SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              --------------------

                                    FORM 10-Q

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

                  For the quarterly period ended June 30, 1999
                           Commission File No. 0-20943

                               Intelligroup, Inc.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

           New Jersey                                  11-2880025
----------------------------------          ------------------------------------
 (State or Other Jurisdiction of            (I.R.S. Employer Identification No.)
  Incorporation or Organization)

499 Thornall Street, Edison, New Jersey                       08837
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                   (Zip Code)

                                 (732) 590-1600
                         -------------------------------
                           (Issuer's Telephone Number,
                              Including Area Code)

     Indicate by checkmark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                   Yes:   X                     No:
                        ----                        ----

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of August 2, 1999:

             Class                                          Number of Shares
             -----                                          ----------------

  Common Stock, $.01 par value                                15,558,751


<PAGE>

                       INTELLIGROUP, INC. and SUBSIDIARIES

                                TABLE OF CONTENTS
                                -----------------

                                                                           Page
                                                                           ----
PART I. FINANCIAL INFORMATION

     Item 1.  Consolidated Financial Statements...........................    1

              Consolidated Balance Sheets
              as of June 30, 1999 (unaudited)
              and December 31, 1998 ......................................    2

              Consolidated Statements of Operations and Comprehensive
              Income (Loss) for the Three Months and Six Months Ended
              June 30, 1999 and 1998 (unaudited)..........................    3

              Consolidated Statements of Cash Flows
              for the Six Months Ended
              June 30, 1999 and 1998 (unaudited)..........................    4

              Notes to Consolidated Financial Statements (unaudited)......    5

     Item 2.  Management's Discussion and Analysis of
              Results of Operations and Financial Condition...............    9

PART II.  OTHER INFORMATION

     Item 1.  Legal Proceedings...........................................   18

     Item 4.  Submission of Matters to a Vote of Security Holders.........   18

     Item 5.  Other Information...........................................   19

     Item 6.  Exhibits and Reports on Form 8-K............................   20

SIGNATURES................................................................   21





                                      - i -
<PAGE>

                          PART I. FINANCIAL INFORMATION

                    Item 1. Consolidated Financial Statements




                                      - 1 -
<PAGE>

                       INTELLIGROUP, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                       June 30, 1999 and December 31, 1998

<TABLE>
<CAPTION>
                                                                         June 30,      December 31,
                                                                          1999             1998
                                                                     --------------    ------------
                                                                       (unaudited)
               ASSETS
<S>                                                                  <C>              <C>
Current Assets:
   Cash and cash equivalents....................................     $  3,749,000     $  4,245,000
   Accounts receivable, less allowance for doubtful accounts
     of $2,480,000 at June 30, 1999 and $1,053,000 at
     December 31, 1998..........................................       35,978,000       33,622,000
   Unbilled services............................................       13,868,000       10,842,000
   Deferred income taxes........................................          823,000          808,000
   Other current assets.........................................        5,870,000        4,197,000
                                                                      -----------      -----------
        Total current assets....................................       60,288,000       53,714,000

Property and equipment, net.....................................       10,200,000        9,506,000
Cost in excess of fair value of net assets acquired, net........        6,990,000        5,629,000
Other assets....................................................          993,000          716,000
                                                                      -----------      -----------
                                                                     $ 78,471,000     $ 69,565,000
                                                                      ===========      ===========

               LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Accounts payable.............................................     $  3,961,000     $  5,347,000
   Accrued payroll and related taxes............................        7,753,000        6,254,000
   Accrued expenses and other liabilities.......................        5,213,000        2,999,000
   Accrued restructuring costs..................................        3,351,000               --
   Accrued acquisition costs....................................          618,000        3,302,000
   Income taxes payable.........................................               --        3,160,000
   Current portion of long-term debt and obligations under
     capital leases.............................................       10,756,000           11,000
                                                                      -----------      -----------
        Total current liabilities...............................       31,652,000       21,073,000
                                                                      -----------      -----------

