at March 31, 2004 |                     | $             |    |        |            | $ |      |        |   | $ |      |       
|                          |                     |               |     |        |            |   |       |        |  
|                          | Payments in 2005    |               |     | (2,602 | )          |   |       | (1,982 | ) |   |       | (4,584 | )
|                          | Accruals in 2005    |               |     | 3,154  |            |   |       | 7,941  |   |   |       | 11,095 |  
|                          | Adjustments in 2005 |               |     | (244   | )          |   |       | (377   | ) |   |       | (621   | )
|                          |                     |               |     |        |            |   |       |        |  
|Balance at March 31, 2005 |                     | $             | 308 |        |            | $ | 5,582 |        |   | $ | 5,890 |       
|                          |                     |               |     |        |            |   |       |        |  



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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                       
|-- | ----------------------
|4. | Property and Equipment



|                                               |  |               |        |  |      |   |        | 
|---------------------------------------------- |  | ------------- | ------ |  | ---- | - | ------ | 
|                                               |  | March 31,     |       
|                                               |  |               |       
|                                               |  | 2004          |        |  | 2005 |  
|                                               |  |               |        |  |      |  
|                                               |  | (As restated) |        |  |     
|Land and buildings                             |  | $             | 19,073 |  |      | $ | 19,073 | 
|Furniture and fixtures                         |  |               | 6,917  |  |      |   | 6,376  | 
|Office equipment                               |  |               | 43,671 |  |      |   | 45,096 | 
|Leasehold improvements                         |  |               | 6,040  |  |      |   | 7,345  | 
|Internal-use software                          |  |               | 15,947 |  |      |   | 16,356 | 
|                                               |  |               |        |  |      |  
|                                               |  |               | 91,648 |  |      |   | 94,246 | 
|Less accumulated depreciation and amortization |  |               | 56,966 |  |      |   | 63,491 | 
|                                               |  |               |        |  |      |  
|                                               |  | $             | 34,682 |  |      | $ | 30,755 | 
|                                               |  |               |        |  |      |  





|   |                    
|-- | -------------------
|5. | Accrued Liabilities



|                                      |  |               |        |  |           |   |        | 
|------------------------------------- |  | ------------- | ------ |  | --------- | - | ------ | 
|                                      |  | March 31,     |        |  | March 31, |  
|                                      |  | 2004          |        |  | 2005      |  
|                                      |  |               |        |  |           |  
|                                      |  | (As restated) |        |  |          
|Accrued compensation-related expenses |  | $             | 6,158  |  |           | $ | 6,872  | 
|Accrued taxes                         |  |               | 2,341  |  |           |   | 1,724  | 
|Accrued restructuring expenses        |  |               | 3,153  |  |           |   | 4,915  | 
|Accrued legal and accounting expenses |  |               | 1,768  |  |           |   | 1,173  | 
|Other accruals                        |  |               | 4,554  |  |           |   | 4,529  | 
|                                      |  |               |        |  |           |  
|                                      |  | $             | 17,974 |  |           | $ | 19,213 | 
|                                      |  |               |        |  |           |  



|   |               
|-- | --------------
|6. | Long-Term Debt



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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|     |  |           |        | 
|---- |  | --------- | ------ | 
|     |  | March 31, |       
|     |  | 2005      |       
|     |  |           |       
|2006 |  | $         | 767    | 
|2007 |  |           | 767    | 
|2008 |  |           | 767    | 
|2009 |  |           | 7,996  | 
|     |  |           |       
|     |  | $         | 10,297 | 
|     |  |           |       



|   |            
|-- | -----------
|7. | Commitments







|                                        |  |           |        |  |         |   |     |  
|--------------------------------------- |  | --------- | ------ |  | ------- | - | --- | -
|                                        |  | Operating |        |  | Capital |  
|Years Ending March 31,                  |  | Leases    |        |  | Leases  |  
|                                        |  |           |        |  |         |  
|2006                                    |  | $         | 7,497  |  |         | $ | 203 |  
|2007                                    |  |           | 6,815  |  |         |   |    |  
|2008                                    |  |           | 6,772  |  |         |   |    |  
|2009                                    |  |           | 2,962  |  |         |   |    |  
|2010                                    |  |           | 1,876  |  |         |   |    |  
|Thereafter                              |  |           | 3,907  |  |         |   |    |  
|                                        |  |           |        |  |         |  
|Total minimum payments required         |  | $         | 29,829 |  |         | $ | 203 |  
|                                        |  |           |        |  |         |  
|Less amounts representing interest      |  |           |        |  |         |   | (7  | )
|                                        |  |           |        |  |         |  
|Present value of minimum lease payments |  |           |        |  |         | $ | 196 |  
|                                        |  |           |        |  |         |  





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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                              |  |          |       | 
|--------------------------------------------- |  | -------- | ----- | 
|                                              |  | Sublease |      
|Years Ending March 31,                        |  | Income   |      
|                                              |  |          |      
|2006                                          |  | $        | 1,521 | 
|2007                                          |  |          | 1,463 | 
|2008                                          |  |          | 1,476 | 
|2009                                          |  |          | 246   | 
|Thereafter                                    |  |          |      | 
|                                              |  |          |      
|Total sublease income under current contracts |  | $        | 4,706 | 
|                                              |  |          |      





|   |                     
|-- | --------------------
|8. | Stockholders Equity







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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












|   |            
|-- | -----------
|9. | Stock Plans



| |                               
| | ------------------------------
| | Stock Option and Benefit Plans





| |                              
| | -----------------------------
| | 2004 Long Term Incentive Plan





| |                
| | ---------------
| | 1997 Stock Plan



67



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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                            
| | ---------------------------
| | 1997 Directors Option Plan





| |                                                         
| | --------------------------------------------------------
| | 1998 Indus International, Inc. Company Share Option Plan



