---

---

UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q/A

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:March 31, 2003

Commission file number:0-20824

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

|Delaware(State or other jurisdiction of
incorporation or organization) | 13-3252333(IRS Employer
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) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ý No o

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

There
were 5,384,516 shares of the registrant's Common Stock, $0.01 par value, outstanding as of May 9, 2003.

Transitional
Small Business Disclosure Form (check
one):    Yes o No ý

This
amendment is filed to correct the presentation of deferred revenue on the balance sheet, to expand the presentation of Managements' Discussion and Analysis, to correct the
presentation of EBITDA, and to make certain other technical changes.

---

---

---



PART IFINANCIAL INFORMATION

ITEM 1FINANCIAL STATEMENTS

INFOCROSSING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share
and per share amounts)

|                                                                                                                                                                                                                     |                                                                                                                                 | March 31,
2003 |         | December 31,
2002 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------- | -------------- | ------- | ----------------- | -
|
|ASSETS                                                                                                                                                                                                               |                                                                                                                                 |                |         |                   |  
|CURRENT ASSETS:                                                                                                                                                                                                      |                                                                                                                                 |                |         |                   |  
|                                                                                                                                                                                                                     | Cash and equivalents                                                                                                            |                | $       | 7,137             |  
|                                                                                                                                                                                                                     | Trade accounts receivable, net of allowances for doubtful accounts of $625 and $1,051                                           |                |         | 3,407             |  
|                                                                                                                                                                                                                     | Due from related parties                                                                                                        |                |         | 218               |  
|                                                                                                                                                                                                                     | Prepaid license fees                                                                                                            |                |         | 697               |  
|                                                                                                                                                                                                                     | Other current assets                                                                                                            |                |         | 1,388             |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                |         |                   |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                | 12,847  |                   |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                |         |                   |  
|PROPERTY and EQUIPMENT, net                                                                                                                                                                                          |                                                                                                                                 |                | 20,509  |                   |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                |         |                   |  
|OTHER ASSETS:                                                                                                                                                                                                        |                                                                                                                                 |                |         |                   |  
|                                                                                                                                                                                                                     | Deferred software, net                                                                                                          |                |         | 1,619             |  
|                                                                                                                                                                                                                     | Goodwill, net                                                                                                                   |                |         | 28,361            |  
|                                                                                                                                                                                                                     | Other intangible assets, net                                                                                                    |                |         | 1,038             |  
|                                                                                                                                                                                                                     | Security deposits and other non-current assets                                                                                  |                |         | 1,127             |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                |         |                   |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                | 32,145  |                   |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                |         |                   |  
|TOTAL ASSETS                                                                                                                                                                                                         |                                                                                                                                 | $              | 65,501  |                   | $
|                                                                                                                                                                                                                     |                                                                                                                                 |                |         |                   |  
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                                                                                |                                                                                                                                 |                |         |                   |  
|CURRENT LIABILITIES:                                                                                                                                                                                                 |                                                                                                                                 |                |         |                   |  
|                                                                                                                                                                                                                     | Accounts payable                                                                                                                |                | $       | 3,503             |  
|                                                                                                                                                                                                                     | Current portion of long-term debt and capitalized lease obligations                                                             |                |         | 2,129             |  
|                                                                                                                                                                                                                     | Current portion of accrued loss on leased facilities                                                                            |                |         | 206               |  
|                                                                                                                                                                                                                     | Accrued expenses                                                                                                                |                |         | 4,001             |  
|                                                                                                                                                                                                                     | Income taxes payable                                                                                                            |                |         | 117               |  
|                                                                                                                                                                                                                     | Current deferred revenue                                                                                                        |                |         | 304               |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                |         |                   |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                | 10,260  |                   |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                |         |                   |  
|LONG-TERM LIABILITES:                                                                                                                                                                                                |                                                                                                                                 |                |         |                   |  
|                                                                                                                                                                                                                     | Debentures due in 2005, net of unaccreted discount                                                                              |                |         | 10,147            |  
|                                                                                                                                                                                                                     | Long-term debt and capitalized lease obligations                                                                                |                |         | 1,918             |  
|                                                                                                                                                                                                                     | Accrued loss on leased facilities                                                                                               |                |         | 877               |  
|                                                                                                                                                                                                                     | Deferred revenue, net of current portion                                                                                        |                |         | 154               |  
|                                                                                                                                                                                                                     | Other long-term liabilities                                                                                                     |                |         | 891               |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                |         |                   |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                | 13,987  |                   |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                |         |                   |  
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                        |                                                                                                                                 |                |         |                   |  
|REDEEMABLE 8% SERIES A CUMULATIVE CONVERTIBLE PARTICIPATING PREFERRED STOCK; $0.01 par value; 300,000 shares authorized; 157,115 shares issued and outstanding (liquidation preference of $75,364 at March 31, 2003) |                                                                                                                                 |                | 55,637  |                   |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                |         |                   |  
|STOCKHOLDERS' DEFICIT:                                                                                                                                                                                               |                                                                                                                                 |                |         |                   |  
|                                                                                                                                                                                                                     | Preferred stock; $0.01 par value; 2,700,000 shares authorized; none issued                                                      |                |         |                  |  
|                                                                                                                                                                                                                     | Common stock; $0.01 par value; 50,000,000 shares authorized; shares issued of 5,973,506 at March 31, 2003 and December 31, 2002 |                |         | 60                |  
|                                                                                                                                                                                                                     | Additional paid-in capital                                                                                                      |                |         | 61,135            |  
|                                                                                                                                                                                                                     | Accumulated deficit                                                                                                             |                |         | (72,727           | )
|                                                                                                                                                                                                                     |                                                                                                                                 |                |         |                   |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                | (11,532 | )                 |  
|                                                                                                                                                                                                                     | Less 594,990 shares of common stock held in treasury, at cost                                                                   |                |         | (2,851            | )
|                                                                                                                                                                                                                     |                                                                                                                                 |                |         |                   |  
|TOTAL STOCKHOLDERS' DEFICIT                                                                                                                                                                                          |                                                                                                                                 |                | (14,383 | )                 |  
|                                                                                                                                                                                                                     |                                                                                                                                 |                |         |                   |  
|TOTAL LIABILITES AND STOCKHOLDERS' DEFICIT                                                                                                                                                                           |                                                                                                                                 | $              | 65,501  |                   | $
|                                                                                                                                                                                                                     |                                                                                                                                 |                |         |                   |  