Long-term debt and obligations under capital leases, less
  current portion...............................................          681,000           60,000
                                                                      -----------      -----------

Deferred income taxes...........................................          533,000          483,000
                                                                      -----------      -----------

Commitments and contingencies

Shareholders' Equity:
   Preferred stock, $.01 par value, 5,000,000 shares
     authorized, none issued or outstanding.....................               --               --
   Common stock, $.01 par value,  25,000,000 shares
     authorized; 15,559,000 and 15,393,000 shares issued and
     outstanding at June 30, 1999 and December 31, 1998,
     respectively...............................................          155,000          154,000
   Additional paid-in capital...................................       37,770,000       35,263,000
   Retained earnings............................................        8,788,000       13,077,000
   Currency translation adjustments.............................       (1,108,000)        (545,000)
                                                                      -----------      -----------
      Total shareholders' equity ...............................       45,605,000       47,949,000
                                                                      -----------      -----------
                                                                     $ 78,471,000     $ 69,565,000
                                                                      ===========      ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                     - 2 -
<PAGE>

                       INTELLIGROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                         AND COMPREHENSIVE INCOME (LOSS)
        For the Three Months and Six Months Ended June 30, 1999 and 1998
                                   (unaudited)

<TABLE>
<CAPTION>
                                             Three Months Ended June 30,     Six Months Ended June 30,
                                             ---------------------------     -------------------------
                                                 1999            1998           1999             1998
                                             -----------     -----------    -----------      -----------
<S>                                         <C>             <C>            <C>              <C>
Revenue.................................    $ 46,434,000    $ 40,046,000   $ 93,178,000     $ 73,324,000
Cost of sales...........................      29,819,000      24,854,000     60,932,000       45,802,000
                                              ----------      ----------     ----------       ----------
    Gross profit........................      16,615,000      15,192,000     32,246,000       27,522,000
                                              ----------      ----------     ----------       ----------

Selling, general and administrative
expenses................................      15,119,000       9,847,000     28,055,000       17,811,000
Acquisition expenses....................              --         434,000      2,115,000          434,000
Restructuring and other special charges.       7,328,000              --      7,328,000               --
                                              ----------      ----------     ----------       ----------
    Total operating expenses............      22,447,000      10,281,000     37,498,000       18,245,000
                                              ----------      ----------     ----------       ----------

    Operating income (loss).............      (5,832,000)      4,911,000     (5,252,000)       9,277,000
Other income (expense), net.............         107,000        (105,000)        46,000          (56,000)
Interest income (expense), net..........        (207,000)         29,000       (267,000)          96,000
                                              ----------      ----------     ----------       ----------

Income (loss) before provision for
 income taxes...........................      (5,932,000)      4,835,000     (5,473,000)       9,317,000

Provision (benefit) for income taxes....      (1,899,000)      1,012,000     (1,354,000)       1,906,000
                                              ----------      ----------     ----------       ----------

Net income (loss).......................    $ (4,033,000)   $  3,823,000   $ (4,119,000)    $  7,411,000
                                              ==========      ==========     ==========       ==========

Earnings per share:
    Basic earnings per share:
         Net income (loss) per share....    $      (0.26)   $       0.25   $      (0.26)    $       0.49
                                              ==========      ==========     ==========       ==========
      Weighted average number of
      common shares - Basic.............      15,549,000      15,221,000     15,548,000       15,157,000
                                              ==========      ==========     ==========       ==========

    Diluted earnings per share:
         Net income (loss) per share....    $      (0.26)   $       0.24   $      (0.26)    $       0.48
                                              ==========      ==========     ==========       ==========

      Weighted average number of
      common shares - Diluted...........      15,549,000      15,645,000     15,548,000       15,577,000
                                              ==========      ==========     ==========       ==========

Comprehensive Income (Loss)
---------------------------

Net income (loss).......................    $ (4,033,000)   $  3,823,000   $ (4,119,000)    $  7,411,000

Other comprehensive income -
      Currency translation adjustments..        (234,000)       (173,000)      (563,000)        (360,000)
                                              ----------      ----------     ----------       ----------

Comprehensive income (loss).............    $ (4,267,000)   $  3,650,000   $ (4,682,000)    $  7,051,000
                                              ==========      ==========     ==========       ==========
</TABLE>


          See accompanying notes to consolidated financial statements.