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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                              |                     |           |           |                     |        |  |            |                |   |   |      |      | 
|----------------------------- | ------------------- | --------- | --------- | ------------------- | ------ |  | ---------- | -------------- | - | - | ---- | ---- | 
|                              |                     |           |           | Options Outstanding |       
|                              |                     |           |           |                     |       
|                              |                     | Shares    |           |                     |        |  | Weighted-  |               
|                              |                     | Available |           |                     |        |  | Average    |               
|                              |                     | for Grant |           |                     | Shares |  |            | Exercise Price |  
|                              |                     |           |           |                     |        |  |            |                |  
|Balances at December 31, 2001 |                     |           | 4,148,018 |                     |        |  | 8,592,174  |                |   | $ | 5.41 |     
|                              | Shares authorized   |           |           |                    |        |  |            |               |   |   |      |     | 
|                              | Options granted     |           |           | (3,630,440          | )      |  |            | 3,630,440      |   |   | $    | 2.52 | 
|                              | Options forfeited   |           |           | 1,992,952           |        |  |            | (1,992,952     | ) |   | $    | 4.77 | 
|                              | Options exercised   |           |           |                    |        |  |            | (290,742       | ) |   | $    | 3.57 | 
|                              | Plan shares expired |           |           | (58,445             | )      |  |            |               |   |   |      |     | 
|                              |                     |           |           |                     |        |  |            |                |  
|Balances at December 31, 2002 |                     |           | 2,452,085 |                     |        |  | 9,938,920  |                |   | $ | 4.53 |     
|                              | Shares authorized   |           |           |                    |        |  |            |               |   |   |      |     | 
|                              | Options granted     |           |           | (726,081            | )      |  |            | 726,081        |   |   | $    | 1.84 | 
|                              | Options forfeited   |           |           | 261,989             |        |  |            | (261,989       | ) |   | $    | 4.81 | 
|                              | Options exercised   |           |           |                    |        |  |            | (1,463         | ) |   | $    | 1.24 | 
|                              | Plan shares expired |           |           | (50,844             | )      |  |            |               |   |   |      |     | 
|                              |                     |           |           |                     |        |  |            |                |  
|Balances at March 31, 2003    |                     |           | 1,937,149 |                     |        |  | 10,401,549 |                |   | $ | 4.34 |     
|                              | Shares authorized   |           |           |                    |        |  |            |               |   |   |      |     | 
|                              | Options granted     |           |           | (4,205,357          | )      |  |            | 4,205,357      |   |   | $    | 2.63 | 
|                              | Options forfeited   |           |           | 3,394,435           |        |  |            | (3,394,435     | ) |   | $    | 5.40 | 
|                              | Options exercised   |           |           |                    |        |  |            | (129,918       | ) |   | $    | 1.17 | 
|                              | Plan shares expired |           |           | (40,390             | )      |  |            |               |   |   |      |     | 
|                              |                     |           |           |                     |        |  |            |                |  
|Balances at March 31, 2004    |                     |           | 1,085,837 |                     |        |  | 11,082,553 |                |   | $ | 3.40 |     
|                              | Shares authorized   |           |           | 1,000,000           |        |  |            |               |   |   |      |     | 
|                              | Options granted     |           |           | (1,786,500          | )      |  |            | 1,786,500      |   |   | $    | 1.75 | 
|                              | Options forfeited   |           |           | 2,782,073           |        |  |            | (2,782,073     | ) |   | $    | 4.18 | 
|                              | Options exercised   |           |           |                    |        |  |            | (222,133       | ) |   | $    | 1.84 | 
|                              | Plan shares expired |           |           | (80,995             | )      |  |            |               |   |   |      |     | 
|                              |                     |           |           |                     |        |  |            |                |  
|Balances at March 31, 2005    |                     |           | 3,000,415 |                     |        |  | 9,864,847  |                |   | $ | 2.92 |     
|                              |                     |           |           |                     |        |  |            |                |  

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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                         |        |                     |           |           |                    |  |      |           |  |   |              |      |  |           |           |           |  |   |      |      | 
|------------------------ | ------ | ------------------- | --------- | --------- | ------------------ |  | ---- | --------- |  | - | ------------ | ---- |  | --------- | --------- | --------- |  | - | ---- | ---- | 
|                         |        | Options Outstanding |           |           | Options Vested and | 
|                         |        |                     |           |           | Exercisable        | 
|                         |        |                     |           | Weighted- |                    |  |      |           |  |  
|                         |        | Number              |           |           | Average            |  |      | Weighted- |  |   | Number       |      |  | Weighted- |          
|                         |        | Outstanding         |           |           | Remaining          |  |      | Average   |  |   | Exercisable  |      |  | Average   |          
|                         |        | at March 31,        |           |           | Contractual        |  |      | Exercise  |  |   | at March 31, |      |  | Exercise  |          
|Range of Exercise Prices |        | 2005                |           |           | Life               |  |      | Price     |  |   | 2005         |      |  | Price     |          
|                         |        |                     |           |           |                    |  |      |           |  |   |              |      |  |           |          
|$0.4100 - $1.3800        |        |                     | 1,855,318 |           |                    |  | 8.18 |           |  | $ | 1.34         |      |  |           | 708,818   |           |  | $ | 1.30 |     
|$1.4700 - $1.7400        |        |                     | 1,364,500 |           |                    |  | 7.89 |           |  | $ | 1.63         |      |  |           | 593,250   |           |  | $ | 1.62 |     
|$1.7500 - $1.9500        |        |                     | 965,188   |           |                    |  | 8.13 |           |  | $ | 1.93         |      |  |           | 385,938   |           |  | $ | 1.92 |     
|$1.9700 - $2.9900        |        |                     | 2,023,954 |           |                    |  | 8.55 |           |  | $ | 2.45         |      |  |           | 494,204   |           |  | $ | 2.58 |     
|$3.0500 - $3.9400        |        |                     | 1,633,203 |           |                    |  | 6.73 |           |  | $ | 3.82         |      |  |           | 1,060,073 |           |  | $ | 3.81 |     
|$4.0400 - $4.7900        |        |                     | 884,559   |           |                    |  | 3.59 |           |  | $ | 4.47         |      |  |           | 843,475   |           |  | $ | 4.49 |     
|$5.0000 - $6.8750        |        |                     | 881,625   |           |                    |  | 6.62 |           |  | $ | 5.72         |      |  |           | 797,623   |           |  | $ | 5.69 |     
|$7.6000 - $8.0625        |        |                     | 256,500   |           |                    |  | 5.32 |           |  | $ | 7.96         |      |  |           | 243,500   |           |  | $ | 7.97 |     
|                         |        |                     |           |           |                    |  |      |           |  |   |              |      |  |           |          
|                         | Totals |                     |           | 9,864,847 |                    |  |      | 7.35      |  |   | $            | 2.92 |  |           |           | 5,126,881 |  |   | $    | 3.55 | 
|                         |        |                     |           |           |                    |  |      |           |  |   |              |      |  |           |          





| |                              
| | -----------------------------
| | Employee Stock Purchase Plans







|    |                                            
|--- | -------------------------------------------
|10. | Alternative Method of Valuing Stock Options