See
Notes to Consolidated Financial Statements (Unaudited).

2

---

INFOCROSSING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands,
except per share amounts)

|                                                      |                                                       | Three Months Ended
March 31, |       
|----------------------------------------------------- | ----------------------------------------------------- | ---------------------------- | ------
|
|
|REVENUES                                              |                                                       | $                            | 13,129
|                                                      |                                                       |                              |       
|COSTS and EXPENSES:                                   |                                                       |                              |       
|                                                      | Costs of revenues, excluding depreciation shown below |                              |       
|                                                      | Selling and promotion costs                           |                              |       
|                                                      | General and administrative expenses                   |                              |       
|                                                      | Depreciation and amortization                         |                              |       
|                                                      |                                                       |                              |       
|                                                      |                                                       |                              | 12,266
|                                                      |                                                       |                              |       
|INCOME FROM OPERATIONS                                |                                                       |                              | 863   
|                                                      |                                                       |                              |       
|Interest income                                       |                                                       |                              | (20   
|Interest expense                                      |                                                       |                              | 593   
|                                                      |                                                       |                              |       
|                                                      |                                                       |                              | 573   
|                                                      |                                                       |                              |       
|INCOME BEFORE INCOME TAXES                            |                                                       |                              | 290   
|Income tax expense                                    |                                                       |                              | 20    
|                                                      |                                                       |                              |       
|NET INCOME                                            |                                                       |                              | 270   
|Accretion and dividends on redeemable preferred stock |                                                       |                              | (2,448
|                                                      |                                                       |                              |       
|NET LOSS TO COMMON STOCKHOLDERS                       |                                                       | $                            | (2,178
|                                                      |                                                       |                              |       
|BASIC AND DILUTED EARNINGS PER SHARE:                 |                                                       |                              |       
|                                                      | Net loss to common stockholders                       |                              | $     
|                                                      |                                                       |                              |       
|                                                      | Weighted average number of common shares outstanding  |                              |       
|                                                      |                                                       |                              |       

See
Notes to Consolidated Financial Statements (Unaudited).