                                     - 3 -
<PAGE>

                       INTELLIGROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 1999 and 1998
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                        June 30,          June 30,
                                                                          1999              1998
                                                                     ------------      ------------
<S>                                                                  <C>               <C>
Cash flows from operating activities:
   Net income (loss)............................................     $ (4,119,000)     $  7,411,000
   Adjustments to reconcile net income (loss) to net cash
     used in operating activities:
       Depreciation and amortization............................        1,668,000           405,000
       Provision for doubtful accounts..........................        2,410,000           610,000
       Deferred income taxes....................................         (276,000)         (197,000)
   Changes in operating assets and liabilities:
       Accounts receivable......................................       (3,855,000)      (10,727,000)
       Unbilled services........................................       (3,026,000)       (1,107,000)
       Other current assets.....................................       (1,617,000)       (1,536,000)
       Other assets.............................................         (277,000)         (874,000)
       Accounts payable.........................................       (1,391,000)        1,669,000
       Accrued payroll and related taxes........................        1,426,000         1,614,000
       Accrued restructuring charges............................        3,351,000                --
       Accrued expenses and other liabilities...................        1,670,000         1,344,000
       Income taxes payable.....................................       (3,348,000)          108,000
                                                                       ----------       -----------
           Net cash used in operating activities................       (7,384,000)       (1,280,000)
                                                                       ----------       -----------

Cash flows from investing activities:
   Purchase of equipment........................................       (1,476,000)       (2,621,000)
   Acquisition of businesses....................................       (1,682,000)               --
                                                                       ----------       -----------
           Net cash used in investing activities................       (3,158,000)       (2,621,000)
                                                                       ----------       -----------

Cash flows from financing activities:
   Proceeds from exercise of stock options......................            9,000           382,000
   Proceeds from line of credit borrowings, net.................       10,625,000                --
   Proceeds from other loans....................................          151,000           162,000
   Principal payments under capital leases......................           (6,000)           (4,000)
   Shareholder dividends........................................         (170,000)               --
                                                                       ----------       -----------
           Net cash provided by financing activities............       10,609,000           540,000
                                                                       ----------       -----------

   Effect of foreign currency exchange rate changes on cash.....         (563,000)         (832,000)
                                                                       ----------       -----------
           Net decrease in cash and cash equivalents ...........         (496,000)       (4,193,000)
Cash and cash equivalents at beginning of period................        4,245,000         8,825,000
                                                                       ----------       -----------
Cash and cash equivalents at end of period......................     $  3,749,000      $  4,632,000
                                                                       ==========       ==========

Supplemental disclosures of cash flow information:
   Cash paid for income taxes...................................     $  2,308,000      $  2,148,000
   Cash paid for interest.......................................          314,000                --
</TABLE>

          See accompanying notes to consolidated financial statements.

                                     - 4 -
<PAGE>
                       INTELLIGROUP, INC. and SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


(1) BASIS OF PRESENTATION

     The   consolidated   financial   statements  and   accompanying   financial
information  as of June 30, 1999 and for the three and six months ended June 30,
1999 and 1998 are  unaudited  and,  in the  opinion of  management,  include all
adjustments  (consisting only of normal recurring adjustments) which the Company
considers  necessary for a fair  presentation  of the financial  position of the
Company  at such  dates  and the  operating  results  and cash  flows  for those
periods.  The  financial  statements  included  herein  have  been  prepared  in
accordance with generally accepted accounting principles and the instructions of
Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with generally accepted accounting  principles have been condensed or
omitted.  These  financial  statements  should be read in  conjunction  with the
Company's  audited  financial  statements  for the year ended December 31, 1998,
which were included as part of the Company's Form S-3 declared  effective by the
Securities and Exchange Commission on June 14, 1999.

