UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended MARCH 31, 2005
                               --------------
                                       or
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR the transition period from ___________________ to _______________________

Commission file number:  0-20824
                         ------------------------------------------------------

                               INFOCROSSING, INC.
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                       DELAWARE                      13-3252333
          -------------------------------        --------------------
          (State or other jurisdiction of           (IRS Employer
           incorporation or organization)         Identification No.)

           2 CHRISTIE HEIGHTS STREET; LEONIA, NJ            07605
           ---------------------------------------------------------
           (Address of principal executive offices)       (Zip Code)

       Registrant's telephone number, including area code: (201) 840-4700

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

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

There were 20,249,983 shares of the registrant's Common Stock, $0.01 par value,
outstanding as of May 3, 2005.




                                     Page 1
<PAGE>


PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                  INFOCROSSING, INC. AND SUBSIDIARIES
                                                      CONSOLIDATED BALANCE SHEETS
                                                  (IN THOUSANDS EXCEPT SHARE AMOUNTS)

                                                                                        MARCH 31,        DECEMBER 31,
                                      ASSETS                                              2005               2004
                                                                                    ---------------    ---------------
                                                                                       (UNAUDITED)
<S>                                                                                 <C>                <C>
CURRENT ASSETS:
  Cash and equivalents                                                              $      35,257      $      26,311
  Trade accounts receivable, net of allowances for doubtful accounts of
       $142 and $249 at March 31, 2005 and December 31, 2004, respectively                 26,009             26,707
  Due from related parties                                                                    241                238
  Prepaid license fees                                                                      1,711              1,585
  Deferred income taxes                                                                     1,260              1,260
  Other current assets                                                                      5,613              4,650
                                                                                       ------------       ------------
    Total current assets                                                                   70,091             60,751

  Property, equipment and purchased software, net                                          27,002             25,113
  Deferred software, net                                                                    1,153              1,077
  Goodwill                                                                                103,976            103,177
  Other intangible assets, net                                                             11,898             12,328
  Deferred income taxes                                                                    10,861             11,715
  Security deposits and other non-current assets                                            2,425              2,489
                                                                                       ------------       ------------
TOTAL ASSETS                                                                        $     227,406      $     216,650
                                                                                       ============       ============

                       LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable                                                                    $       9,258      $       9,041
Current portion of long-term debt and capitalized lease obligations                         4,358              3,683
Current portion of accrued loss on leased facilities                                          203                217
Accrued expenses                                                                            7,740              8,056
Income taxes payable                                                                           89                305
Deferred revenue                                                                            1,314              1,267
                                                                                       ------------       ------------
    Total current liabilities                                                              22,962             22,569

Notes payable, long-term debt and capitalized lease obligations,
     net of current portion                                                               101,857            100,432
Accrued loss on leased facilities, net of current portion                                     471                505
Other long-term liabilities                                                                 2,063              1,907
                                                                                       ------------       ------------
  TOTAL LIABILITIES                                                                       127,353            125,413
                                                                                       ------------       ------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Preferred stock; $0.01 par value; 3,000,000 shares authorized; none issued                  -                   -
Common stock; $0.01 par value; 50,000,000 shares authorized; shares issued of
     20,860,843 and 20,395,473 at March 31, 2005 and December 31, 2004,
     respectively                                                                             209                204
Additional paid-in capital                                                                156,652            150,278
Accumulated deficit                                                                       (53,670)           (56,107)
                                                                                       ------------       ------------
                                                                                          103,191             94,375
Less 618,969 shares at March 31, 2005 and December 31, 2004,
     of common stock held in treasury, at cost                                             (3,138)            (3,138)
                                                                                       ------------       ------------
TOTAL STOCKHOLDERS' EQUITY                                                                100,053             91,237
                                                                                       ------------       ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $     227,406      $     216,650
                                                                                       ============       ============
</TABLE>
                        See Notes to Consolidated Financial Statements.


                                     Page 2
<PAGE>



<TABLE>
<CAPTION>
                                         INFOCROSSING, INC. AND SUBSIDIARIES
                                        CONSOLIDATED STATEMENTS OF OPERATIONS
                                           (UNAUDITED, IN THOUSANDS EXCEPT
                                        NUMBERS OF SHARES AND PER SHARE AMOUNTS)

                                                                        THREE MONTHS ENDED MARCH 31,
                                                                     ------------------------------------
                                                                          2005                 2004
                                                                     ---------------       --------------

<S>                                                               <C>                   <C>
REVENUES                                                          $         37,527      $        15,176
                                                                     ---------------       --------------
COSTS and EXPENSES:
   Costs of revenues                                                        25,847               10,223
   Selling and promotion costs                                                 958                  736
   General and administrative expenses                                       2,579                1,366
   Depreciation and amortization                                             2,620                1,604
                                                                     ---------------       --------------
                                                                            32,004               13,929
                                                                     ---------------       --------------
INCOME FROM OPERATIONS                                                       5,523                1,247
                                                                     ---------------       --------------
Interest income                                                               (126)                 (38)
Interest expense                                                             1,591                  703
                                                                     ---------------       --------------
                                                                             1,465                  665
                                                                     ---------------       --------------
INCOME BEFORE INCOME TAXES                                                   4,058                  582

Income tax (benefit) expense                                                 1,621                 (193)
                                                                     ---------------       --------------

NET INCOME                                                        $          2,437      $           775
                                                                     ===============       ==============

BASIC INCOME PER SHARE:
   Net income                                                     $           0.12      $          0.05
                                                                     ===============       ==============
   Weighted average number of common shares outstanding                 20,086,501           15,192,584
                                                                     ===============       ==============
DILUTED INCOME PER SHARE:
   Net income                                                     $           0.11      $          0.05
                                                                     ===============       ==============
   Weighted average number of common shares and
       share equivalents outstanding                                    27,338,434           17,145,750
                                                                     ===============       ==============
</TABLE>

                        See Notes to Consolidated Financial Statements.


                                     Page 3
<PAGE>






<TABLE>
<CAPTION>
                                                   INFOCROSSING, INC. AND SUBSIDIARIES
                                             CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                                                       (UNAUDITED, IN THOUSANDS)


                               COMMON                     ADDITIONAL          ACCUMULATED          TREASURY
                               SHARES     PAR VALUE     PAID IN CAPITAL         DEFICIT          STOCK AT COST          TOTAL
                              --------    ---------    ----------------    -----------------    --------------     ---------------
<S>                            <C>        <C>            <C>                 <C>                  <C>               <C>
Balances,
   December 31, 2004           20,395     $     204      $      150,278      $       (56,107)     $     (3,138)     $      91,237

Exercises of stock options        466             5               5,822                -                -                   5,827

Tax credit for disqualifying
     disposition of stock
     options                    -             -                     552                -                 -                    552

Net income                      -             -                   -                    2,437             -                  2,437
                              --------    ---------       -------------       --------------       -----------       ------------
Balances,
   March 31, 2005              20,861     $     209      $      156,652      $       (53,670)     $     (3,138)     $     100,053
                              ========    =========       =============       ==============       ===========       ============
</TABLE>

                        See Notes to Consolidated Financial Statements.



                                     Page 4
<PAGE>


<TABLE>
<CAPTION>
                                                  INFOCROSSING, INC. AND SUBSIDIARIES
                                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                            (IN THOUSANDS)

                                                                                              THREE MONTHS ENDED MARCH 31,
                                                                                       -------------------------------------------
                                                                                                2005                   2004
                                                                                       --------------------   --------------------
                                                                                                       (UNAUDITED)
<S>                                                                                    <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                             $            2,437     $              775
Adjustments to reconcile net income to cash provided by operating activities:
   Depreciation and amortization                                                                    2,620                  1,593
   Accretion of discounted debentures                                                                  31                  -
    Deferred income taxes                                                                           1,406                  -
    Non-employee option and warrant issued for services                                            -                          19
    Interest due on related party balances                                                             (3)                    (3)
    Decrease (increase) in:
     Trade accounts receivable                                                                        698                   (808)
     Prepaid license fees and other current assets                                                 (1,089)                  (794)
     Security deposits and other non-current assets                                                    64                   (886)
   Increase (decrease) in:
     Accounts payable                                                                                 217                    482
     Payments on accrued loss on leased facilities                                                    (35)                   (39)
     Accrued expenses                                                                                (988)                   274
     Income taxes payable                                                                            (216)                    18
     Deferred revenue and other liabilities                                                           203                    (37)
                                                                                          -----------------      -----------------
          Net cash provided by operating activities                                                 5,345                    594
                                                                                          -----------------      -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                                                                (779)                  (128)
    Disposal of property                                                                               15                  -
   Additional purchase price consideration.                                                          (127)                 -
   Increase in deferred software costs                                                               (182)                   (30)
                                                                                          -----------------      -----------------
          Net cash used in investing activities                                                    (1,073)                  (158)
                                                                                          -----------------      -----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from a private equity placement                                                    -                      28,768
   Repayment of debt and capitalized leases                                                        (1,140)                  (732)
   Exercises of stock options and warrants                                                          5,827                  1,022
                                                                                          -----------------      -----------------
          Net cash provided by (used in) financing activities                                       4,687                 29,058
                                                                                          -----------------      -----------------
          Net cash provided by continuing operations                                                8,959                 29,494