3

---

INFOCROSSING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
(Unaudited, in thousands)

|                                                      |  | Common Shares |  | Par Value |    | Additional
Paid in
Capital |   | Accumulated
Deficit |  | Treasury
Stock at Cost |         | Total |  
|----------------------------------------------------- |  | ------------- |  | --------- | -- | -------------------------- | - | ------------------- |  | ---------------------- | ------- | ----- | -
|Balances, December 31, 2002                           |  | 5,974         |  | $         | 60 |                            | $ | 61,135              |  | $                      | (70,549 | )     | $
|Accretion and dividends on Redeemable preferred stock |  |              |  |           |   |                            |   |                    |  |                        | (2,448  | )     |  
|Net income                                            |  |              |  |           |   |                            |   |                    |  |                        | 270     |       |  
|                                                      |  |               |  |           |    |                            |   |                     |  |                        |         |       |  
|Balances, March 31, 2003                              |  | 5,974         |  | $         | 60 |                            | $ | 61,135              |  | $                      | (72,727 | )     | $
|                                                      |  |               |  |           |    |                            |   |                     |  |                        |         |       |  

See
Notes to Consolidated Financial Statements (Unaudited).

4

---

INFOCROSSING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)

|                                                                              |                                                                                              | Three Months Ended
March 31,                   |                                                     
|----------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | ---------------------------------------------- | ----------------------------------------------------
|
|
|CASH FLOWS FROM OPERATING ACTIVITIES:                                         |                                                                                              |                                                |                                                     
|Net income                                                                    |                                                                                              | $                                              | 270                                                 
|Adjustments to reconcile net income to cash provided by operating activities: |                                                                                              |                                                |                                                     
|                                                                              | Depreciation and amortization                                                                |                                                |                                                     
|                                                                              | Accretion of discounted Debentures                                                           |                                                |                                                     
|                                                                              | Credits granted by a software licensor, net of amounts used                                  |                                                |                                                     
|                                                                              | Decrease (increase) in:                                                                      |                                                |                                                     
|                                                                              |                                                                                              | Trade accounts receivable                      |                                                     
|                                                                              |                                                                                              | Prepaid license fees and other current assets  |                                                     
|                                                                              |                                                                                              | Security deposits and other non-current assets |                                                     
|                                                                              | Increase (decrease) in:                                                                      |                                                |                                                     
|                                                                              |                                                                                              | Accounts payable                               |                                                     
|                                                                              |                                                                                              | Income taxes payable                           |                                                     
|                                                                              |                                                                                              | Accrued expenses                               |                                                     
|                                                                              |                                                                                              | Payments on accrued loss on leased facilities  |                                                     
|                                                                              |                                                                                              | Deferred revenue and other liabilities         |                                                     
|                                                                              |                                                                                              |                                                |                                                     
|                                                                              |                                                                                              |                                                | Net cash provided by operating activities           
|                                                                              |                                                                                              |                                                |                                                     
|CASH FLOWS FROM INVESTING ACTIVITIES:                                         |                                                                                              |                                                |                                                     
|                                                                              | Purchase of property and equipment                                                           |                                                |                                                     
|                                                                              | Purchase of the outstanding stock of AmQUEST, Inc. and payments of related costs             |                                                |                                                     
|                                                                              | Increase in deferred software costs                                                          |                                                |                                                     
|                                                                              |                                                                                              |                                                |                                                     
|                                                                              |                                                                                              |                                                | Net cash used in investing activities               
|                                                                              |                                                                                              |                                                |                                                     
|CASH FLOWS FROM FINANCING ACTIVITIES:                                         |                                                                                              |                                                |                                                     
|                                                                              | Proceeds from issuance of Debentures                                                         |                                                |                                                     
|                                                                              | Repayment of debt and capitalized leases                                                     |                                                |                                                     
|                                                                              | Advances to related parties, net                                                             |                                                |                                                     
|                                                                              |                                                                                              |                                                |                                                     
|                                                                              |                                                                                              |                                                | Net cash (used in) provided by financing activities 
|                                                                              |                                                                                              |                                                |                                                     
|                                                                              |                                                                                              |                                                | Net cash provided by (used in) continuing operations
|                                                                              |                                                                                              |                                                |                                                     
|CASH FLOWS FROM DISCONTINUED OPERATIONS:                                      |                                                                                              |                                                |                                                     
|                                                                              | Payments on portion of accrued loss on leased facilities relating to discontinued operations |                                                |                                                     
|                                                                              |                                                                                              |                                                |                                                     
|Net increase (decrease) in cash and equivalents                               |                                                                                              |                                                | 111                                                 
|Cash and equivalents, beginning of period                                     |                                                                                              |                                                | 7,026                                               
|                                                                              |                                                                                              |                                                |                                                     
|Cash and equivalents, end of the period                                       |                                                                                              | $                                              | 7,137                                               
|                                                                              |                                                                                              |                                                |                                                     
|SUPPLEMENTAL CASH FLOW INFORMATION:                                           |                                                                                              |                                                |                                                     
|                                                                              | Cash paid during the period for:                                                             |                                                |                                                     
|                                                                              |                                                                                              | Interest                                       |                                                     
|                                                                              |                                                                                              |                                                |                                                     
|                                                                              |                                                                                              | Income taxes                                   |                                                     
|                                                                              |                                                                                              |                                                |                                                     
|SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITY:                       |                                                                                              |                                                |                                                     
|                                                                              | Fees and other costs accrued in connection with the purchase Of AmQUEST, Inc.                |                                                | $                                                   
|                                                                              |                                                                                              |                                                |                                                     
|                                                                              | Equipment acquired subject to a capital lease                                                |                                                | $                                                   
|                                                                              |                                                                                              |                                                |                                                     
|SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:                     |                                                                                              |                                                |                                                     
|                                                                              | Treasury shares received in payment of a stock option exercise                               |                                                | $                                                   
|                                                                              |                                                                                              |                                                |                                                     
|                                                                              | Additional Debentures issued in lieu of a cash payment of interest                           |                                                | $                                                   
|                                                                              |                                                                                              |                                                |                                                     