     The Company's 1998 Financial  Statements  have been restated to include the
results of the acquisitions of each of (i) CPI Resources  Limited;  (ii) Azimuth
Consulting Limited,  Azimuth Holdings Limited,  Braithwaite Richmond Limited and
Azimuth Corporation Limited; and (iii) Empower Solutions,  LLC and its affiliate
Empower,  Inc. (the "Empower Companies") in accordance with pooling of interests
accounting.

     Results for interim periods are not  necessarily  indicative of results for
the entire year.

(2) EARNINGS PER SHARE

     Basic earnings per share is computed by dividing income (loss) available to
common  shareholders by the weighted average number of common stock  outstanding
for the period.  Diluted earnings per share reflects the potential dilution that
would  occur  if  securities  or other  contracts  to issue  common  stock  were
exercised or converted into common stock, unless they are antidilutive.




                                     - 5 -
<PAGE>

     A reconciliation of weighted average number of common shares outstanding to
weighted average common shares outstanding assuming dilution is as follows:
<TABLE>
<CAPTION>

                                               Three Months Ended June 30,    Six Months Ended June 30,
                                               ---------------------------    -------------------------
                                                  1999           1998            1999          1998
                                                  ----           ----            ----          ----
<S>                                           <C>            <C>             <C>           <C>
Weighted average number of common
shares                                        15,549,000     15,221,000      15,548,000    15,157,000
Common share equivalents of outstanding
stock options                                         --        424,000              --       420,000
                                              ----------     ----------      ----------    ----------
Weighted average number of common
shares assuming dilution                      15,549,000     15,645,000      15,548,000    15,577,000
                                              ==========     ==========      ==========    ==========
</TABLE>


     All stock  options  outstanding  as of June 30, 1999 were excluded from the
computation  of net loss per common  share,  as they are  antidilutive.  Certain
stock options outstanding at June 30, 1998 were not included in the computations
of earnings per share assuming  dilution  because the options'  exercise  prices
were greater than the average price of the common shares.

(3) ACQUISITIONS

     On January 8, 1999, the Company  consummated  the acquisition of all of the
shares of outstanding capital stock of Network Publishing,  Inc. The acquisition
was accounted for utilizing purchase accounting.  The purchase price included an
initial cash payment in the aggregate of $1,800,000 together with a cash payment
of $200,000 to be held in escrow,  and resulted in costs in excess of fair value
of net assets acquired of $1.6 million. In addition, the purchase price includes
an earn-out  payment of up to $2,212,650  in restricted  shares of the Company's
Common Stock,  payable on or before April 15, 2000 and a potential lump sum cash
payment of $354,024,  payable no later than March 31, 2000.  Pro-forma financial
information has not been presented as this acquisition was deemed  immaterial to
the Company's operations as a whole.

     On  February  16,  1999,  the  Company,  by  way  of  merger  transactions,
consummated  the  acquisition  of  the  Empower  Companies.  Such  mergers  were
accounted  for as a pooling of  interests.  The Company  issued an  aggregate of
1,831,091  restricted  shares of the Company's  Common Stock. The Company may be
required to issue additional  shares of its restricted Common Stock which may be
issued in connection  with the net worth  adjustment as of the closing date. The
pre-merger  results of the Empower  Companies were revenues of $16.3 million and
net income of $4.9  million for the six months  ended June 30, 1999 and revenues
of $7.1 million and net income of $3.2 million for the six months ended June 30,
1998. In connection with this merger,  acquisition expenses of $2.1 million were
expensed during 1999. These costs primarily relate to professional fees incurred
in connection with the merger.