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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                                          
|--- | -----------------------------------------
|11. | Employee Benefit and Profit-Sharing Plans





|    |                                               
|--- | ----------------------------------------------
|12. | Segment Information and Geographic Information





|                                      |                |              |         |              |           |   |        |                       |  |   |         |         |  |   |         |         | 
|------------------------------------- | -------------- | ------------ | ------- | ------------ | --------- | - | ------ | --------------------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|                                      |                |              |         | Three Months |           |   |        |                       | 
|                                      |                | Year Ended   |         |              | Ended     |   |        |                      
|                                      |                | December 31, |         |              | March 31, |   |        | Years Ended March 31, | 
|                                      |                |              |         |              |           |   |        |                       | 
|                                      |                | 2002         |         |              | 2003      |   |        | 2004                  |  |   | 2005    |        
|                                      |                |              |         |              |           |   |        |                       |  |   |         |        
|Revenue (based on customer location): |                |              |         |              |           |   |        |                       |  |   |         |         |  |   |         |        
|                                      | North America  |              | $       | 80,495       |           |   | $      | 18,814                |  |   | $       | 120,703 |  |   | $       | 112,879 | 
|                                      | United Kingdom |              |         | 28,299       |           |   |        | 6,696                 |  |   |         | 17,446  |  |   |         | 13,143  | 
|                                      | Others         |              |         | 8,371        |           |   |        | 1,724                 |  |   |         | 8,237   |  |   |         | 16,147  | 
|                                      |                |              |         |              |           |   |        |                       |  |   |         |        
|Total consolidated revenue            |                | $            | 117,165 |              |           | $ | 27,234 |                       |  | $ | 146,386 |         |  | $ | 142,169 |        
|                                      |                |              |         |              |           |   |        |                       |  |   |         |        

|                                     |               |               |        |        |               |   |        |               |  |   |           |        |  |   |        |        | 
|------------------------------------ | ------------- | ------------- | ------ | ------ | ------------- | - | ------ | ------------- |  | - | --------- | ------ |  | - | ------ | ------ | 
|                                     |               | December 31,  |        |        | March 31,     |   |        | March 31,     |  |   | March 31, |       
|                                     |               | 2002          |        |        | 2003          |   |        | 2004          |  |   | 2005      |       
|                                     |               |               |        |        |               |   |        |               |  |   |           |       
|                                     |               | (As restated) |        |        | (As restated) |   |        | (As restated) |  |   |          
|Long-lived assets:                   |               |               |        |        |               |   |        |               |  |   |           |        |  |   |        |       
|                                     | North America |               | $      | 17,461 |               |   | $      | 38,332        |  |   | $         | 33,980 |  |   | $      | 30,286 | 
|                                     | Others        |               |        | 1,331  |               |   |        | 1,076         |  |   |           | 702    |  |   |        | 469    | 
|                                     |               |               |        |        |               |   |        |               |  |   |           |       
|Total consolidated long-lived assets |               | $             | 18,792 |        |               | $ | 39,408 |               |  | $ | 34,682    |        |  | $ | 30,755 |       
|                                     |               |               |        |        |               |   |        |               |  |   |           |       

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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |             
|--- | ------------
|13. | Income Taxes



|          |                   |              |        |              |           |   |     |             |  |   |      |     |  |   |     |      |  
|--------- | ----------------- | ------------ | ------ | ------------ | --------- | - | --- | ----------- |  | - | ---- | --- |  | - | --- | ---- | -
|          |                   |              |        | Three Months |           |   |    
|          |                   | Year Ended   |        |              | Ended     |   |     | Years Ended | 
|          |                   | December 31, |        |              | March 31, |   |     | March 31,   | 
|          |                   |              |        |              |           |   |     |             | 
|          |                   | 2002         |        |              | 2003      |   |     | 2004        |  |   | 2005 |    
|          |                   |              |        |              |           |   |     |             |  |   |      |    
|Current:  |                   |              |        |              |           |   |     |             |  |   |      |     |  |   |     |     
|          | Federal           |              | $      | (4,799       | )         |   | $   |            |  |   | $    |    |  |   | $   | (249 | )
|          | State and foreign |              |        | 855          |           |   |     | 277         |  |   |      | 623 |  |   |     | 361  |  
|          |                   |              |        |              |           |   |     |             |  |   |      |    
|          |                   |              | (3,944 | )            |           |   | 277 |             |  |   | 623  |     |  |   | 112 |     
|          |                   |              |        |              |           |   |     |             |  |   |      |    
|Deferred: |                   |              |        |              |           |   |     |             |  |   |      |     |  |   |     |     
|          | Federal           |              |        |             |           |   |     |            |  |   |      |    |  |   |     |     |  
|          | State and foreign |              |        |             |           |   |     |            |  |   |      |    |  |   |     |     |  
|          |                   |              |        |              |           |   |     |             |  |   |      |    
|          |                   |              |       |              |           |   |    |             |  |   |     |     |  |   |    |     
|          |                   |              |        |              |           |   |     |             |  |   |      |    
|          |                   | $            | (3,944 | )            |           | $ | 277 |             |  | $ | 623  |     |  | $ | 112 |     
|          |                   |              |        |              |           |   |     |             |  |   |      |    