CASH FLOWS FROM DISCONTINUED OPERATIONS:
   Payments on portion of accrued loss on leased facilities relating to
     discontinued operations                                                                          (13)                   (14)
                                                                                          -----------------      -----------------
Net increase in cash and equivalents                                                                8,946                 29,480
Cash and equivalents, beginning of period                                                          26,311                 10,073
                                                                                          -----------------      -----------------
Cash and equivalents, end of the period                                                $           35,257     $           39,553
                                                                                          =================      =================
SUPPLEMENTAL CASH FLOW INFORMATION:
   Cash paid during the period for:
     Interest                                                                          $            2,367     $              675
                                                                                          =================      =================
     Income taxes                                                                      $              437     $               20
                                                                                          =================      =================
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITY:
     Equipment acquired subject to capital leases                                      $            3,209     $              417
                                                                                          =================      =================
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
     Treasury shares received in payment of a stock option exercise                    $           -          $              287
                                                                                          =================      =================
</TABLE>

                        See Notes to Consolidated Financial Statements.



                                     Page 5
<PAGE>


                       INFOCROSSING, INC. AND SUBSIDIAIRES
                        NOTES TO THE CONSOLIDATED INTERIM
                        FINANCIAL STATEMENTS (UNAUDITED)

1.  BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Infocrossing, Inc.
and its wholly owned subsidiaries (collectively, the "Company"). All significant
inter-company balances and transactions have been eliminated.

The consolidated balance sheet as of March 31, 2005, the consolidated statements
of operations and cash flows for the three months ended March 31, 2005 and 2004,
and the consolidated statement of stockholders' equity for the three months
ended March 31, 2005 have not been audited. In the opinion of management, all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial position, results of operations, and cash flows for
the periods indicated have been made. The results of operations and cash flows
for the periods ended March 31, 2005 and 2004 are not necessarily indicative of
the operating results for the full year.

Certain reclassifications have been made to the prior periods to conform to the
current presentation.

Certain disclosures normally included in financial statements prepared in
accordance with U.S. generally accepted accounting principles have been
condensed or omitted. These consolidated interim financial statements should be
read in conjunction with the Company's Annual Report on Form 10-K for the year
ended December 31, 2004, as amended.


2.  ACQUISITIONS

INFOCROSSING HEALTHCARE SERVICES, INC.

On October 1, 2004, the Company acquired the Medicaid, Medicare and Managed Care
claims processing business (the "Claims Processing Business") of Verizon
Information Technologies Inc. from Verizon Communications Inc. The sale was
structured as an acquisition of the common stock of the Claims Processing
Business. The purchase price was $43,500,000 in cash and approximately
$1,886,000 in related acquisition costs (the "IHS Acquisition"). Immediately
following the closing of the IHS Acquisition, the Claims Processing Business'
name was changed to Infocrossing Healthcare Services, Inc. ("IHS"). The
acquisition was accounted for using the purchase method of accounting and,
accordingly, the purchase price was allocated to the tangible and intangible
assets acquired and the liabilities assumed based on their respective fair
values. In connection with the allocation of the purchase price, goodwill of
$25,357,000 and an intangible asset subject to amortization in the amount of
$10,320,000, relating to contract rights and customer relationships, was
recorded. The intangible asset is being amortized over its estimated useful life
of ten years.






                                     Page 6
<PAGE>



The following table summarizes the preliminary amounts assigned to the
identifiable assets acquired and the liabilities assumed based on estimated fair
values as of the date of the IHS Acquisition with the remainder recorded as
goodwill.

                            OCTOBER 1, 2004
                             (IN THOUSANDS)

Trade accounts receivable                                  $      9,146
Other current assets                                                 57
                                                              -----------
    Total current assets                                          9,203
Property, equipment, and purchased software                       2,049
Intangible assets subject to amortization                        10,320
Goodwill                                                         25,357
                                                              -----------
    Total assets acquired                                        46,929
                                                              -----------
Accrued expenses                                                 (1,380)
Deferred revenue                                                    (72)
Other current liabilities                                           (91)
                                                              -----------
    Total current liabilities                                    (1,543)
                                                              -----------
Purchase price                                             $     45,386
                                                              ===========

Since the Company is in the process of finalizing its estimate of the fair
values of identifiable assets acquired and liabilities assumed, the allocation
of the purchase price of the IHS acquisition is subject to adjustment.

INFOCROSSING WEST, INC.

On April 2, 2004, the Company acquired all of the outstanding capital stock of
ITO Acquisition Corporation, a California corporation doing business as Systems
Management Specialists ("SMS"), from ITO Holdings, LLC for $34,909,000 in cash,
$1,224,000 in related acquisition costs and 135,892 shares of common stock of
the Company valued at approximately $1,439,000. The value of the 135,892 shares
was determined using the average market price of the Company's common stock two
days before and after March 4, 2004, when the terms of the acquisition were
determined and announced. The acquisition was accounted for using the purchase
method of accounting and, accordingly, the purchase price was allocated to the
tangible and intangible assets acquired and the liabilities assumed based on
their respective fair values. In connection with the allocation of the purchase
price, goodwill of $41,320,000 and an intangible asset subject to amortization
in the amount of $1,650,000, relating to contract rights and customer
relationships, was recorded. In connection with an acquisition by SMS prior to
April 2004, the Company may have to pay contingent consideration for a period of
up to four years. Through March 31, 2005, such contingent consideration totaled
$405,000, which has been recorded as additional goodwill.






                                     Page 7
<PAGE>


The following table summarizes the fair values of the assets acquired and the
liabilities assumed as of the date of the SMS Acquisition.

                                 APRIL 2, 2004
                                (IN THOUSANDS)

Trade accounts receivable                                  $             3,313
Other current assets                                                     1,447
                                                              ------------------
    Total current assets                                                 4,760
Property, equipment, and purchased software                              4,033
Intangible assets subject to amortization                                1,650
Other assets                                                               793
Goodwill                                                                41,320
                                                              ------------------
    Total assets acquired                                               52,556
                                                              ------------------

Accrued expenses                                                        (8,655)
Current portion of capitalized lease obligations                        (1,529)
Other current liabilities                                                  (87)
                                                              ------------------
    Total current liabilities                                          (10,271)
Long term liabilities                                                   (5,043)
                                                              ------------------
    Total liabilities assumed                                          (15,314)
                                                              ------------------
Purchase price, net of cash acquired of $330               $            37,242
                                                              ==================

As of March 31, 2005, the Company finalized its estimate of the fair value of
accrued expenses for (a) severance and (b) redundant space and equipment leases.
These adjustments are in addition to the contingent consideration discussed
above, and resulted in an increase in goodwill of $672,000.

The results of operations of the aforementioned acquisitions are included with
that of the Company for the period subsequent to the respective acquisitions.

The following unaudited condensed combined pro forma information for the quarter
ended March 31, 2004 gives effect to the IHS Acquisition and the SMS Acquisition
as if they had occurred on January 1, 2004. For the purposes of the pro forma
information, the Company has assumed that, other than the related financings, it
had sufficient cash to make the acquisitions. The pro forma information may not
be indicative of the results that actually would have occurred had the
transactions been in effect on the dates indicated, nor does it purport to
indicate the results that may be obtained in the future. The pro forma
information does not give effect to planned synergies and cost savings.

PRO FORMA INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 2004
                      (IN THOUSANDS EXCEPT PER SHARE DATA)

Revenues                                                    $       35,637
                                                               -------------
Net income                                                  $          663
                                                               -------------
Basic net earnings per share                                $         0.04
                                                               -------------
Diluted net earnings per equivalent share                   $         0.04
                                                               -------------


                                     Page 8
<PAGE>

3.  STOCK-BASED COMPENSATION

In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards Number 123(R) ("SFAS No. 123(R)"),
SHARE-BASED PAYMENT, which establishes standards for transactions in which an
entity exchanges its equity instruments for goods or services. This standard
requires a public entity to measure the cost of employee services received in
exchange for an award of equity instruments based on the grant-date fair value
of the award. This eliminates the exception to account for such awards using the
intrinsic method previously allowable under APB Opinion No. 25. SFAS 123(R) will
be effective for fiscal years beginning on or after December 15, 2005.