                                     - 6 -
<PAGE>

(4) RESTRUCTURING AND OTHER SPECIAL CHARGES

     In connection with  management's plan to reduce costs and improve operating
efficiencies,  the  Company  incurred  a  non-recurring  charge of $5.6  million
related to restructuring  initiatives during the six months ended June 30, 1999.
The  restructuring  charge  included  settlement  of the former Chief  Executive
Officer's  employment  agreement  and  additional  severance  payment,  expenses
associated  with the  termination of certain  employees in the United States and
the United  Kingdom,  the  closing of  certain  satellite  offices in the United
States  and  an  additional  office  in  Belgium,  and  costs  to  exit  certain
contractual  obligations.

     Activity  in accrued  costs for  restructuring  and other  special  charges
during the six month period ended June 30, 1998 is as follows:

                                      Charges to       Costs       Accrued Costs
                                      Operations       Paid        June 30, 1999
                                      ----------      --------     -------------

Severance and related costs.......      $ 5,027       $ 2,054        $ 2,973

Other costs primarily to exit
facilities, contracts, and
certain activities................          601           223            378
                                        -------       -------        -------
                                        $ 5,628       $ 2,277        $ 3,351
                                        =======       =======        =======

     Additionally,  the Company recorded a reserve of approximately $1.7 million
against  an  outstanding  receivable  from a large  ERP  account,  whose  parent
corporation filed for protection under Chapter 11 of the U.S. bankruptcy laws.

(5) CREDIT FACILITY

     On January 29, 1999, the Company  entered into an unsecured  three-year $30
million  Revolving  Credit Loan Agreement (the "Loan  Agreement") with PNC Bank,
N.A.  (the  "Bank").  The  proceeds  of the credit  facility  may be used by the
Company for  financing  acquisitions  and  general  corporate  purposes.  At the
Company's option, for each loan, interest shall be computed either at the Bank's
prime rate per annum or the Adjusted Libor Rate plus the Applicable  Margin,  as
such terms are defined in the Loan Agreement.  The Company's  obligations  under
the credit  agreement are payable at the  expiration of such facility on January
29, 2002. Approximately $10.6 million was outstanding under this credit facility
at June 30, 1999.

     The credit agreement contains financial covenants which require the Company
to (i) maintain a  consolidated  cash flow leverage  ratio equal to or less than
2.5 to 1.0  for the  period  of  four  fiscal  quarters  preceding  the  date of
determination  taken together as one accounting period  ("Consolidated Cash Flow
Leverage  Ratio"),  (ii)  maintain  a  consolidated  net  worth of not less than
consolidated  net worth of the prior fiscal year plus 50% of positive net income
for such  fiscal  year  ("Consolidated  Net  Worth"),  (iii) not enter  into any
agreement to purchase and/or pay for, or


                                     - 7 -
<PAGE>

become  obligated to pay for capital  expenditures,  long term  leases,  capital
leases or sale lease-backs,  in an amount at any time outstanding aggregating in
excess of $5,000,000 during any fiscal year,  provided,  however,  in a one year
carry-forward  basis,  the Company may incur capital  expenditures not to exceed
$8,000,000  during  any  fiscal  year,  and (iv)  shall not cause or permit  the
minimum fixed charge coverage  ratio,  calculated on the basis of a rolling four
quarters to be less than 1.4 to 1.0 as at the end of each fiscal quarter.

     As a result of the  restructuring and other special charges incurred during
the  quarter  ended June 30,  1999,  at June 30,  1999,  the  Company was not in
compliance with the  Consolidated  Cash Flow Leverage Ratio and Consolidated Net
Worth  financial  covenants.  As of the date of this  filing,  the Company is in
discussions with the Bank regarding a waiver and amendment to the Loan Agreement
with respect to such covenants.  There can be no assurance that the Company will
obtain a waiver or an amendment on terms acceptable to the Company, if at all.