|                                            |                |                              |         |              |               |   |         |               |       |   |         |   |        |   |        |   |        |  
|------------------------------------------- | -------------- | ---------------------------- | ------- | ------------ | ------------- | - | ------- | ------------- | ----- | - | ------- | - | ------ | - | ------ | - | ------ | -
|                                            |                |                              |         | Three Months |               |   |        
|                                            |                | Year Ended                   |         |              | Ended         |   |         | Years Ended   |      
|                                            |                | December 31,                 |         |              | March 31,     |   |         | March 31,     |      
|                                            |                |                              |         |              |               |   |         |               |      
|                                            |                | 2002                         |         |              | 2003          |   |         | 2004          |       |   | 2005    |  
|                                            |                |                              |         |              |               |   |         |               |       |   |         |  
|                                            |                | (As restated)                |         |              | (As restated) |   |         | (As restated) |       |   |        
|Loss before income taxes
    United States  |                | $                            | (38,992 | )            |               | $ | (10,965 | )             |       | $ | (8,691  | ) |        | $ | (4,960 | )
|                                            | International: |                              |         |              |               |   |         |               |       |   |         |   |        |   |        |   |       
|                                            |                | Europe, Middle East & Africa |         |              | 1,311         |   |         |               | 1,491 |   |         |   | (2,021 | ) |        |   | (15    | )
|                                            |                | Asia                         |         |              | (97           | ) |         |               | 27    |   |         |   | (1,157 | ) |        |   | (2,306 | )
|                                            |                | Canada                       |         |              | 621           |   |         |               | 132   |   |         |   | (656   | ) |        |   | 473    |  
|                                            |                | Australia                    |         |              | (564          | ) |         |               | (87   | ) |         |   | 1,187  |   |        |   | 855    |  
|                                            |                |                              |         |              |               |   |         |               |       |   |         |  
|Total consolidated loss before income taxes |                | $                            | (37,721 | )            |               | $ | (9,402  | )             |       | $ | (11,338 | ) |        | $ | (5,953 | )
|                                            |                |                              |         |              |               |   |         |               |       |   |         |  



|                                              |  |              |       |              |           |  |       |             |  |  |       |    |  |  |       |   
|--------------------------------------------- |  | ------------ | ----- | ------------ | --------- |  | ----- | ----------- |  |  | ----- | -- |  |  | ----- | --
|                                              |  |              |       | Three Months |           |  |      
|                                              |  | Year Ended   |       |              | Ended     |  |       | Years Ended | 
|                                              |  | December 31, |       |              | March 31, |  |       | March 31,   | 
|                                              |  |              |       |              |           |  |       |             | 
|                                              |  | 2002         |       |              | 2003      |  |       | 2004        |  |  | 2005  |   
|                                              |  |              |       |              |           |  |       |             |  |  |       |   
|Federal statutory rate                        |  |              | 35.0  | %            |           |  | 35.0  | %           |  |  | 34.0  | %  |  |  | 34.0  | % 
|State taxes, net of federal benefit           |  |              |      |              |           |  |      |             |  |  |      |    |  |  | 3.6   |   
|Foreign taxes                                 |  |              | 1.1   |              |           |  | 2.7   |             |  |  | (5.5  | )  |  |  | (1.5  | ) 
|Reported losses and tax credits not benefited |  |              | (31.0 | )            |           |  | (44.2 | )           |  |  | (26.2 | )  |  |  | (43.0 | ) 
|Other                                         |  |              | 5.4   |              |           |  | 3.6   |             |  |  | (7.8  | )  |  |  | 5.0   |   
|                                              |  |              |       |              |           |  |       |             |  |  |       |   
|                                              |  |              | 10.5  | %            |           |  | (2.9  | )%          |  |  | (5.5  | )% |  |  | (1.9  | )%
|                                              |  |              |       |              |           |  |       |             |  |  |       |   

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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                        |  |           |         |   |      |   |         |  
|--------------------------------------- |  | --------- | ------- | - | ---- | - | ------- | -
|                                        |  | March 31, |        
|                                        |  |           |        
|                                        |  | 2004      |         |   | 2005 |  
|                                        |  |           |         |   |      |  
|Accounts receivable allowances          |  | $         | 2,625   |   |      | $ | 4,805   |  
|Depreciation and amortization           |  |           | (4,017  | ) |      |   | (2,597  | )
|Other (prepaid license writedown)       |  |           | 2,630   |   |      |   | 2,114   |  
|Nondeductible accruals                  |  |           | 2,879   |   |      |   | 2,876   |  
|Deferred revenue                        |  |           | 2,747   |   |      |   | 959     |  
|Net operating loss carryforwards        |  |           | 25,848  |   |      |   | 26,939  |  
|Research and other credit carryforwards |  |           | 10,442  |   |      |   | 10,442  |  
|Foreign tax credits and losses          |  |           | 4,864   |   |      |   | 5,562   |  
|                                        |  |           |         |   |      |  
|                                        |  |           | 48,018  |   |      |   | 51,100  |  
|Valuation allowance                     |  |           | (48,018 | ) |      |   | (51,100 | )
|                                        |  |           |         |   |      |  
|                                        |  | $         |        |   |      | $ |        |  
|                                        |  |           |         |   |      |  









|    |           
|--- | ----------
|14. | Litigation





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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |             
|--- | ------------
|15. | Acquisitions



| |     
| | ----
| | IUS:







|                                                                       |                                              |  |     |       |  |   |        |        | 
|---------------------------------------------------------------------- | -------------------------------------------- |  | --- | ----- |  | - | ------ | ------ | 
|Current assets                                                         |                                              |  |     |       |  | $ | 15,820 |       
|Property and equipment                                                 |                                              |  |     |       |  |   | 22,197 |       
|Other assets                                                           |                                              |  |     |       |  |   | 75     |       
|Intangible assets subject to amortization
    Trademarks (5 year life) |                                              |  | 730 |       |  |   |        |       
|                                                                       | Technology (5 year life)                     |  |     | 2,400 |  |   |        |        | 
|                                                                       | Contracts and Customer Base (2-15 year life) |  |     | 9,810 |  |   |        |        | 
|                                                                       |                                              |  |     |       |  |  
|                                                                       | Total intangible assets                      |  |     |       |  |   |        | 12,940 | 
|Goodwill                                                               |                                              |  |     |       |  |   | 430    |       
|                                                                       |                                              |  |     |       |  |  
|Total assets acquired                                                  |                                              |  |     |       |  |   | 51,462 |       
|Total liabilities assumed                                              |                                              |  |     |       |  |   | 15,697 |       
|                                                                       |                                              |  |     |       |  |  
|Net assets acquired                                                    |                                              |  |     |       |  | $ | 35,765 |       
|                                                                       |                                              |  |     |       |  |  