See Notes to Consolidated Financial Statements (Unaudited).

5

---



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

1. BASIS OF PRESENTATION

The consolidated balance sheet as of March 31, 2003, the consolidated statements of operations and the consolidated statements of cash flows for the three
months ended March 31, 2003 and 2002, and the consolidated statement of stockholders' deficit for the three months ended March 31, 2003 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 for the periods ended March 31, 2003 and 2002 are not necessarily indicative of the operating results for the full years.

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 accounting principles generally accepted in the United States 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, 2002.

The
consolidated financial statements include the accounts of Infocrossing, Inc. and its wholly owned subsidiaries, including, subsequent to its acquisition on February 5,
2002, the accounts of AmQUEST, Inc. (collectively, the "Company"). All significant intercompany balances and transactions have been eliminated.

2. ACQUISITION

On February 5, 2002, the Company purchased all of the outstanding capital stock of AmQUEST, a Georgia corporation, from its former parent company American
Software, Inc. ("ASI")(the "AmQUEST Acquisition"). As consideration for the purchase of AmQUEST's shares, the Company paid ASI approximately $19,634,000 in cash, after finalizing certain post
closing adjustments. In addition, the Company incurred approximately $612,000 in professional fees and other costs related to the acquisition of which $150,000 remains unpaid at March 31, 2003.

The
Company financed the AmQUEST Acquisition through the application of the proceeds of the financing described in Note 3 and cash on hand.

The
Company acquired client contracts valued at $1,200,000. This intangible asset is being amortized over five years using an accelerated method to approximate the anticipated decline in
the revenues of the acquired contracts as they expire over that time. The acquisition also generated $20,624,000 in goodwill. This goodwill is not amortizable for tax purposes.

The
following unaudited condensed consolidated pro forma financial statement of operations is presented to illustrate the effects of the acquisition of AmQUEST as if such transaction had
occurred on the first day of January 1, 2002. The pro forma statement of operations may not be indicative of the results that actually would have occurred had the combination been in effect on
the date indicated, nor does it purport to indicate the results that may be obtained in the future.

6

---

Condensed Consolidated Pro Forma Statement of Operations
(In Thousands except Per Share Data)

Three Months Ended
March 31, 2002Revenues

$
12,708Net income

$
1,115Net loss to common stockholders

$
(1,134
)Net loss to common stockholders per basic and diluted share

$
(0.21
)


3. DEBENTURES

On February 1, 2002, the Company entered into a Securities Purchase Agreement (the "SPA") with a group of private investors (the "Investors") whereby the
Company issued Senior Subordinated Debentures (the "Debentures") and warrants to purchase, initially, 2,000,000 shares of the common stock of the Company (the "Initial Camden Warrants") in exchange
for $10,000,000. Pursuant to the SPA, the proceeds of the sale of the Debentures were used to fund a portion of the cost of the AmQUEST Acquisition.

The
Debentures were issued at an aggregate face value of $10,000,000 with a maturity of three years from February 1, 2002 (the "Issuance Date"), with the right to extend the term
of the Debentures for one additional year at the Company's sole option. Pursuant to the terms of the Debentures, the Company is required to make semi-annual interest payments of 12% per
annum for the first two years, 13% per annum for the period commencing on February 1, 2004 and ending on February 1, 2005, and (if the Company elects to extend the maturity date as
described above), 14% per annum from February 1, 2005. The Company has the option to pay interest in the form of (a) cash, (b) additional Debentures, or (c) a combination
of cash and additional Debentures. If the Company chooses to make interest payments using additional Debentures, the Company may be required to issue additional warrants (the "Additional Camden
Warrants") pursuant to the terms of the Debentures. Additional Camden Warrants will not be subject to cancellation. The fair market value of Additional Camden Warrants issued, if any, will be recorded
as deferred financing costs and amortized over the remaining term of the Debentures.