                                     - 8 -
<PAGE>

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

GENERAL

     The  Company  provides a wide  range of  information  technology  services,
including  management  consulting,  enterprise-wide  business process solutions,
Internet applications services,  applications  outsourcing and maintenance,  web
site design and customization,  IT training  solutions,  systems integration and
custom software development based on leading technologies. The Company has grown
rapidly  since 1994 when it made a strategic  decision to diversify its customer
base by expanding the scope of its integration  and development  services and to
utilize software developed by SAP as a primary tool to implement enterprise-wide
business  process  solutions.  In 1995, the Company achieved the status of a SAP
National  Implementation  Partner.  In the same year,  the Company also began to
utilize Oracle's ERP application products to diversify its service offerings. In
1997,  the  Company  enhanced  its partner  status with SAP, by first  achieving
National Logo Partner status and then  AcceleratedSAP  Partner Status.  Also, in
1997,  the Company  further  diversified  its ERP-based  service  offerings,  by
beginning to provide PeopleSoft and Baan implementation  services. In July 1997,
the  Company  was  awarded  PeopleSoft  implementation  partnership  status.  In
September   1997,  the  Company  was  awarded  Baan   international   consulting
partnership  status.  In  June  1998,  the  Company  also  expanded  its  Oracle
applications implementation services practice and added upgrade services to meet
market demand of mid-size to large companies that are  implementing or upgrading
Oracle applications.

     The  Company  generates  revenue  from  professional  services  rendered to
customers.  Revenue is  recognized  as services  are  performed.  The  Company's
services   range  from  providing   customers   with  a  single   consultant  to
multi-personnel  full-scale projects. The Company provides these services to its
customers  primarily  on a time and  materials  basis and  pursuant  to  written
contracts which can be terminated  with limited  advance  notice,  typically not
more than 30 days, and without  significant  penalty,  generally limited to fees
earned and expenses incurred by the Company through the date of termination. The
Company provides its services directly to end-user  organizations or as a member
of a consulting team assembled by another information technology consulting firm
to Fortune 1000 and other large and mid-sized  companies.  The Company generally
bills its customers semi-monthly for the services provided by its consultants at
contracted rates. Where contractual provisions permit, customers also are billed
for reimbursement of expenses incurred by the Company on the customers' behalf.

     The Company  has  provided  and  continues  to provide  services on certain
projects in which it, at the request of the  clients,  offered a fixed price for
its  services.  For the year ended  December  31,  1998,  revenues  derived from
projects  under  fixed-price  contracts  represented  approximately  4%  of  the
Company's  total  revenue.  No single  fixed-price  contract was material to the
Company's business during 1998.  However,  one fixed price project,  which began
late  in 1998  and is  expected  to be  completed  in  early  2000,  represented
approximately  3% of the  Company's  revenue  during the quarter  ended June 30,
1999. Fixed price contracts, in the aggregate,  represented approximately 10% of
the Company's total revenue during such quarter.  The Company  believes that, as
it pursues its strategy of making turnkey project management a larger portion of
its business,  it will continue to offer fixed price  projects.  The Company has
had  limited  prior  experience  in pricing  and  performing  under  fixed price
arrangements  and believes that there are certain risks related thereto and thus
prices such arrangements to reflect the associated risk. There

                                     - 9 -
<PAGE>

can be no  assurance  that the Company  will be able to complete  such  projects
within the fixed  price  timeframes.  The  failure to perform  within such fixed
price  contracts,  if entered into,  could have a material adverse effect on the
Company's business, financial condition and results of operations.

     The  Company has derived  and  believes  that it will  continue to derive a
significant  portion  of its  revenue  from a limited  number of  customers  and
projects. For the six months ended June 30, 1999 and the year ended December 31,
1998,  the  Company's  ten largest  customers  accounted  for in the  aggregate,
approximately 34% and 38% of its revenue, respectively. For the six months ended
June 30, 1999 and the year ended  December 31, 1998,  no customer  accounted for
more than 10% of revenue. During the six months ended June 30, 1999 and the year
ended  December 31, 1998,  44% and 52%,  respectively,  of the  Company's  total
revenue was derived  from  projects  in which the Company  implemented  software
developed  by SAP.  During the six months ended June 30, 1999 and the year ended
December 31, 1998,  approximately  8% and 11%,  respectively,  of the  Company's
total  revenue  was  derived  from  projects  in which the  Company  implemented
software developed by Oracle.  During the six months ended June 30, 1999 and the
year ended December 31, 1998,  approximately 27% and 19%,  respectively,  of the
Company's  total  revenue  was  derived  from  engagements  in which the Company
implemented software developed by PeopleSoft.