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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                |  |               |         |   |              |   |         |  
|------------------------------- |  | ------------- | ------- | - | ------------ | - | ------- | -
|                                |  | Twelve Months |         |   | Three Months |  
|                                |  | Ended         |         |   | Ended        |  
|                                |  | December 31,  |         |   | March 31,    |  
|                                |  | 2002          |         |   | 2003         |  
|                                |  |               |         |   |              |  
|Revenues                        |  | $             | 186,796 |   |              | $ | 35,656  |  
|Pro forma net loss(1)           |  |               | (31,978 | ) |              |   | (10,880 | )
|Pro forma net loss per share(1) |  |               | (0.76   | ) |              |   | (0.26   | )






|    |                        
|--- | -----------------------
|(1) | As restated, see Note 2





| |          
| | ---------
| | Wishbone:



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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                                |                         |  |       |     |  |   |       |       | 
|------------------------------------------------------------------------------- | ----------------------- |  | ----- | --- |  | - | ----- | ----- | 
|Current assets                                                                  |                         |  |       |     |  | $ | 628   |      
|Property and equipment                                                          |                         |  |       |     |  |   | 5     |      
|Other assets                                                                    |                         |  |       |     |  |   | 13    |      
|Intangible assets subject to amortization
    Customer Relationships (10 years) |                         |  | 1,040 |     |  |   |       |      
|                                                                                | Software (5 years)      |  |       | 640 |  |   |       |       | 
|                                                                                | Contracts (2 years)     |  |       | 90  |  |   |       |       | 
|                                                                                |                         |  |       |     |  |  
|                                                                                | Total intangible assets |  |       |     |  |   |       | 1,770 | 
|Goodwill                                                                        |                         |  |       |     |  |   | 6,584 |      
|                                                                                |                         |  |       |     |  |  
|Total assets acquired                                                           |                         |  |       |     |  |   | 9,000 |      
|Total liabilities assumed                                                       |                         |  |       |     |  |   | 412   |      
|                                                                                |                         |  |       |     |  |  
|Net assets acquired                                                             |                         |  |       |     |  | $ | 8,588 |      
|                                                                                |                         |  |       |     |  |  





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INDUS INTERNATIONALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                
|--- | -------------------------------
|16. | Quarterly Results of Operations



|                             |            |                                       |        |       |                    |   |        |                   |   |   |                |       |   |            |        |       |          |   |        |            |   |   |          |       |   |   |        |      |  |   |        |      | 
|---------------------------- | ---------- | ------------------------------------- | ------ | ----- | ------------------ | - | ------ | ----------------- | - | - | -------------- | ----- | - | ---------- | ------ | ----- | -------- | - | ------ | ---------- | - | - | -------- | ----- | - | - | ------ | ---- |  | - | ------ | ---- | 
|                             |            | Three Months Ended                    |       
|                             |            |                                       |       
|                             |            | June 30, 2003                         |        |       | September 30, 2003 |   |        | December 31, 2003 |   |   | March 31, 2004 |      
|                             |            |                                       |        |       |                    |   |        |                   |   |   |                |      
|                             |            | As                                    |        |       |                    |   | As     |                   |   |   |                | As    |   |            |        |       | As       |   |        |           
|                             |            | Previously                            |        |       | As                 |   |        | Previously        |   |   | As             |       |   | Previously |        |       | As       |   |        | Previously |   |   | As       |      
|                             |            | Reported                              |        |       | Restated           |   |        | Reported          |   |   | Restated       |       |   | Reported   |        |       | Restated |   |        | Reported   |   |   | Restated |      
|                             |            | (In thousands, except per share data) |       
|Total revenues               |            | $                                     | 38,225 |       |                    | $ | 38,225 |                   |   | $ | 34,005         |       |   | $          | 34,005 |       |          | $ | 34,357 |            |   | $ | 34,357   |       |   | $ | 39,799 |      |  | $ | 39,799 |     
|Cost of revenues             |            |                                       | 18,091 |       |                    |   | 18,082 |                   |   |   | 15,486         |       |   |            | 15,479 |       |          |   | 16,012 |            |   |   | 16,004   |       |   |   | 18,050 |      |  |   | 18,041 |     
|                             |            |                                       |        |       |                    |   |        |                   |   |   |                |       |   |            |        |       |          |   |        |            |   |   |          |      
|Gross margin                 |            |                                       | 20,134 |       |                    |   | 20,143 |                   |   |   | 18,519         |       |   |            | 18,526 |       |          |   | 18,345 |            |   |   | 18,353   |       |   |   | 21,749 |      |  |   | 21,758 |     
|Operating expenses           |            |                                       | 24,353 |       |                    |   | 24,341 |                   |   |   | 22,679         |       |   |            | 22,668 |       |          |   | 21,416 |            |   |   | 21,407   |       |   |   | 21,115 |      |  |   | 21,104 |     
|Restructuring expenses       |            |                                       | 12     |       |                    |   | 12     |                   |   |   | 11             |       |   |            | 11     |       |          |   | 11     |            |   |   | 11       |       |   |   | 10     |      |  |   | 10     |     
|Net income (loss)            |            | $                                     | (4,924 | )     |                    | $ | (4,903 | )                 |   | $ | (4,563         | )     |   | $          | (4,544 | )     |          | $ | (3,202 | )          |   | $ | (3,184   | )     |   | $ | 651    |      |  | $ | 670    |     
|                             |            |                                       |        |       |                    |   |        |                   |   |   |                |       |   |            |        |       |          |   |        |            |   |   |          |      
|Net income (loss) per share: |            |                                       |        |       |                    |   |        |                   |   |   |                |       |   |            |        |       |          |   |        |            |   |   |          |       |   |   |        |      |  |   |        |     
|                             | Basic(1)   |                                       | $      | (0.12 | )                  |   | $      | (0.12             | ) |   | $              | (0.09 | ) |            | $      | (0.09 | )        |   | $      | (0.06      | ) |   | $        | (0.06 | ) |   | $      | 0.01 |  |   | $      | 0.01 | 
|                             | Diluted(1) |                                       | $      | (0.12 | )                  |   | $      | (0.12             | ) |   | $              | (0.09 | ) |            | $      | (0.09 | )        |   | $      | (0.06      | ) |   | $        | (0.06 | ) |   | $      | 0.01 |  |   | $      | 0.01 | 