The
initial carrying values of the Debentures ($8,280,000) and Initial Camden Warrants ($1,720,000) were determined by apportioning an amount equal to the proceeds from the private sale
multiplied by the relative value of each item as of the Issuance Date. The difference between the carrying value and the face value of the Debentures is being recorded as additional interest expense
through February 1, 2005 (the initial maturity date of the Debentures) using the interest method.

The
Initial Camden Warrants have been issued pursuant to a Warrant Agreement dated as of February 1, 2002 by and between the Company and the Investors (the "Warrant Agreement")
and are subject to certain customary anti-dilution adjustments. The exercise price of the Initial Camden Warrants is $5.86. The Camden Warrants expire on January 31, 2007 and may be
cancelled, in part, upon the prepayment of the Debentures as more fully described in the Warrant Agreement.

On
July 31, 2002 and January 31, 2003, the Company made the interest payment then due by issuing additional Debentures totaling $600,000 and $636,000, respectively. The
additional Debentures are subject to the same interest rates and other terms as the original Debentures. If any Debentures are outstanding at February 1, 2004, the Company will be required to
issue Additional Camden Warrants to purchase 123,600 shares of common stock.

7

---

4. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In July 2002, the FASB issued Statement of Financial Accounting Standards No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities" ("SFAS 146"). SFAS 146 provides guidance on the timing of the recognition of costs associated with exit or disposal activities, requiring such costs to be recognized when
incurred. Previous guidance required the recognition of costs at the date of commitment to an exit or disposal plan. The provisions of SFAS 146 are to be adopted prospectively after
December 31, 2002. Although SFAS 146 may impact the accounting for costs related to exit or disposal activities the Company may enter into in the future, particularly the timing of the
recognition of these costs, the adoption of the statement did not have an impact on the Company's current financial condition or results of operations.

In
December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based CompensationTransition and Disclosure, an amendment of FASB Statement
No. 123," which amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. The transition and annual disclosure provisions of SFAS No. 148 are effective for fiscal years ending after December 15, 2002. In
addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used on reported results. The Company has adopted the disclosure provisions of SFAS No. 148 and continues to account for
stock-based compensation to employees under APB Opinion No. 25 and related interpretations.

5. STOCK-BASED COMPENSATION

The Company accounts for stock options granted to employees and directors under the Plan in accordance with Accounting Principles Board Opinion No. 25 and
related Interpretations. Accordingly, no compensation cost has been recognized for stock option awards. Had compensation cost been determined in accordance with Statement of Financial Accounting
Standard No. 123 "Accounting for Stock-Based Compensation", the Company's income (loss) in thousands of dollars and income (loss) per common share for the three months ended March 31,
2003 and 2002 would have been as follows:

2003

2002Net loss to common stockholders:As reported

$
(2,178
)
$
(919
)Pro forma

$
(2,908
)
$
(1,642
)Net loss to common stockholders per share:As reported

$
(0.40
)
$
(0.17
)Pro forma

$
(0.54
)
$
(0.31
)


6. BASIC AND DILUTED EARNINGS PER COMMON SHARE

Statement of Financial Accounting Standards No. 128 "Earnings per Share" ("SFAS 128") requires the presentation of basic and diluted earnings per
share ("EPS"). Basic EPS is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during each period. Diluted EPS is computed using
the weighted average number of common shares plus the dilutive effect of common stock equivalents. Common stock equivalents that are antidilutive are excluded from the computation of weighted average
shares outstanding. Certain common stock equivalents that are currently antidilutive may be dilutive in the future. In determining

8

---

the
diluted loss per common share for the three months ended March 31, 2003 and 2002, common stock equivalents are ignored since the effect of including such equivalents would have been
antidilutive.

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

Infocrossing is a leading provider of information technology and business process outsourcing services to enterprise clients. We deliver a full suite of managed
and outsourced solutions that enable clients to leverage our infrastructure and process expertise to improve their efficiency and reduce their operating costs. We have gained significant 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,
including Global 2000 companies, and help assure the optimal performance, security, reliability, and scalability of our clients' mainframes, distributed servers, and networks, irrespective of where
the systems' components are located. Due to rapid changes and increasing complexities in information technology, we believe outsourcing is an efficient solution for many businesses and continues to be
a growing trend. We have grown through strategic acquisitions as well as organic growth.