SFAS 123(R) permits public companies to adopt its requirements using one of the
following two methods:

1.       A "modified prospective" method in which compensation cost is
         recognized beginning with the effective date (a) based on the
         requirements of SFAS 123(R) for all share based payments granted after
         the effective date and (b) based on the requirements of SFAS 123 for
         all awards granted to employees prior to the effective date of SFAS
         123(R) that remain unvested on the effective date.
2.       A "modified retrospective" method which includes the requirements of
         the modified prospective method described above, but also permits
         entities to restate based on the amounts previously recognized under
         SFAS 123 for purposes of pro forma disclosures either (a) all periods
         presented or (b) prior interim periods of the year of adoption.

The Company plans to adopt SFAS 123(R) using the modified prospective method.

As permitted by SFAS No. 123, "ACCOUNTING FOR STOCK-BASED COMPENSATION", the
Company currently accounts for share-based payments to employees using APB
Opinion 25's intrinsic value method and, as such, generally recognizes no
compensation cost for employee stock options. Accordingly, the adoption of SFAS
123(R)'s fair value method will have a significant impact on its results of
operations, although it will have no impact on its overall financial position.
The impact of the adoption of SFAS 123(R) cannot be predicted at this time
because it will depend on levels of share-based payments granted in the future.
However, had the Company adopted SFAS 123(R) in prior periods, the impact of
that standard would have approximated the impact of SFAS 123 as described in the
disclosure of pro forma net income and earnings per share below.

The Company has not determined what impact SFAS 123(R) might have on the nature
of its share-based compensation to employees in the future.


                                     Page 9
<PAGE>

Had compensation cost been determined in accordance with SFAS No. 123, the
Company's income in thousands of dollars and basic and diluted earnings per
common share for the three month periods ended March 31, 2005 and 2004,
respectively, would have been as follows:

                                        THREE MONTHS ENDED MARCH 31,
                                   ----------------------------------------
                                         2005                  2004
                                   ------------------    ------------------
Net income as reported
                                   $          2,437      $            775
   Deduct stock-based
        employee compensation
        determined under the
        fair value method for all
        awards, net of tax                   (1,223)                  (91)
                                      ---------------       ---------------
            Pro forma income       $          1,214      $            684
                                      ===============       ===============

Net income per share:
      Basic as reported            $           0.12      $           0.05
                                      ===============       ===============
      Diluted as reported          $           0.11      $           0.05
                                      ===============       ===============
      Basic, pro forma             $           0.06      $           0.05
                                      ===============       ===============
      Diluted, pro forma           $           0.06      $           0.04
                                      ===============       ===============

The Pro forma income and pro forma basic and diluted earnings per share for the
period ended March 31, 2004 has been restated to properly account for
forfeitures.


4.  BASIC AND DILUTED EARNINGS PER COMMON SHARE

The Company computes earnings per share in accordance with SFAS No. 128,
"EARNINGS PER Share." Basic earnings per share is computed by dividing net
income by the weighted average number of common shares outstanding during the
period. Diluted earnings per share adjusts basic earnings per share for the
effects of convertible securities, stock options and warrants and other
potentially dilutive financial instruments, only in the periods in which such
effect is dilutive. For the quarters ended March 31, 2005 and 2004, the weighted
average number of shares used in calculating diluted earnings per share includes
options and warrants to purchase common stock and, in 2005, the effects of
convertible securities aggregating 7,251,933 and 1,953,166 shares, respectively.
The calculation for 2005 also includes an increase to net earnings equal to
interest expense relating to the convertible debt, adjusted for income taxes, of
$456,000. The convertible securities were not outstanding in the quarter ended
March 31, 2004. The calculation of earnings per share for the quarters ended
March 31, 2005 and 2004 excludes 973,600 and 275,100 shares, respectively,
related to out-of-the-money stock options and warrants because to include them
in the calculation would be antidilutive.


5.  INCOME TAXES

In the period ended March 31, 2005, the Company recorded income tax expense of
$1,621,000, consisting of a current provision of $294,000 and a deferred
provision of $1,327,000.

At December 31, 2004, the Company had net operating loss carryforwards of
approximately $37 million for federal income tax purposes that begin to expire
in 2019. The use of these net operating loss carryforwards may be limited under
Section 382 of the Internal Revenue Code, as a result of cumulative changes in
ownership of more than 50% over a three year period.

The Company reviews its deferred tax asset on a quarterly basis to determine if
a valuation allowance is required, primarily based on its estimate of future
taxable income. Changes in the Company's assessment of the need for a valuation
allowance could give rise to adjustments in the valuation allowance and tax
expense in the period of change.


                                    Page 10
<PAGE>

At December 31, 2004, the Company has federal alternative minimum tax credit
carryforwards of approximately $60,000 that do not expire.


6.  LEGAL PROCEEDINGS

On November 1, 2004, we were served with a summons and complaint in a lawsuit
commenced by two former employees of ITO Acquisition Corporation d/b/a Systems
Management Specialists, now known as Infocrossing West, Inc. ("West") filed in
the Superior Court of California, Orange County (Case No. 04CC10709). Plaintiffs
assert that they had been induced to join West in 2002 based on promises of
receiving equity interests and options to acquire additional equity in West.
Plaintiffs assert that on numerous occasions they had received verbal assurance
of receiving the foregoing equity interests in West. We had acquired West on
April 2, 2004. Plaintiffs' employment with West terminated shortly after our
acquisition of West. Plaintiffs maintain that they are entitled to direct
damages of at least $15 million plus punitive damages, costs, attorneys' fees,
and other relief as the court may award. In addition, one of the plaintiffs also
asserted a claim for unpaid commissions of approximately $30,000. On November
30, 2004, West filed an answer denying all of plaintiffs' allegations. Discovery
commenced recently.

West is indemnified pursuant to the Stock Purchase Agreement between us and ITO
Holdings, LLC ("Holdings") dated as of March 3, 2004 (the "SPA") for breaches of
numerous representations and warranties contained in the SPA. Holdings
represented and warranted to us, among other things, that it owned all of West's
capital stock and there were no other equity interests or commitments relating
to West's capital stock. Holdings has confirmed its indemnification obligations
with respect to the claims asserted by plaintiffs. If, however, discovery
reveals that the commissions at issue were earned after March 3, 2004 or, if
earned prior to such date, they were properly accrued, we agreed to cooperate
with Holdings to determine the appropriate amount of commissions, if any, which
would be due and owing from West. West believes it is in its best interest to
resolve the commissions issue early in the litigation to avoid needless and
protracted proceedings and expenses relating to such a minor dispute.
Accordingly, Holdings has agreed that West will not be responsible for, or asked
to contribute to, attorney's fees and costs associated with the resolution of
the commissions claim.

It is premature to give a proper evaluation of the probability of a favorable or
unfavorable outcome. While it is again premature to give a proper evaluation of
the potential liability, the Company believes that the above matter will be
resolved without any material adverse impact on our financial position, results
of operations, or cash flows.




                                    Page 11
<PAGE>



ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS.

Management believes that we are a leading provider of information technology, or
IT, and business process outsourcing services to enterprise clients. We deliver
a full suite of outsourced solutions that enable clients to leverage our
infrastructure and process expertise to improve their efficiency and reduce
their operating costs. During our nearly twenty year history, we have developed
expertise in managing complex computing environments, beginning with traditional
data center outsourcing services and evolving to a comprehensive set of managed
solutions. We support a variety of clients, and assure the optimal performance,
security, reliability, and scalability of our clients' mainframes, distributed
servers, and networks, irrespective of where the systems' components are
located. Strategic acquisitions have contributed significantly to our historical
growth and remain an integral component of our long-term growth strategy.

On April 2, 2004, we acquired all of the outstanding capital stock of ITO
Acquisition Corporation, a California corporation doing business as Systems
Management Specialists ("SMS"), from ITO Holdings, LLC for a total purchase
price of approximately $37,572,000 including related acquisition costs of
$1,224,000 and 135,892 shares of our common stock valued at $1,439,000 (the "SMS
Acquisition"). In June 2004, the name of this subsidiary was changed to
Infocrossing West, Inc. In connection with an acquisition by SMS prior to April
2004, the Company may have to pay contingent consideration for a period of up to
four years. Through March 31, 2005, such contingent consideration totaled
$405,000 that was recorded as additional goodwill.

SMS, headquartered in Orange County, California, provides computing operations,
business process outsourcing and managed application services to clients
primarily located in the western United States.

On October 1, 2004, we acquired a segment of Verizon Information Technologies
Inc. ("VITI") for a total purchase price of approximately $45,386,000 including
related acquisition costs of $1,886,000. Immediately after the acquisition we
changed VITI's name to Infocrossing Healthcare Services, Inc. ("IHS").

During 2004 we also used $7,090,000 in cash, incurred an estimated $116,000 of
acquisition-related costs, and issued 123,193 shares of common stock valued at
$1,500,000 for other acquisitions, including a business that offers e-mail
security services.