|                             |            |                                       |        |       |                    |   |        |                   |   |   |          |       |   |            |        |       |           |   |        |      |  |   |        |      |  |   |        |      | 
|---------------------------- | ---------- | ------------------------------------- | ------ | ----- | ------------------ | - | ------ | ----------------- | - | - | -------- | ----- | - | ---------- | ------ | ----- | --------- | - | ------ | ---- |  | - | ------ | ---- |  | - | ------ | ---- | 
|                             |            | Three Months Ended                    |       
|                             |            |                                       |       
|                             |            | June 30, 2004                         |        |       | September 30, 2004 |   |        | December 31, 2004 |   |   |         
|                             |            |                                       |        |       |                    |   |        |                   |   |   |         
|                             |            | As                                    |        |       |                    |   | As     |                   |   |   |          | As    |   |            |        |       | March 31, |  
|                             |            | Previously                            |        |       | As                 |   |        | Previously        |   |   | As       |       |   | Previously |        |       | As        |   |        | 2005 | 
|                             |            | Reported                              |        |       | Restated           |   |        | Reported          |   |   | Restated |       |   | Reported   |        |       | Restated  |   |        |      | 
|                             |            | (In thousands, except per share data) |       
|Total revenues               |            | $                                     | 38,552 |       |                    | $ | 38,552 |                   |   | $ | 32,566   |       |   | $          | 32,566 |       |           | $ | 33,671 |      |  | $ | 33,671 |      |  | $ | 37,380 |     
|Cost of revenues             |            |                                       | 17,658 |       |                    |   | 17,631 |                   |   |   | 14,419   |       |   |            | 14,395 |       |           |   | 13,945 |      |  |   | 13,922 |      |  |   | 13,759 |     
|                             |            |                                       |        |       |                    |   |        |                   |   |   |          |       |   |            |        |       |           |   |        |      | 
|Gross margin                 |            |                                       | 20,894 |       |                    |   | 20,921 |                   |   |   | 18,147   |       |   |            | 18,171 |       |           |   | 19,726 |      |  |   | 19,749 |      |  |   | 23,621 |     
|Operating expenses           |            |                                       | 20,345 |       |                    |   | 20,308 |                   |   |   | 18,083   |       |   |            | 18,051 |       |           |   | 18,411 |      |  |   | 18,379 |      |  |   | 20,962 |     
|Restructuring expenses       |            |                                       | 10,458 |       |                    |   | 9,601  |                   |   |   | 1,937    |       |   |            | 1,937  |       |           |   | (991   | )    |  |   | (991   | )    |  |   | (117   | )   
|Net income (loss)            |            | $                                     | (9,929 | )     |                    | $ | (9,008 | )                 |   | $ | (2,187   | )     |   | $          | (2,131 | )     |           | $ | 2,506  |      |  | $ | 2,562  |      |  | $ | 2,512  |     
|                             |            |                                       |        |       |                    |   |        |                   |   |   |          |       |   |            |        |       |           |   |        |      | 
|Net income (loss) per share: |            |                                       |        |       |                    |   |        |                   |   |   |          |       |   |            |        |       |           |   |        |      |  |   |        |      |  |   |        |     
|                             | Basic(1)   |                                       | $      | (0.17 | )                  |   | $      | (0.16             | ) |   | $        | (0.04 | ) |            | $      | (0.04 | )         |   | $      | 0.04 |  |   | $      | 0.04 |  |   | $      | 0.04 | 
|                             | Diluted(1) |                                       | $      | (0.17 | )                  |   | $      | (0.16             | ) |   | $        | (0.04 | ) |            | $      | (0.04 | )         |   | $      | 0.04 |  |   | $      | 0.04 |  |   | $      | 0.04 | 






|    |                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Because of the method used in calculating per share data, the
    quarterly net income (loss) per share amounts may not
    necessarily sum to the net loss per share computed for the year.

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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures



Evaluation of Disclosure Controls and Procedures.




Managements Annual Report on Internal Control Over
Financial Reporting.








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79



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Report of Independent Registered Public Accounting Firm on
Internal Control over Financial Reporting















80



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| |                      
| | ---------------------
| | /s/ Ernst & Young LLP




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Remediation of Material Weakness in Internal Control.




Changes in Internal Control Over Financial Reporting.




Inherent Limitations on Effectiveness of Controls.









|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III









|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



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www.indus.com







|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services









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PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