On
February 5, 2002, we completed the acquisition of AmQUEST, Inc., an Atlanta-based IT outsourcing company, for approximately $19.6 million in cash after certain
post-closing adjustments (the "AmQUEST Acquisition"). This acquisition combined two highly complementary businesses and enabled us to benefit from increased scale, enhanced services, and
expanded geographic reach. The combination strengthens our position as one of the leading providers of IT outsourcing solutions for large and mid-size companies enterprises across a broad
range of industries including financial services, security, publishing, healthcare, telecommunications and manufacturing.

THREE-MONTHS ENDED MARCH 31, 2003 AND 2002

For the three months ended March 31, 2003 (the "Current Quarter"), revenues increased $1,896,000 (17%) to $13,129,000 from $11,233,000 for the three months
ended March 31, 2002 (the "Prior Quarter").    This revenue growth is attributable to new customer contracts added in 2002.

Costs
of revenues increased $2,883,000 (50%) to $8,680,000 during the Current Quarter compared with $5,797,000 for the Prior Quarter. Costs of revenues in the Prior Quarter reflect a
settlement of certain claims with a software licensor whereby we received credits totaling $2,000,000 to be used toward certain future purchases (the "Credits"). The entire value of the Credits was
recorded in the Prior Quarter, and we also reversed accrued expenses of $796,000 for software support and maintenance fees in the Prior Quarter in connection with the settlement of the dispute.

Selling
and promotion costs increased $33,000 (4%) to $806,000 in the Current Quarter from $773,000 in the Prior Quarter.

General
and administrative expenses decreased $226,000 (14%) to $1,364,000 for the Current Quarter from $1,590,000 for the Prior Quarter, due to savings of $67,000 in facilities costs,
$43,000 in professional fees, and $41,000 in provision for doubtful accounts.

Depreciation
and amortization for fixed assets and other intangibles increased $54,000 (4%), from $1,362,000 in the Prior Quarter to $1,416,000 in the Current Quarter as a result of
fixed asset additions since March 31, 2002.

We
recorded net interest expense of $573,000 in the Current Quarter, compared with $381,000 in the Prior Quarter. The net change of $192,000 reflects an increase of $128,000 in interest
expense on a larger average outstanding debt balance than in the Prior Quarter and a decrease in interest income of

9

---

$64,000,
due to a lower average balance of interest-earning assets during the Current Quarter. Also, to a lesser extent, the decrease in interest income results from lower interest rates.

In
the Current Quarter, we recorded income tax expense of $20,000, related to estimated state income tax obligations. No tax expense was recorded in the Prior Quarter. At
March 31, 2003, we have net operating loss carryforwards of approximately $44.1 million for federal income tax purposes, including approximately $8.1 million acquired in the
AmQUEST Acquisition, that begin to expire in 2019. The use of the acquired net operating loss acquired in the AmQUEST Acquisition may be restricted under
current tax rules. Any future tax benefit generated by the use of the net operating loss acquired in the AmQUEST Acquisition will be treated as a reduction of goodwill. The deferred tax asset
associated with carrying forward cumulative pre-tax losses has been fully offset by a valuation allowance due to the uncertainty of realizing such tax benefits.

We
had net income of $270,000 for the Current Quarter compared with $1,330,000 for the Prior Quarter. Net income for the Prior Quarter includes $2,796,000 related to the settlement of a
dispute with a software licensor, as previously described. Excluding the settlement of the dispute in the Prior Quarter, net income increased by $1,736,000. Net loss to common stockholders after
accretion and accrued dividends on preferred stock was $2,178,000 for the Current Quarter compared with $919,000 in the Prior Quarter. The loss per common share was $0.40 for the Current Quarter
compared with $0.17 in the Prior Quarter, on both a basic and diluted basis. Common stock equivalents were ignored in determining the net loss per share for both periods, since the inclusion of such
equivalents would be antidilutive.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was approximately $1,785,000 for the three months ended March 31, 2003. During the Current Quarter, we had
$270,000 of net income, $1,416,000 of depreciation and amortization, and $139,000 of debenture discount amortization. Among other operating items, the decrease in accounts receivable was offset by a
decrease in current deferred revenue, and the increase in accrued expenses was offset by a decrease in accounts payable and an increase in non-current assets.

Principal
investing activities include $969,000 for the purchase of property and equipment. During the first quarter of 2003, we also incurred capital leases of approximately $1,262,000.

Principal
financing activities included $462,000 in payments of principal with respect to debt and capital lease obligations.