The integration of SMS was completed in early March 2005 and the integration of
the smaller acquisitions substantially was completed in 2004. The integration of
IHS is in process. The acquired businesses are being integrated into the Company
so that the entire enterprise will enjoy the synergistic benefit from
operational leverage and consolidation.

The foregoing acquisitions were recorded as purchases in accordance with the
Financial Accounting Standards Board, Statements of Financial Accounting
Standards No. 141, "Business Combinations" ("SFAS 141").

The Company and its subsidiaries operate in one reportable segment of providing
information technology and business process outsourcing services.

RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2005 AND 2004

Net income increased by $1,662,000 (214.5%) from $775,000 for the quarter ended
March 31, 2004 (the "Prior Year's Quarter") to $2,437,000 for the quarter ended
March 31, 2005 (the "Current Quarter") on 147.3% higher revenues. For the
Current Quarter, the results of operations include SMS, IHS, and other
acquisitions completed in 2004. None of the acquisitions were completed during
the Prior Year's Quarter.

For the Current Quarter, revenues increased $22,351,000 (147.3%) to $37,527,000
from $15,176,000 for the Prior Year's Quarter. Approximately $21,085,000 of this
growth is attributable to revenue from clients added as the result of
acquisitions completed in 2004. Approximately $1,266,000 represents organic
growth from existing as well as new customers.


                                    Page 12
<PAGE>

Costs of revenues increased by $15,624,000 (152.8%) to $25,847,000 during the
Current Quarter compared with $10,223,000 for the Prior Year's Quarter. The
increase results from the expansion of revenues from both acquisitions and
organic growth. Costs of revenues as a percentage of revenues increased to 68.9%
in the Current Quarter from 67.4% in the Prior Year's Quarter, reflecting a
lower gross margin. Our infrastructure provides a shared operating environment
that enables us to effectively integrate new clients, including clients acquired
through acquisitions.

Due to higher compensation costs in the Current Quarter, selling and promotion
costs increased by $222,000 (30.2%) to $958,000 for the Current Quarter from
$736,000 for the Prior Year's Quarter, but decreased as a percentage of revenues
to 2.6% for the Current Quarter from 4.9% for the Prior Year's Quarter. Higher
compensation costs reflect a larger sales staff in the Current Quarter than in
the Prior Year's Quarter. The reduction as a percentage of revenue reflects the
benefits of integration of the acquired businesses.

General and administrative expenses increased by $1,213,000 (88.8%) to
$2,579,000 for the Current Quarter from $1,366,000 for the Prior Year's Quarter.
General and administrative expenses declined as a percentage of revenue to 6.9%
in the Current Quarter from 9.0% in the Prior Year's Quarter, reflecting the
benefits of operational leverage and consolidation of the acquired businesses.
Approximately $572,000, or 47.2% of the total increase, was related to
acquisitions completed in 2004 after the Prior Year's Quarter. Approximately
$275,000 (22.7% of the total increase) was due to professional fees relating to
compliance costs with respect to the Sarbanes-Oxley Act of 2002, approximately
$108,000 (8.9%) was due to increases in other professional fees, and
approximately $92,000 (7.6%) was due to higher insurance costs incurred because
of the increase in the Company's size and activities.

Depreciation and amortization of fixed assets and other intangibles increased
$1,016,000 (63.3%) to $2,620,000 for the Current Quarter from $1,604,000 for the
Prior Year's Quarter. Of this increase, $762,000 of depreciation of fixed assets
and amortization of other intangibles was related to acquisitions completed in
2004 after the Prior Year's Quarter. The remainder of the increase of $254,000
resulted from new fixed asset additions during twelve months ended March 31,
2005. Despite these increases, depreciation and amortization decreased as a
percentage of revenues to 7.0% in the Current Quarter compared with 10.6% in the
Prior Year's Quarter.

Net interest expense increased by $800,000 to $1,465,000 for the Current Quarter
from $665,000 for the Prior Year's Quarter. This net increase consists of
$88,000 in additional interest income and $888,000 in additional interest
expense. The increases in interest income and expense are due to larger average
outstanding balances of both cash and outstanding debt, respectively, in the
Current Quarter.

A deferred tax benefit reflects future income tax savings realizable when tax
credits, net operating loss carry-forwards, or other deductions based on
temporary differences between taxable income and income before income taxes can
be used to reduce income taxes. If it is more likely than not that the deferred
tax assets will not be realizable, a valuation allowance must be established.
Deferred tax assets decreased during 2004 since we recognized deferred tax
assets at amounts considered by management, more likely than not, to be
realized. Based on our recent history of profitability and our forecasts for
future periods, management has determined that it is more likely than not that
the net operating loss carry-forwards and other temporary differences will be
realized. As of March 31, 2005, we have net operating loss carry-forwards of
approximately $35,000,000 for Federal income tax purposes that begin to expire
in 2019. The use of these net operating loss carry-forwards may be limited in
amount in future years pursuant to Section 382 of the Internal Revenue Code.

For the Current Quarter, we recorded a tax expense of $1,621,000, consisting of
a current provision of $294,000 and a deferred provision of $1,327,000, compared
with a tax benefit of $193,000 for the Prior Year's Quarter. The tax benefit for
the Prior Year's Quarter included $234,000 from the sale of New Jersey state net
operating loss carry-forwards.

Due to a lack of SMS's history of generating taxable income, we recorded a
valuation allowance equal to 100% of their net deferred tax assets. In the event
that we are able to generate taxable earnings from SMS in the future and
determine it is more likely than not that we can realize our deferred tax
assets, an adjustment to the valuation allowance would be made which may
increase goodwill in the period that such determination is made.

We have net income of $2,437,000 for the Current Quarter compared with $775,000
for the Prior Year's Quarter.


                                    Page 13
<PAGE>

In the Current Quarter, we had income per common share of $0.12 on a basic basis
and $0.11 on a diluted basis, compared with income per common share of $0.05 on
both a basic basis and diluted basis for the Prior Year's Quarter. The number of
weighted average shares increased to approximately 20,087,000 shares on a basic
basis and approximately 27,338,000 shares on a diluted basis for the Current
Quarter from approximately 15,193,000 shares on a basic basis and approximately
17,146,000 shares on a diluted basis for the Prior Year's Quarter. The increase
in shares reflects (i) a private placement of 2,917,000 shares of common stock
in March 2004; (ii) the potential conversion of $72,000,000 of 4% convertible
notes due July 15, 2024, which were issued in mid 2004, into 4,687,500 shares of
common stock; and (iii) the issuance of 259,085 shares of common stock for
acquisitions after March 31, 2004. The shares and equivalents enumerated in the
immediately preceding sentence are in absolute amounts, not weighted average
amounts.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $5,345,000 for the quarter ended
March 31, 2005 (the "Current Quarter"). During the Current Quarter, we had
sources of cash of $2,437,000 of net income, $2,620,000 of depreciation and
amortization; $1,406,000 from a decrease in deferred tax assets; $203,000 from
an increase in other current and long-term liabilities; and $698,000 from a
decrease in accounts receivable. Significant uses of cash during the Current
Quarter include an increase in prepaid expenses and other current assets of
$1,089,000 and a decrease in accrued expenses of $988,000. The utilization of a
portion of the Company's net operating loss carry-forwards is reflected in the
decrease in deferred tax assets.

On June 30, 2004, we completed a private offering of $60,000,000 aggregate
principal amount of 4.0% Convertible Senior Notes due July 15, 2024 (the
"Notes"). Approximately $40,000,000 of the net proceeds from this offering was
used to repay 9.0% notes payable outstanding. The remaining balance was used to
fund acquisitions and for general corporate purposes. On July 6, 2004, the
initial purchaser exercised its option in full to purchase an additional
$12,000,000 of the Notes. Net proceeds after a discount of $2,520,000 and
approximately $591,000 of costs and fees were approximately $68,889,000.
Interest on the Notes is payable semi-annually in arrears beginning on January
15, 2005.

Offers and sales of the Notes were made only in the United States to qualified
institutional buyers in transactions exempt from the registration requirements
of the Securities Act of 1933, as amended (the "Securities Act"). The notes were
originally issued by us in a transaction exempt from the registration
requirements of the Securities Act and were immediately resold by the initial
purchaser in reliance on Rule 144A. The Notes and the shares of common stock
into which they may be converted may be resold pursuant to a registration
statement on Form S-3 that became effective in December 2004. We will not
receive any proceeds from any sales of common stock under this registration
statement.