Financial Statements




Financial Statement Schedules




Exhibits




|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- | -- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 2  | .1          |  | Purchase Agreement, dated as of February 12, 2003, by and
    among the Registrant, SCT Utility Systems, Inc., SCT, SCT
    Financial Corporation, SCT Property, Inc., SCT International
    Limited, SCT Technologies (Canada) Inc., SCT Software &
    Resource Management Corporation and Systems & Computer
    Technology International B.V. (incorporated by reference to
    Exhibit 10.1 to the Form 8-K filed on
    February 14, 2003)           
|        | 2  | .2          |  | Amendment No. 1 to Purchase Agreement, dated as of
    March 5, 2003, by and among the Registrant, SCT Utility
    Systems, Inc., SCT, SCT Financial Corporation, SCT Property,
    Inc., SCT International Limited, SCT Technologies (Canada) Inc.,
    SCT Software & Resource Management Corporation and
    Systems & Computer Technology International B.V.
    (incorporated by reference to Exhibit 10.3 to the
    Form 8-K filed on March 6, 2003)
|        | 3  | .1          |  | Registrants Amended and Restated Certificate of
    Incorporation (incorporated by reference to Exhibit 3.1 of
    the Form 8-K filed on January 26, 2005)                                                                                                                                                                                                                                                                                                
|        | 3  | .2          |  | Registrants Amended and Restated Bylaws (incorporated by
    reference to Exhibit 3.2 to the Annual Report on
    Form 10-K/ A filed on June 30, 2003)                                                                                                                                                                                                                                                                                                    
|        | 4  | .1          |  | Registration Rights Agreement for Shares, dated as of
    February 12, 2003, by and among the Registrant and each of
    the Purchasers of the Shares, as listed on the Schedule of
    Purchasers accompanying the Purchase Agreement (incorporated by
    reference to Exhibit 10.3 to the Form 8-K filed on
    February 14, 2003)                                                                                                                      
|        | 4  | .2          |  | Registration Rights Agreement for Conversion Shares, dated as of
    February 12, 2003, by and among the Registrant and each of
    the Purchasers of the Notes, as listed on the Schedule of
    Purchasers accompanying the Purchase Agreement (incorporated by
    reference to Exhibit 10.4 to the Form 8-K filed on
    February 14, 2003)                                                                                                            
|        | 4  | .3          |  | Registration Rights Agreement dated as of February 6, 2004
    by and among the Registrant and each of the Purchasers of the
    Shares, as listed on the Schedule of Purchasers accompanying the
    Purchase Agreement (incorporated by reference to
    Exhibit 10.2 to the Form 8-K filed on
    February 10, 2004)                                                                                                                                    
|        | 4  | .4          |  | Securities Purchase Agreement, dated as of August 19, 2004,
    by and among Warburg, Pincus Investors, L.P., Warburg, Pincus
    Investors Liquidating Trust, Registrant and each of the
    Purchasers listed on the schedule attached as Schedule A to
    the Securities Purchase Agreement. (incorporated by reference to
    Exhibit 10 to the Form 8-K filed on August 20,
    2004)                                                                
|        | 4  | .5          |  | Stockholder Protection Rights Agreement, dated January 25,
    2005, between Registrant and Mellon Investors Services LLC, as
    Rights Agent (incorporated by reference to Exhibit 99.1 of
    the Form 8-K filed on January 26, 2005)                                                                                                                                                                                                                   
|        | 10 | .1*         |  | Indus International, Inc. 1997 Stock Plan (incorporated by
    reference to Exhibit 10.1 to the Registration Statement on
    Form S-4 (No. 333-33113) filed on August 7, 1997)                                                                                                                                                                                                                                                                            
|        | 10 | .2*         |  | Amendment No. 1 to the Indus International, Inc. 1997 Stock
    Plan (incorporated by reference to Exhibit 99.1 to the
    Registration Statement on Form S-8 filed with the
    Commission on July 5, 2001)                                                                                                                                                                                                                                               

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|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                     
|------- | -- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 10 | .3*         |  | Amendment No. 2 to the Indus International, Inc. 1997 Stock
    Plan (incorporated by reference to Exhibit 99.2 to the
    Registration Statement on Form S-8 filed with the
    Commission on July 5, 2001)                                                                                                                                        
|        | 10 | .4*         |  | Amendment No. 3 to the Indus International, Inc. 1997 Stock
    Plan (incorporated by reference to Exhibit 99.3 to the
    Registration Statement on Form S-8 filed with the
    Commission on July 5, 2001)                                                                                                                                        
|        | 10 | .5*         |  | Indus International, Inc. Amended and Restated
    1997 Director Option Plan (incorporated by reference to
    Exhibit 99.2 to the Form 8-K filed with the Commission
    on October 29, 2004)                                                                                                                                                      
|        | 10 | .6*         |  | Indus International, Inc. 2004 Long-Term Incentive Plan
    (incorporated by reference to Exhibit 99.1 to the
    Form 8-K filed with the Commission on October 29, 2004)                                                                                                                                                                           
|        | 10 | .7*         |  | Form of Award Certificate for Stock Option under the Indus
    International, Inc. 2004 Long-Term Incentive Plan (incorporated
    by reference to Exhibit 10.3 to the Registrants
    Quarterly Report on Form 10-Q for the fiscal quarter ended
    December 31, 2004)                                                                           
|        | 10 | .8*         |  | Form of Award Certificate for Restricted Stock under the Indus
    International, Inc. 2004 Long-Term Incentive Plan (incorporated
    by reference to Exhibit 10.4 to the Registrants
    Quarterly Report on Form 10-Q for the fiscal quarter ended
    December 31, 2004)                                                                       
|        | 10 | .9*         |  | Rules of the Indus International, Inc. Company Share Option Plan
    (the UK Option Plan) (incorporated by reference to
    Exhibit 10.7 of the Registrants Annual Report on
    Form 10-K for the fiscal year ended December 31, 2001)                                                                                                           
|        | 10 | .10*        |  | 2003 Employee Stock Purchase Plan (incorporated by reference to
    Appendix A of the Registrants Proxy Statement filed
    on July 1, 2003)                                                                                                                                                                                                       
|        | 10 | .11*        |  | Form of Indus International, Inc. Fiscal 2006 Incentive
    Compensation Plan (incorporated by reference to
    Exhibit 99.1 of Form 8-K filed on May 10, 2005)                                                                                                                                                                                     
|        | 10 | .12         |  | Amended and Restated Lease Agreement for the Registrants
    Atlanta, Georgia corporate headquarters by and between Cousins
    Properties Incorporated and the Registrant dated August 1,
    2000 (incorporated by reference to Exhibit 10.12 to the
    Registrants Annual Report on Form 10-K for the fiscal
    year ended December 31, 2000)
|        | 10 | .13         |  | Office Lease Agreement for the Registrants
    San Francisco, California regional office by and between
    EOP  60 Spear, L.L.C. and the Registrant dated
    March 3, 2000, as amended (incorporated by reference to
    Exhibit 10.8 to the Registrants Annual Report on
    Form 10-K for the fiscal year ended December 31, 2000)           
|        | 10 | .14*        |  | Employment Agreement dated September 16, 2002 by and
    between the Registrant and Gregory J. Dukat (incorporated by
    reference to Exhibit 10.2 to the Registrants
    Quarterly Report on Form 10-Q for the fiscal quarter ended
    June 30, 2002)                                                                                           
|        | 10 | .15*        |  | Change of Control Severance Agreement dated September 16,
    2002 by and between the Registrant and Gregory J. Dukat
    (incorporated by reference to Exhibit 10.3 to the
    Registrants Quarterly Report on Form 10-Q for the
    fiscal quarter ended June 30, 2002)                                                                          
|        | 10 | .16*        |  | Employment Agreement dated as of May 6, 2004 by and between
    the Registrant and Thomas W. Williams (incorporated by reference
    to Exhibit 10.15 to the Registrants Annual Report on
    Form 10-K for the fiscal year ended March 31, 2004)                                                                                                  
|        | 10 | .17*        |  | Employment Agreement dated as of February 19, 2003 by and
    between the Registrant and John D. Gregg (incorporated by
    reference to Exhibit 10.16 to the Registrants Annual
    Report on Form 10-K for the fiscal year ended
    March 31, 2004)                                                                                             
|        | 10 | .18*        |  | Employment Agreement dated as of January 28, 2005 by and
    between the Registrant and Joseph T. Trino (incorporated by
    reference to Exhibit 10.5 to the Registrants
    Quarterly Report on Form 10-Q for the fiscal quarter ended
    December 31, 2004)                                                                                    
|        | 10 | .19*        |  | Separation and Release Agreement dated September 30, 2004
    by and between the Registrant and Thomas R. Madison, Jr.
    (incorporated by reference to Exhibit 99.1 to the
    Registrants Form 8-K filed on October 6, 2004)                                                                                                                    
|        | 10 | .20         |  | Purchase Agreement, dated as of February 12, 2003, by and
    among the Registrant and each of the Purchasers listed on the
    Schedule of Purchasers accompanying the Purchase Agreement
    (incorporated by reference to Exhibit 10.2 to the
    Form  8-K filed on February 14, 2003)                                                          