On
February 1, 2002, the Company entered into a Securities Purchase Agreement (the "SPA") with a group of private investors (the "Investors") whereby the Company issued Senior
Subordinated Debentures (the "Debentures") and warrants to purchase, initially, 2,000,000 shares of the common stock of the Company (the "Initial Camden Warrants") in exchange for $10,000,000.

The
Debentures were issued at an aggregate face value of $10,000,000 with a maturity of three years from February 1, 2002 (the "Issuance Date"), with the right to extend the term
of the Debentures for one additional year at the Company's sole option. Pursuant to the terms of the Debentures, the Company is required to make semi-annual interest payments of 12% per
annum for the first two years, 13% per annum for the period commencing on February 1, 2004 and ending on February 1, 2005, and (if the Company elects to extend the maturity date as
described above), 14% per annum from February 1, 2005. The Company has the option to pay interest in the form of (a) cash, (b) additional Debentures, or (c) a combination
of cash and additional Debentures. If the Company chooses to make interest payments using additional Debentures, the Company may be required to issue additional warrants (the "Additional Camden
Warrants") pursuant to the terms of the Debentures. Additional Camden Warrants will not be subject to cancellation. The fair market value of Additional Camden

10

---

Warrants
issued, if any, will be recorded as deferred financing costs and amortized over the remaining term of the Debentures.

On
July 31, 2002 and January 31, 2003, the Company made the interest payment then due by issuing additional Debentures totaling $600,000 and $636,000, respectively. The
additional Debentures are subject to the same interest rates and other terms as the original Debentures. If any Debentures are outstanding at February 1, 2004, the Company will be required to
issue Additional Camden Warrants to purchase 123,600 shares of common stock.

As
of March 31, 2003, we had cash and equivalents of $7,137,000. We believe that our cash, current assets, and cash generated from future operating activities will provide
adequate resources to fund our ongoing operating requirements for the next 12 months. We would need to obtain additional financing to fund any significant acquisitions or other substantial
investments.

EBITDA

EBITDA represents net income before interest, taxes, depreciation and amortization. The Company presents EBITDA because it considers such information an important
supplemental measure of the Company's 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 the Company, many of which present EBITDA when reporting their results. The Company also uses EBITDA for the following purposes. EBITDA is one of the factors used to determine the
total amount of bonuses available to be awarded to executive officers and other employees. The Company's credit agreement uses EBITDA (with additional adjustments) to measure compliance with covenants
such as interest coverage and debt incurrence. EBITDA is also used by prospective and current lessors as well as potential lenders to evaluate potential transactions with the Company. EBITDA is also
widely used by the Company and other buyers to evaluate and price potential acquisition candidates.

For
the three months ended March 31, 2003, our EBITDA was $2,279,000 compared with $3,073,000 in the Prior Quarter. EBITDA for the Prior Quarter includes $2,796,000 related to the
settlement of a dispute with a software licensor, as previously described. Excluding the settlement of the dispute in the Prior Quarter, Management believes that the significant improvement in EBITDA
reflects the contribution of AmQUEST to our operations along with organic revenue growth and the additional cost savings noted above.

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 GAAP. Some of these
limitations are: (a) EBITDA does not reflect changes in, or cash requirements for, the Company's working capital needs; (b) EBITDA does not reflect the significant interest expense, or
the cash requirements necessary to service interest or principal payments, on the Company's 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 the Company's performance. The Company compensates for these limitations by relying primarily on its GAAP results and using EBITDA only supplementally.

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

11

---

Reconciliationin Thousands

Three Months Ended
March 31,2003

2002NET INCOME

$
270

$
1,330Add back:Tax expense


20


Net interest expense


573


381Depreciation and amortization


1,416


1,362EBITDA

$
2,279

$
3,073


EBITDA
is a measure of the Company's performance that is not required by, or presented in accordance with, GAAP. EBITDA is not a measurement of the Company's 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.

NEW FINANCIAL ACCOUNTING STANDARDS

In July 2002, the FASB issued Statement of Financial Accounting Standards No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities" ("SFAS 146"). SFAS 146 provides guidance on the timing of the recognition of costs associated with exit or disposal activities, requiring such costs to be recognized when
incurred. Previous guidance required the recognition of costs at the date of commitment to an exit or disposal plan. The provisions of SFAS 146 are to be adopted prospectively after
December 31, 2002. Although SFAS 146 may impact the accounting for costs related to exit or disposal activities the Company may enter into in the future, particularly the timing of the
recognition of these costs, the adoption of the statement will not have an impact on the Company's current financial condition or results of operations.