The Notes are convertible, subject to certain conditions, at the option of the
holder prior to maturity, into shares of our common stock at a specified
conversion price, subject to certain adjustments. The conversion price will be
adjusted to reflect stock dividends, stock splits, issuances of rights to
purchase shares of common stock and other events. Upon conversion, we will have
the right to deliver to the holders, at our option, cash, shares of our common
stock, or a combination thereof. At the initial conversion price of $15.36, the
$72,000,000 of Notes would be convertible into 4,687,500 common shares. After
the effective date of the Registration Statement and prior to the end of the
18th month thereafter, if the market price of our common stock is less than
68.23% ($10.48 initially, subject to adjustment) of the conversion price then in
effect for at least 20 trading days during any 30 consecutive trading day
period, the conversion price shall immediately be reduced by 17.38% (to $12.69
initially, subject to adjustment); provided that (i) this adjustment shall only
be applicable to Notes that have been sold or otherwise distributed pursuant to
the registration statement referred to above or pursuant to Rule 144(k) under
the Securities Act (and such adjustment shall apply to all such Notes,
regardless of whether they are so sold or distributed before or after
adjustment), and (ii) there shall be no more than one such reduction of the
conversion price during the term of the Notes.


                                    Page 14
<PAGE>

The holders may convert their Notes into shares of our common stock, initially
at the conversion price of $15.36 per share, equal to a conversion rate of
approximately 65.1042 shares per $1,000 principal amount of Notes, prior to the
close of business on their stated maturity date under any of the following
circumstances: (1) during any fiscal quarter if the market price per share of
our common stock for a period of at least 20 consecutive trading days during the
30 consecutive trading day period ending on the last day of the preceding fiscal
quarter is more than 130% of the applicable conversion price; (2) on or before
July 15, 2019, during the five business-day period following any 10 consecutive
trading-day period in which the trading price for the Notes during such ten-day
period was less than 98% of the applicable conversion value for the Notes during
that period, subject to certain limitations; (3) if the Notes have been called
for redemption; or (4) upon the occurrence of specified corporate transactions.
The specified transactions include: (1) certain distributions to our common
stockholders of rights to acquire shares of our common stock at a discount; (2)
certain distributions to our common stockholders when the distribution has a per
share value in excess of 5% of the market price of our common stock; and (3) a
consolidation, merger or binding share exchange pursuant to which our common
stock will be converted into cash, securities or other property. Upon a "change
of control," as defined in the indenture, the holders can require us to
repurchase all or part of the Notes for cash equal to 100% of principal plus
accrued interest. A consolidation, merger, or binding exchange also may
constitute a "change of control" in certain instances. If the "change of
control" occurred prior to July 15, 2009, in certain instances, we may be
required to pay a "make whole premium" when repurchasing the Notes. The amount
of the "make whole premium" is set forth in the indenture.

We have a call option, pursuant to which we may redeem the Notes, in part or in
whole, for cash at any time on or after July 15, 2007 at a price equal to 100%
of the principal amount of the Notes, plus accrued interest plus a "premium" if
the redemption is prior to July 15, 2009, provided, however, the Notes are only
redeemable prior to July 15, 2009 if the market price of our common stock has
been at least 150% of the conversion price then in effect for at least 20
trading days during any 30 consecutive trading day period. The "premium"
referred to in the preceding sentence shall be in an amount equal to $173.83 per
$1,000 principal amount of Notes, less the amount of any interest actually paid
on such Notes prior to the redemption date.

The holders of the Notes may require that we purchase for cash all or a portion
of the Notes on July 15, 2009, 2014, and 2019 at a repurchase price equal to
100% of the principal amount of the Notes plus any accrued interest. There are
no financial covenants, other than a limitation on incurring of additional
indebtedness, as defined in the indenture. We are not restricted from paying
dividends, or issuing other securities, or repurchasing other securities issued
by us under the terms of the indenture.

In July 2004, we established a $25,000,000, non-revolving loan facility,
available for use in connection with the acquisition of complementary
businesses. Advances can be made during the first three years of the term of the
facility and interest will be payable monthly in arrears at prime plus 3.0%. The
interest rate floor is 8.5%. Monthly principal payments equal to 2.5% of the
outstanding balance will commence at the conclusion of the draw period and
continue until March 2009 when any remaining balance will be due. Advances are
subject to satisfying certain acquisition criteria and the approval of the
lenders. We paid a 1.0% commitment fee at the closing of the loan and will pay
an unused facility fee at the rate of 0.75% per annum until we borrow more than
$10,000,000 on a cumulative basis. We may incur prepayment penalties if we
terminate the facility during the first 18 months or prepay any advance prior to
the one-year anniversary of the applicable borrowing date. As of September 30,
2004, there were no advances made under this facility. The facility and any
loans made under the facility are guaranteed by all of our subsidiaries, and any
such loans and the guarantees are secured by a first-priority interest on
substantially all of our assets, including the capital stock and assets of the
subsidiaries. The facility contains certain covenants including, but not limited
to: a maximum leverage ratio; minimum consolidated earnings before interest,
taxes, depreciation, and amortization; a minimum debt coverage ratio; and
limitations on indebtedness, capital expenditures, investments, loans, mergers
and acquisitions, stock issuances, and transactions with affiliates. In
addition, the terms of the facility limit our ability to pay dividends. We were
in compliance with such covenants at December 31, 2004.

On October 1, 2004, we borrowed $24,375,000 from the non-revolving loan facility
to pay a portion of the cost of the IHS acquisition. The amount borrowed
represents the full loan availability under the line. The $625,000 balance must
remain available in the event we are required to fund an Interest Reserve, as
that term is defined in the loan agreement. Monthly principal payments of
approximately $609,000 will begin on July 1, 2007, and a final payment of
$11,578,000 is scheduled to be made on March 15, 2009.


                                    Page 15
<PAGE>

Financing activities during the Current Quarter include the repayment of
approximately $1,140,000 of capital leases and the receipt of $5,827,000 from
the exercise of employee stock options. In addition, we added $3,209,000 of
equipment subject to new capital lease agreements during the Current Quarter.

On February 22, 2005, we filed a preliminary, or "shelf" registration statement
with the Securities and Exchange Commission. This registration statement will
permit us to sell equity or debt securities, in any combination, for up to
$125,000,000. We intend to use the net proceeds we expect to receive from the
sale of the securities to reduce our outstanding debt and to fund possible
acquisitions and investments. The exact timing and terms of this financing will
depend upon market conditions and other factors. There can be no assurance that
such financing will occur.

As of March 31, 2005, we had cash and equivalents of $35,257,000

We believe that our cash and equivalents, current assets, and cash generated
from future operating activities will provide adequate resources to fund our
ongoing operating requirements for at least the next twelve months. We may need
to obtain additional financing to fund significant acquisitions or other
substantial investments.

EBITDA

EBITDA represents net income before interest, taxes, depreciation and
amortization. We present EBITDA because we consider such information an
important supplemental measure of our performance and believe it is frequently
used by securities analysts, investors and other interested parties in the
evaluation of companies with comparable market capitalization to us, many of
which present EBITDA when reporting their results. We also use EBITDA as one of
the factors used to determine the total amount of bonuses available to be
awarded to executive officers and other employees. Our credit agreement uses
EBITDA (with additional adjustments) to measure compliance with covenants such
as interest coverage and debt incurred. EBITDA is also used by prospective and
current lessors as well as potential lenders to evaluate potential transactions
with us. In addition, EBITDA is also widely used by us and other buyers to
evaluate and determine the price of potential acquisition candidates.

For the Current Quarter our EBITDA increased by $5,292,000 (185.6%) to
$8,143,000 from $2,851,000 for the comparable period in 2004.

EBITDA has limitations as an analytical tool, and you should not consider it in
isolation, or as a substitute for analysis of our results as reported under U.S.
Generally Accepted Accounting Principles ("GAAP"). Some of these limitations
are: (a) EBITDA does not reflect changes in, or cash requirements for, our
working capital needs; (b) EBITDA does not reflect the significant interest
expense, or the cash requirements necessary to service interest or principal
payments, on our debts; and (c) although depreciation and amortization are
non-cash charges, the assets being depreciated and amortized may have to be
replaced in the future, and EBITDA does not reflect any cash requirements for
such capital expenditures. Because of these limitations, EBITDA should not be
considered as a principal indicator of our performance. We compensate for these
limitations by relying primarily on our GAAP results and using EBITDA only on a
supplemental basis.

The following table reconciles EBITDA to net income for the Current and Prior
Year's Quarter.

                          RECONCILIATION - IN THOUSANDS
-------------------------------------------------------------------------------
                                              QUARTER ENDED MARCH 31,
                                   ------------------------------------------
                                          2005                    2004
                                   ------------------      ------------------
NET INCOME                         $            2,437      $              775
  Add back (deduct):
    Tax expense (benefit)                       1,621                   (193)
    Interest expense                            1,465                     665
    Depreciation and amortization               2,620                   1,604

                                   ------------------      ------------------
EBITDA                             $            8,143      $            2,851
                                   ==================      ==================

                                    Page 16
<PAGE>

EBITDA is a measure of our performance that is not required by, or presented in
accordance with, GAAP. EBITDA is not a measurement of our financial performance
under GAAP and should not be considered as an alternative to net income, income
(loss) from operating activities or any other performance measures derived in
accordance with GAAP.


RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued SFAS No. 153, EXCHANGES OF NONMONETARY ASSETS,
which eliminated the exception for nonmonetary exchanges of similar productive
assets and replaces it with a general exception for exchanges of nonmonetary
assets that do not have commercial substance. SFAS No. 153 will be effective for
nonmonetary asset exchanges occurring in fiscal periods beginning after June 15,
2005. We do not believe the adoption of SFAS No. 153 will have a material impact
on our operating results or financial position.

In December 2004, the FASB issued SFAS No. 123 (R), SHARED-BASED PAYMENT, which
establishes standards for transactions in which an entity exchanges its equity
instruments for goods or services. This standard requires a public entity to
measure the cost of employee services received in exchange for an award of
equity instruments based on the grant-date fair value of the award. This
eliminates the exception to account for such awards using the intrinsic method
previously allowable under APB Opinion No. 25. SFAS 123(R) originally was to be
effective for interim or annual reporting periods beginning on or after June 15,
2005, but the Securities and Exchange Commission delayed the effective date
until annual reporting periods beginning after December 15, 2005.

SFAS 123(R) permits public companies to adopt its requirements using one of the
following two methods:

         1. A "modified prospective" method in which compensation cost is
recognized beginning with the effective date (a) based on the requirements of
SFAS 123(R) for all shared based payments granted after the effective date and
(b) based on the requirements of FASB 123 for all awards granted to employees
prior to the effective date of SFAS 123(R) that remain unvested on the effective
date.

         2. A "modified retrospective" method which includes the requirements of
the modified prospective method described above, but also permits entities to
restate based on the amounts previously recognized under FASB 123 for purposes
of pro forma disclosures either (a) all prior periods presented or (b) prior
interim periods of the year of adoption.

We plan to adopt FASB 123(R) using the modified-prospective method.

As permitted by FASB 123, we currently account for shared-based payments to
employees using APB Opinion 25's intrinsic value method and, as such, generally
recognize no compensation cost for employee stock options. Accordingly, the
adoption of SFAS 123(R)'s fair value method will have a significant impact on
our results of operations, although it will have no impact on our overall
financial position. The impact of the adoption of SFAS 123(R) cannot be
predicted at this time because it will depend on levels of share-based payments
granted in the future. However, had we adopted SFAS 123(R) in prior periods, the
impact of that standard would have approximated the impact of FASB 123 as
described in the disclosure of pro forma net income and earnings per share in
Note 1 to our consolidated financial statements.

We have not determined what impact SFAS 123(R) might have on the nature of our
shared-based compensation to employees in the future.

FORWARD-LOOKING STATEMENTS

Statements made in this Report, including the foregoing financial statements and
notes, other than statements of historical fact, are forward-looking statements
that involve risks and uncertainties. These statements relate to future events
or our future financial performance, including statements relating to products,
customers, suppliers, business prospects and effects of acquisitions. In some
cases, forward-looking statements can be identified by terminology such as
"may," "will," "should," "expect," "anticipate," "intend," "plan," "believe,"
"estimate," "potential," or "continue," the negative of these terms or other
comparable terminology. These statements involve a number of risks and
uncertainties and as such, final results could differ from estimates or
expectations due to a number of factors including, without limitation:
incomplete or preliminary information; changes in government regulations and
policies; continued acceptance of our products and services in the marketplace;
competitive factors; closing contracts with new customers on favorable terms;
expanding services to existing customers; new products; technological changes;
our dependence on third party suppliers; intellectual property rights;
difficulties with the identification, completion, and integration of
acquisitions, including the integration of Verizon Information Technologies
Inc., now known as Infocrossing Healthcare Services, Inc.; and other risks and

                                    Page 17
<PAGE>

uncertainties including those set forth in this Report that could cause actual
events or results to differ materially from any forward-looking statement. For
any of these factors, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, as amended.



ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


INTEREST RATE RISK

We are not significantly exposed to the impact of interest rate changes, foreign
currency fluctuations, or changes in the market values of our investments. We
primarily invest in money market mutual funds or certificates of deposit and
commercial paper issued only by major corporations and financial institutions of
recognized strength and security, and hold all such investments to term. We
generally invest in instruments of no more than 30 days maturity. Our debt is at
a fixed rate of interest, and the carrying amount of long-term debt approximates
fair value based on interest rates that are currently available to us with
similar terms and remaining maturities.

MARKET RISK

Our accounts receivable are subject, in the normal course of business, to
collection risks. We regularly assess these risks and have established policies
and business practices to protect against the adverse effects of collection
risks. As a result, we do not anticipate any material losses in this area.

FOREIGN CURRENCY RISKS

We have no significant foreign-source income, and bill foreign customers in U.S.
dollars only.


ITEM 4 - CONTROLS AND PROCEDURES.

An evaluation was performed under the supervision and with the participation of
our management, including the Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the
end of the period covered by this report. Based on that evaluation, our
management, including the Chief Executive Officer and the Chief Financial
Officer, concluded that our disclosure controls and procedures were effective as
of March 31, 2005. There have been no changes in our internal control over
financial reporting that occurred during our last fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.



PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

Corcoran and Tallas v. Cortens, Dolan, ITO Acquisition Corporation d/b/a
------------------------------------------------------------------------
Systems Management Specialists, and Does 1 through 50
-----------------------------------------------------

On November 1, 2004, we were served with a summons and complaint in a lawsuit
commenced by two former employees of ITO Acquisition Corporation d/b/a Systems
Management Specialists, now known as Infocrossing West, Inc. ("West") filed in
the Superior Court of California, Orange County (Case No. 04CC10709). Plaintiffs
assert that they had been induced to join West in 2002 based on promises of
receiving equity interests and options to acquire additional equity in West.
Plaintiffs assert that on numerous occasions they had received verbal assurance
of receiving the foregoing equity interests in West. We had acquired West on
April 2, 2004. Plaintiffs' employment with West terminated shortly after our
acquisition of West. Plaintiffs maintain that they are entitled to direct
damages of at least $15 million plus punitive damages, costs, attorneys' fees,
and other relief as the court may award. In addition, one of the plaintiffs also
asserted a claim for unpaid commissions of approximately $30,000. On November
30, 2004, West filed an answer denying all of plaintiffs' allegations. Discovery
commenced recently.


                                    Page 18
<PAGE>

West is indemnified pursuant to the Stock Purchase Agreement between us and ITO
Holdings, LLC ("Holdings") dated as of March 3, 2004 (the "SPA") for breaches of
numerous representations and warranties contained in the SPA. Holdings
represented and warranted to us, among other things, that it owned all of West's
capital stock and there were no other equity interests or commitments relating
to West's capital stock. Holdings has confirmed its indemnification obligations
with respect to the claims asserted by plaintiffs. If, however, discovery
reveals that the commissions at issue were earned after March 3, 2004 or, if
earned prior to such date, they were properly accrued, we agreed to cooperate
with Holdings to determine the appropriate amount of commissions, if any, which
would be due and owing from West. West believes it is in its best interest to
resolve the commissions issue early in the litigation to avoid needless and
protracted proceedings and expenses relating to such a minor dispute.
Accordingly, Holdings has agreed that West will not be responsible for, or asked
to contribute to, attorney's fees and costs associated with the resolution of
the commissions claim.

It is premature to give a proper evaluation of the probability of a favorable or
unfavorable outcome. While it is again premature to give a proper evaluation of
the potential liability, we believe that the above matter will be resolved
without any material adverse impact on our financial position, results of
operations, or cash flows.


                                    Page 19
<PAGE>

ITEM 6 - EXHIBITS

2.1        Stock Purchase Agreement between the Company and ITO Holdings, LLC,
           dated as of March 3, 2004, incorporated by reference to Exhibit 2.1
           to a Current Report on Form 8-K filed April 7, 2004.

2.2        Purchase and Sale Agreement, dated as of September 1, 2004 between
           Verizon Data Services, Inc. and the Company, incorporated by
           reference to Exhibit 2.1 to a Current Report on Form 8-K filed
           October 14, 2004.

2.3        Stock Purchase Agreement dated as of February 5, 2002 by and between
           the Company and American Software, Inc., incorporated by reference to
           Exhibit 2.1 to the Company's Current Report on Form 8-K filed
           February 5, 2002.

3.1A       Restated Certificate of Incorporation, incorporated by reference to
           Exhibit 3.1A to the Company's Annual Report on Form 10-K for the
           period ended December 31, 2004.