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|        |    |             |  |                                                                                                                                                                                                                                                                                          
|------- | -- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 10 | .21         |  | Purchase Agreement, dated as of February 6, 2004, by and
    among the Registrant and each of the Purchasers listed on the
    Schedule of Purchasers accompanying the Purchase Agreement
    (incorporated by reference to Exhibit 10.1 to the
    Form  8-K filed on February 10, 2004)
|        | 10 | .22         |  | Promissory Note dated September 4, 2003 by Indus Utility
    Systems, Inc. to New Small Research, LLC (incorporated by
    reference to Exhibit 10.1 to the Registrants
    Quarterly Report on Form 10-Q filed on November 10,
    2003)                                               
|        | 10 | .23         |  | Loan Agreement dated September 4, 2003 by and between Indus
    Utility Systems, Inc. and New Small Research, LLC (incorporated
    by reference to Exhibit 10.2 to the Registrants
    Quarterly Report on Form 10-Q filed on November 10,
    2003)                                   
|        | 10 | .24         |  | Recourse Carve-Out Guaranty dated September 4, 2003 by and
    between the Registrant and New Small Research, LLC (incorporated
    by reference to Exhibit 10.3 to the Registrants
    Quarterly Report on Form 10-Q filed on November 10,
    2003)                                   
|        | 21 | .1          |  | Subsidiaries of Registrant                                                                                                                                                                                                                                                               
|        | 23 | .1          |  | Consent of Ernst & Young LLP, Independent Registered
    Public Accounting Firm                                                                                                                                                                                                          
|        | 24 | .1          |  | Power of Attorney, included on the signature page of this report                                                                                                                                                                                                                         
|        | 31 | .1          |  | Certification of Chief Executive Officer of the Registrant,
    pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                             
|        | 31 | .2          |  | Certification of Chief Financial Officer of the Registrant,
    pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                             
|        | 32 | .1          |  | Statement of the Chief Executive Officer of the Registrant,
    pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                             
|        | 32 | .2          |  | Statement of the Chief Financial Officer of the Registrant,
    pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                             






|  |                                                                       
|- | ----------------------------------------------------------------------
|* | Designates management contract or compensatory plan or
    arrangement



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SIGNATURES






| |                          
| | -------------------------
| | Indus International, Inc.



| |     |                     
| | --- | --------------------
| | By: | /s/ Gregory J. Dukat

| |                                      
| | -------------------------------------
| |                                      
| | Gregory J. Dukat                     
| | President and Chief Executive Officer







|                                                     |  |                                                                                                       |  |               |  | 
|---------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------- |  | ------------- |  | 
|Signature                                            |  | Title                                                                                                 |  | Date         
|                                                     |  |                                                                                                       |  |              
|                                                    
|/s/ Gregory J. DukatGregory
    J. Dukat             |  | President and Chief Executive Officer (Principal Executive
    Officer), Director                     |  | June 10, 2005
|                                                    
|/s/ Thomas W. WilliamsThomas
    W. Williams         |  | Executive Vice President and Chief Financial Officer (Principal
    Financial and Accounting Officer) |  | June 10, 2005
|                                                    
|/s/ Allen R. FreedmanAllen
    R. Freedman           |  | Chairman of the Board, Director                                                                       |  | June 10, 2005
|                                                    
|/s/ Richard C. CookRichard
    C. Cook               |  | Director                                                                                              |  | June 10, 2005
|                                                    
|/s/ Eric HaskellEric
    Haskell                     |  | Director                                                                                              |  | June 10, 2005
|                                                    
|/s/ Thomas R. Madison, Jr.Thomas
    R. Madison, Jr. |  | Director                                                                                              |  | June 10, 2005
|                                                    
|/s/ Douglas S. MassingillDouglas
    S. Massingill   |  | Director                                                                                              |  | June 10, 2005
|                                                    
|/s/ Frederick J. SchwabFrederick
    J. Schwab       |  | Director                                                                                              |  | June 10, 2005

87