     The Company's most significant cost is project  personnel  expenses,  which
consist of consultant salaries, benefits and payroll-related expenses. Thus, the
Company's financial performance is based primarily upon billing margin (billable
hourly rate less the cost to the Company of a consultant on an hourly basis) and
personnel  utilization rates (billable hours divided by paid hours). The Company
believes that turnkey  project  management  assignments  typically  carry higher
margins. The Company has been shifting to such higher-margin  turnkey management
assignments  and more complex  projects by leveraging its  reputation,  existing
capabilities,  proprietary  implementation  methodology,  development  tools and
offshore development  capabilities with expanded sales and marketing efforts and
new service offerings to develop turnkey project sales  opportunities  with both
new and existing  customers.  The  Company's  inability to continue its shift to
higher-margin  turnkey  management  assignments  and more  complex  projects may
adversely impact the Company's future growth.

     Since  late 1994,  the  Company  has made  substantial  investments  in its
infrastructure in order to support its rapid growth.  For example,  in 1994, the
Company  established  and funded an operations  facility in India,  the Advanced
Development Center (the "ADC"), and in 1995 established a sales office in Foster
City,  California.  In  addition,  from 1994 to date,  the Company has  incurred
expenses  to  develop   proprietary   development   tools  and  its  proprietary
accelerated  implementation methodology and toolset. Since 1995, the Company has
also been increasing its sales force and its marketing,  finance, accounting and
administrative  staff,  in order to manage its  growth.  The  Company  currently
maintains its headquarters in Edison, New Jersey, and branch offices in Chicago,
Detroit, Foster City (California),  Reston (Virginia), Dallas, Atlanta, Phoenix,
and Washington, D.C. The Company also currently maintains offices in Europe (the
United Kingdom and Denmark),  and Asia Pacific  (Australia,  India, New Zealand,
the  Philippines,  Japan and Singapore).  The Company leases its headquarters in
Edison, New Jersey, totaling approximately 48,475 square feet. Such lease has an
initial term of ten (10) years, which commenced in September 1998.

                                     - 10 -
<PAGE>

     This Form 10-Q contains  forward-looking  statements  within the meaning of
Section 21E of the  Securities  Exchange  Act of 1934,  as  amended,  including,
without  limitation,  statements  regarding the Company's  intention to shift to
higher margin turnkey  management  assignments and more complex  projects and to
utilize its proprietary  implementation  methodology in an increasing  number of
projects.  In addition,  statements  regarding the Company's plans to expand its
service   offerings   through   internal  growth  and   acquisitions   are  also
forward-looking  statements.  Such forward-looking  statements include risks and
uncertainties, including, but not limited to:

  o  the substantial  variability of the Company's  quarterly  operating results
     caused by a variety of factors,  many of which are not within the Company's
     control,  including (a) patterns of software and hardware  capital spending
     by  customers,  (b)  information  technology  outsourcing  trends,  (c) the
     timing, size and stage of projects,  (d) timing and impact of acquisitions,
     (e) new service  introductions  by the Company or its  competitors  and the
     timing of new product  introductions  by the Company's  ERP  partners,  (f)
     levels  of  market  acceptance  for the  Company's  services,  (g)  general
     economic conditions, (h) the hiring of additional staff and (i) fixed price
     contracts;

  o  changes in the Company's billing and employee utilization rates;

  o  the Company's ability to manage its growth effectively,  which will require
     the Company (a) to  continue  developing  and  improving  its  operational,
     financial and other internal systems,  as well as its business  development
     capabilities,  (b) to  attract,  train,  retain,  motivate  and  manage its
     employees,  (c) to continue to maintain high rates of employee  utilization
     at profitable  billing rates,  (d) to successfully  integrate the personnel
     and  businesses  acquired  by the  Company,  and  (e) to  maintain  project
     quality,  particularly  if the size and  scope  of the  Company's  projects
     increase;