3.1B       Certificate of Amendment to the Company's Certificate of
           Incorporation, filed May 8, 2000, to increase the authorized shares
           and to remove Article 11, incorporated by reference to the Company's
           report on Form 10-Q for the period ended April 30, 2000.

3.1C       Certificate of Amendment to the Company's Certificate of
           Incorporation, filed as of June 5, 2000, to change the name of the
           Company to Infocrossing, Inc., incorporated by reference to the
           Company's report on Form 10-Q for the period ended April 30, 2000.

3.2        By-Laws, as amended, incorporated by reference to Exhibit 3.2 to the
           Company's Form 10-Q/A filed May 17, 2004.

4.1        Indenture, dated as of June 30, 2004, between the Company as issuer
           and Wells Fargo Bank, National Association, as trustee; and form of
           4.00% Convertible Senior Notes due 2024, incorporated by reference to
           a Registration Statement on Form S-3 filed July 13, 2004.

4.2        Resale Rights Agreement, dated as of June 30, 2004, by and between
           the Company and Lehman Brothers, Inc. regarding the Company's 4.00%
           Convertible Senior Notes due 2024, incorporated by reference to a
           Registration Statement on Form S-3 filed July 13, 2004.

4.3        Securities Purchase Agreement, dated as of March 24, 2004, by and
           among the Company and certain purchasers of the Company's common
           stock, incorporated by reference to Exhibit 4.1 to the Company's
           Current Report on Form 8-K filed April 1, 2004.

4.4        Registration Rights Agreement, dated as of March 24, 2004, by and the
           Company and certain purchasers of the Company's common stock,
           incorporated by reference to Exhibit 4.2 to the Company's Current
           Report on Form 8-K filed April 1, 2004.




                                    Page 20
<PAGE>



(a)    Exhibits (continued):

4.5         Securities Purchase Agreement, dated as of October 16, 2003, by and
            among the Company and certain purchasers of common stock and
            warrants, incorporated by reference to Exhibit 4.1 to the Company's
            Current Report on Form 8-K filed October 22, 2003.

4.6         Registration Rights Agreement, dated as of October 16, 2003, by and
            among the Company and certain purchasers of common stock and
            warrants, incorporated by reference to Exhibit 4.2 to the Company's
            Current Report on Form 8-K filed October 22, 2003.

4.7         Exchange Agreement, dated as of October 16, 2003, by and among the
            Company and holders of series A preferred stock and series A
            warrants, incorporated by reference to Exhibit 4.3 to the Company's
            Current Report on Form 8-K filed October 22, 2003.

4.8         Second Amended and Restated Registration Rights Agreement, dated as
            of October 21, 2003, by and among the Company and certain
            stockholders of the Company, incorporated by reference to Exhibit
            4.4 to the Company's Current Report on Form 8-K filed October 22,
            2003.

4.9         Warrant Agreement dated as of February 1, 2002 by and between the
            Company and the Warrantholders party thereto, incorporated by
            reference to Exhibit 4.3 to the Company's Current Report on Form 8-K
            filed February 5, 2002.

4.10        Warrant Agreement dated as of May 10, 20000 between the Company and
            the Warrantholders Party thereto, incorporated by reference to
            Exhibit 4.10 to the Company's Annual Report on Form 10-K for the
            period ended December 31, 2004.

10.1        Letter of Employment between the Company and John Lalli, dated as of
            May 15, 2002.

10.2        Contract for Services between Verizon Information Technologies,
            Inc. (now Infocrossing Healthcare Services, Inc.) and the State of
            Missouri, including Amendments 1 through 6.

10.3A       Acquisition Loan Agreement dated July 29, 2004 between the Company,
            various Lenders and CapitalSource Finance LLC as Agent for the
            Lenders, incorporated by reference to Exhibit 10.7 to the Company's
            Quarterly Report on Form 10Q for June 30, 2004.

10.3B       Consent, Waiver and First Amendment to Acquisition Loan Agreement
            dated as of October 1, 2004 by and among the Company and
            CapitalSource Finance, LLC., incorporated by reference to Exhibit
            10.1 to the Company's Current Report on Form 8-K filed October 4,
            2004.

10.3C       Amended and Restated Consent, Waiver, and First Amendment to
            Acquisition Loan Agreement, dated as of October 6, 2004, by and
            among the Company and CapitalSource Finance, LLC, incorporated by
            reference to Exhibit 10.16 to the Company's Quarterly Report on Form
            10-Q for the period ended September 30, 2004.

10.3D       Second Amendment to Acquisition Loan Agreement and Other Documents,
            dated as of November 8, 2004, by and among the Company and
            CapitalSource Finance, LLC incorporated by reference to Exhibit
            10.16 to the Company's Quarterly Report on Form 10-Q for the period
            ended September 30, 2004.

10.3E       Third Amendment to Acquisition Loan Agreement and Other Documents,
            dated as of December 29, 2004, incorporated by reference to Exhibit
            10.4E to the Company's Annual Report on Form 10-K for the period
            ended December 31, 2004.




                                    Page 21
<PAGE>



(a)    Exhibits (continued):

10.4A        Guarantee and Security Agreement dated as of July 29, 2004, between
             the Company and certain of the Company's subsidiaries and
             CapitalSource Finance LLC, incorporated by reference to Exhibit
             10.8 to the Company's Quarterly Report on Form 10Q for June 30,
             2004.

10.4B        Joinder to Security Agreement dated October 1, 2004, incorporated
             by reference to Exhibit 10.5B to the Company's Annual Report on
             Form 10-K for the period ended December 31, 2004.

10.5A        Stock Pledge Agreement Dated as of July 29, 2004, between the
             Company and certain of the Company's subsidiaries and CapitalSource
             Finance LLC, incorporated by reference to Exhibit 10.9 to the
             Company's Quarterly Report on Form 10Q for June 30, 2004.

10.5B        Addendum to Stock Pledge Agreement dated October 1, 2004,
             incorporated by reference to Exhibit 10.6B to the Company's Annual
             Report on Form 10-K for the period ended December 31, 2004.

10.6A        Amended and Restated Term Loan Agreement, dated as of April 2, 2004
             between the lenders named therein and the Company ("Amended and
             Restated Term Loan Agreement"), incorporated by reference to
             Exhibit 10.1 to the Company's Current Report on Form 8-K filed
             April 7, 2004.

10.6B        First Amendment to Amended and Restated Term Loan Agreement, dated
             as of June 30, 2004, between the lenders named therein and the
             Company, incorporated by reference to Exhibit 4.5 to a Registration
             Statement No. 333-117340 on Form S-3 filed July 13, 2004.

10.6C        Term Loan Agreement dated as of October 21, 2003 by and among the
             Company, Infocrossing Agent, Inc., and the lenders named therein,
             incorporated by reference to Exhibit 10.1 to the Company's Current
             Report on Form 8-K filed October 22, 2003.

10.6D        First Amendment to Loan Agreement and other Loan Documents, dated
             as of February 13, 2004, by and among the Company, certain
             subsidiaries of the Company, certain lenders named therein, and
             CapitalSource Finance LLC.

10.6E        Master Assignment and Assumption Agreement, dated as of February
             13, 2004, by and among by and among the Company, as borrower;
             certain subsidiaries of the Company, as guarantors; Infocrossing
             Agent, Inc., as agent for assigning lenders named therein;
             assigning lenders named therein; and CapitalSource Finance LLC,
             incorporated by reference to Exhibit 10.7E to the Company's Annual
             Report on Form 10-K for the period ended December 31, 2004.

10.7A        Guaranty and Security Agreement, dated as of April 2, 2004, between
             a subsidiary of the Company and CapitalSource, incorporated by
             reference to Exhibit 10.2 to the Company's Current Report on Form
             8-K filed April 7, 2004.

10.7B        Guaranty and Security Agreement dated as of October 21, 2003 by and
             among the Company, Infocrossing Agent, Inc., and the Company's
             subsidiaries, incorporated by reference to Exhibit 10.2 to the
             Company's Current Report on Form 8-K filed October 22, 2003.

10.8         Amended and Restated Stock Pledge Agreement, dated as of April 2,
             2004, among the Company, a subsidiary of the Company, and
             CapitalSource, incorporated by reference to Exhibit 10.3 to the
             Company's Current Report on Form 8-K filed April 7, 2004.





                                    Page 22
<PAGE>



(a)    Exhibits (continued):

10.9          Employment Agreement between the Company and Zach Lonstein, dated
              as of January 1, 2005, incorporated by reference to Exhibit 10.1
              to the Company's Current Report on Form 8-K filed January 5,
              2005, superseding an Employment Agreement, dated as of November
              1, 1999, incorporated by reference to Exhibit 10.4 to the
              Company's Form 10-Q for the period ended July 31, 2000.