In
December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based CompensationTransition and Disclosure, an amendment of FASB Statement
No. 123," which amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. The transition and annual disclosure provisions of SFAS No. 148 are effective for fiscal years ending after December 15, 2002. In
addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used on reported results. The Company has adopted the disclosure provisions of SFAS No. 148 and continues to account for
stock-based compensation to employees under APB Opinion No. 25 and related interpretations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

General

The Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the U. S., which require the selection and
application of significant accounting policies, and which require management to make significant estimates and assumptions. We believe that the following are some of the more critical judgment areas
in the application of its accounting polices.

12

---

Revenue Recognition

The Company's services are provided under a combination of fixed monthly fees and time and materials billings. Contracts with customers typically range from one
to five years. Revenue is recognized (1) after we have obtained an executed service contract from the customer; (2) as the services are rendered; (3) when the price is fixed as
per the service contract; and (4) when the Company believes that collectibility is reasonably assured based on the credit risk policies and procedures that the Company employs.

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial
condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Tangible and Intangible Assets

We have significant tangible and intangible assets on its balance sheet, primarily property and equipment, deferred software costs, and intangible assets,
primarily goodwill, related to acquisitions. The assignment of useful lives to these assets and the valuation and classification of intangible assets involves significant judgments and the use of
estimates. The testing of these tangible and intangibles under established accounting guidelines for impairment also requires significant use of judgment and
assumptions. Our assets are tested and reviewed for impairment on an ongoing basis under the established accounting guidelines. Changes in business conditions or changes in the decisions of management
as to how assets will be deployed in our operations could potentially require future adjustments to asset valuations.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. As such, final
results could differ from estimates or expectations due to risks and uncertainties including, but not limited to: incomplete or preliminary information; changes in government regulations and policies;
continued acceptance of the Company's products and services in the marketplace; competitive factors; new products; technological changes; the Company's dependence on third party suppliers;
intellectual property rights; and other risks. For any of these factors, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995, as amended.

13

---



ITEM 3QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

The Company is not exposed to material gains or losses related to the impact of interest rate changes, foreign currency fluctuations, or changes in the market
values of its investments. The Company generally invests in fixed income securitiestypically commercial paper, certificates of deposit and money market accounts issued only by major
corporations and financial institutions of recognized strength and securityand holds all investments to maturity.

At
March 31, 2003, the Company's outstanding fixed rate debt was approximately $15,283,000. If market rates decline, the Company runs the risk that the related required payments
on the fixed rate debt will exceed those that would be paid based on current market rates.

Market Risk

The Company's accounts receivable are subject, in the normal course of business, to collection risks. The Company regularly assesses these risks and has policies
and business practices to mitigate the adverse effects of collection risks. As a result, the Company does not anticipate any material losses in this area in excess of the recorded allowance for
doubtful accounts.

Foreign Currency Risks

The Company has no material foreign operations.

ITEM 4CONTROLS AND PROCEDURES

During the quarter ended March 31, 2003, an evaluation was performed under the supervision and with the participation of the Company's management,
including the Chief Executive Officer and Senior Vice President of Finance, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that
evaluation, the Company's management, including the Chief Executive Officer and the Senior Vice President of Finance, concluded that the Company's disclosure controls and procedures were effective as
of March 31, 2003. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to March 31,
2003.

PART IIOTHER INFORMATION

ITEM 1LEGAL PROCEEDINGS

None.

ITEM 6EXHIBITS AND REPORTS ON FORM 8-K

14

---



None.

15

---

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.                                                      |  | 
|---------------- | ----------------------------------------------------------------------- |  | 
|February 6, 2004 | /s/ ZACH LONSTEINZach Lonstein
Chairman & Chief Executive Officer       |  | 
|                 |                                                                         |  | 
|February 6, 2004 | /s/ WILLIAM J. McHALEWilliam J. McHale
Senior Vice President of Finance |  | 
|                 |                                                                         |  | 

16

---

CERTIFICATIONS

I,
Zach Lonstein, certify that:



|February 6, 2004 | /s/ ZACH LONSTEINZach Lonstein
Chairman and Chief Executive Officer |  | 
|---------------- | ------------------------------------------------------------------- |  | 
|                 |                                                                     |  | 

17

---

CERTIFICATIONS (CONTINUED)

I,
William J. McHale, certify that:



|February 6, 2004 | /s/ WILLIAM J. McHALEWilliam J. McHale
Senior Vice President of Finance |  | 
|---------------- | ----------------------------------------------------------------------- |  | 
|                 |                                                                         |  | 

18

---

QuickLinks