10.10         Employment Agreement between the Company and Robert Wallach, dated
              as of January 1, 2005, incorporated by reference to Exhibit 10.2
              to the Company's Current Report on Form 8-K filed January 5, 2005,
              superseding an Employment Agreement, dated as of November 1, 1999,
              incorporated by reference to Exhibit 10.5 to Infocrossing's Form
              10-Q for the period ended July 31, 2000.

10.11A        Employment Agreement, dated as of April 2, 2004, by and between
              the Company and Patrick A. Dolan, incorporated by reference to
              Exhibit 10.4 to the Company's Current Report on Form 8-K filed
              April 7, 2004.

10.11B        Settlement and Release Agreement dated as of October 15, 2004 by
              and among the Company and Patrick A. Dolan, incorporated by
              reference to Exhibit 99.2 to the Company's Current Report on Form
              8-K filed November 5, 2004.

10.12A        Employment Agreement, dated as of April 2, 2004, by and between
              the Company and Jim Cortens, incorporated by reference to Exhibit
              10.5 to the Company's Current Report on Form 8-K filed April 7,
              2004.

10.12B        Settlement and Release Agreement dated as of October 15, 2004 by
              and among the Company and Jim Cortens, incorporated by reference
              to Exhibit 13B to the Company's Annual Report on Form 10-K for the
              period ended December 31, 2004.

10.13         Employment Agreement, dated as of October 1, 2004, by and between
              a subsidiary of the Company and Michael J. Luebke, incorporated by
              reference to Exhibit 14 to the Company's Annual Report on Form
              10-K for the period ended December 31, 2004.
10.14A        Company's 2002 Stock Option and Stock Appreciation Rights Plan
              ("2002 Plan"), incorporated by reference to Appendix B to the
              Company's Definitive Proxy Statement for the Annual Meeting of
              Stockholders held on June 25, 2002.

10.14B        Amendment to 2002 Plan adopted by the Board of Directors on
              January 21, 2005, incorporated by reference to Exhibit 10.15B to
              the Company's Annual Report on Form 10-K for the period ended
              December 31, 2004.

10.14C        Amendment to 2002 Plan approved at the Company's Annual Meeting of
              Stockholders held on June 15, 2004, incorporated by reference to
              Exhibit 10.15C to the Company's Annual Report on Form 10-K for the
              period ended December 31, 2004.

10.14D        Amendment to 2002 Plan adopted by the Board of Directors on April
              1, 2004, incorporated by reference to Exhibit 10.15D to the
              Company's Annual Report on Form 10-K for the period ended December
              31, 2004.

10.15A        Amended and Restated 1992 Stock Option and Stock Appreciation
              Rights Plan ("1992 Plan"), incorporated by reference to Appendix A
              to Company's Definitive Proxy Statement for the Annual Meeting of
              Stockholders held on May 8, 2000.





                                    Page 23
<PAGE>



(a)    Exhibits (continued):

10.15B        Amendment to 1992 Plan approved at the Company's Annual Meeting of
              Stockholders held on June 22, 2001, incorporated by reference to
              Exhibit 10.16B to the Company's Annual Report on Form 10-K for the
              period ended December 31, 2004.

10.16         Stock Option Agreement under the Company's 2002 Stock Option and
              Stock Appreciation Rights Plan, dated January 21, 2005, between
              the Company and Zach Lonstein, incorporated by reference to
              Exhibit 10.1 to the Company's Current Report on Form 8-K filed
              November 5, 2004.

10.17A        Lease dated June 2, 1997 between the Company and Leonia
              Associates, LLC, incorporated by reference to Exhibit 10.18A to
              the Company's Annual Report on Form 10-K for the period ended
              December 31, 2004.

10.17B        First Amendment of Lease between the Company and Leonia
              Associates, LLC, dated January 16, 1998, incorporated by reference
              to Exhibit 10.18B to the Company's Annual Report on Form 10-K for
              the period ended December 31, 2004.

10.17C        Second Amendment of Lease between the Company and Leonia
              Associates, LLC, dated as of September 9, 1999, incorporated by
              reference to Exhibit 10.18C to the Company's Annual Report on Form
              10-K for the period ended December 31, 2004.

10.17D        Third Amendment of Lease between the Company and Leonia
              Associates, LLC, dated as of August 28, 2000, incorporated by
              reference to Exhibit 10.7D to the Company's 10-K for the fiscal
              year ended October 31, 2000.

10.17E        Fourth Amendment of Lease between the Company and Leonia
              Associates, LLC, dated as of April 19, 2004, incorporated by
              reference to Exhibit 10.18E to the Company's Annual Report on Form
              10-K for the period ended December 31, 2004.

10.18A        Office Lease Agreement dated May 22, 2000 between the Company and
              Crocker Realty Trust, incorporated by reference to Exhibit 10.6 to
              the Company's Form 10-Q for the period ended July 31, 2000.

10.18B        First Amendment to Lease dated as of April 1, 2002 by and between
              Crocker Realty Trust, L.P. and the Company, incorporated by
              reference to Exhibit 10.1 to the Company's Form 10-Q for period
              ended March 31, 2002.

10.19A        Tenth Floor Option Agreement between the Company, G-H-G Realty
              Company ("GHG"), and RSL Com USA, Inc. ("RSL"), dated as of
              November 30, 1999, with related notice of exercise dated February
              14, 2000, incorporated by reference to Exhibit 10.6A to the
              Company's Form 10-K for the fiscal year ended October 31, 2000.

10.19B        Eleventh Floor Option Agreement between the Company, GHG, and RSL,
              dated as of November 30, 1999, with related notice of exercise
              dated December 2, 1999, incorporated by reference to Exhibit 10.6B
              to the Company's 10-K for the fiscal year ended October 31, 2000.





                                    Page 24
<PAGE>



(a)    Exhibits (continued):

10.20A*       Master Services Agreement dated as of May 24, 2001 among the
              Company, Alicomp, a Division of Alicare, Inc. and ADT Security
              Services, Inc., incorporated by reference to Exhibit 10.1A to a
              Registration Statement No. 333-110173 on Form S-3 filed February
              6, 2004.

10.20B*       Amendment to Master Services Agreement among the Company, Alicomp,
              a Division of Alicare, Inc. and ADT Security Services, Inc. dated
              as of January 11, 2002, incorporated by reference to Exhibit 10.1B
              to a Registration Statement No. 333-110173 on Form S-3 filed
              February 6, 2004.

10.20C*       Computer Services Agreement dated as of March 21, 1997 by and
              between the Company and Alicomp, a Division of Alicare, Inc.,
              incorporated by reference to Exhibit 10.2A to a Registration
              Statement No. 333-110173 on Form S-3 filed February 6, 2004.

10.20D*       Marketing Agreement dated as of March 21, 1997 by and between the
              Company and Alicomp, a Division of Alicare, Inc., incorporated by
              reference to Exhibit 10.2B to a Registration Statement No.
              333-110173 on Form S-3 filed February 6, 2004.

10.20E*       Extension Agreement dated as of October 1, 2002 by and between the
              Company and Alicomp, a Division of Alicare, Inc., incorporated by
              reference to Exhibit 10.2C to a Registration Statement No.
              333-110173 on Form S-3 filed February 6, 2004.

10.20F*       Extension Agreement dated as of December 30, 2003 by and between
              the Company and Alicomp, a Division of Alicare, Inc., incorporated
              by reference to Exhibit 10.2D to a Registration Statement No.
              333-110173 on Form S-3 filed February 6, 2004.

14            Code of Ethics, incorporated by reference to the Company's
              definitive Proxy Statement filed on April 29, 2004.

31            Certifications required by Rule 13a-14(a) and Section 302 of the
              Sarbanes-Oxley Act of 2002 to be filed.

32            Certifications required by Rule 13a-14(b) and 18 U.S.C. Section
              1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
              of 2002) to be furnished but not filed.


* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment.



                                    Page 25
<PAGE>





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.





                                      INFOCROSSING, INC.

May 10, 2005                          /s/ ZACH LONSTEIN
                                      ------------------------------------------
                                      Zach Lonstein
                                      Chairman & Chief Executive Officer

May 10, 2005                          /s/ WILLIAM J. McHALE
                                      ------------------------------------------
                                      William J. McHale
                                      Senior Vice President of Finance




                                    Page 26
<PAGE>



                             EXHIBITS FILED HEREWITH

10.1         Letter of Employment between the Company and John Lalli, dated as
             of May 15, 2002.

10.2         Contract for Services between Verizon Information Technologies,
             Inc. (now Infocrossing Healthcare Services, Inc.) and the State
             of Missouri., including Amendments 1 through 6

31           Certifications required by Rule 13a-14(a) and Section 302 of the
             Sarbanes-Oxley Act of 2002 to be filed.

32           Certifications required by Rule 13a-14(b) and 18 U.S.C. Section
             1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
             of 2002) to be furnished but not filed.