  o  the Company's ability to maintain an effective internal control structure;

  o  the Company's reliance on a continued relationship with SAP America and the
     Company's present status as a SAP National Logo Partner;

  o  the Company's substantial reliance on key customers and large projects;

  o  the highly competitive nature of the markets for the Company's services;

  o  the Company's  ability to  successfully  address the continuing  changes in
     information  technology,  evolving industry standards and changing customer
     objectives and preferences;

 o   the  Company's  reliance on the  continued  services  of its key  executive
     officers and leading technical personnel;

 o   the Company's  ability to attract and retain a sufficient  number of highly
     skilled employees in the future;

 o   the  Company's  ability to continue to diversify its  offerings,  including
     growth in its Oracle, Baan and PeopleSoft and Internet services;

                                     - 11 -
<PAGE>

 o   uncertainties  resulting from pending litigation matters and from potential
     administrative and regulatory immigration and tax law matters;

 o   the Company's ability to protect its intellectual property rights; and

 o   Year 2000  compliance of vendors'  products and related  issues,  including
     impact of the Year 2000 problem on customer buying patterns.

     As a result of these factors and others,  the Company's  actual results may
differ materially from the results disclosed in such forward-looking statements.

RESULTS OF OPERATIONS

     The following table sets forth for the periods  indicated certain financial
data as a percentage of revenue:
<TABLE>
<CAPTION>
                                                            Percentage of Revenue
                                          ---------------------------------------------------------
                                          Three Months Ended June 30,     Six Months Ended June 30,
                                          ---------------------------     -------------------------
                                              1999           1998          1999            1998
                                              ----           ----          ----            ----
<S>                                            <C>            <C>           <C>              <C>
Revenue...............................         100.0%         100.0%        100.0%           100.0%
Cost of sales.........................          64.2           62.1          65.4             62.5
                                            --------       --------      --------         --------
    Gross profit......................          35.8           37.9          34.6             37.5
Selling, general and administrative
  expenses............................          32.6           24.6          30.1             24.3
Acquisition expenses..................            --            1.1           2.3              0.6
Restructuring and other special
charges...............................          15.8             --           7.9               --
                                            --------       --------      --------         --------
    Operating income (loss)...........         (12.6)          12.2          (5.7)            12.6
Interest and other income
(expense), net........................          (0.2)          (0.2)         (0.3)              --
                                            --------       --------      --------         --------
Income (loss) before provision for
   income taxes.......................         (12.8)          12.0          (6.0)            12.6
Provision (benefit) for income taxes..          (4.1)           2.5          (1.5)             2.6
                                            --------       --------      --------         --------
Net income (loss).....................          (8.7)%          9.5%         (4.5)%           10.0%
                                            ========       ========       =======         ========
</TABLE>

THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998

     Revenue.  Revenue  increased by 16.0%, or $6.4 million,  from $40.0 million
during the three  months ended June 30, 1998 to $46.4  million  during the three
months  ended  June 30,  1999.  This  increase  was  attributable  primarily  to
increased  demand  for  the  Company's  PeopleSoft  implementation  services  as
compared  with the same period in the prior year,  and, to a lesser  extent,  an
increase  in  management  consulting  revenues,  as well as growth  in  internet
development services,  partially related to the Company's acquisition of Network
Publishing,  Inc. on January 8, 1999.  Revenue for the three month  period ended
June 30, 1999,  included a fixed price project which accounted for approximately
3.0% of revenue.

     Gross profit.  The Company's cost of sales  includes  primarily the cost of
salaries to consultants  and related  employee  benefits and payroll taxes.  The
Company's cost of sales increased by 20.0%, or $4.9 million,  from $24.9 million
during the three  months ended June 30, 1998 to $29.8  million  during the three
months ended June 30, 1999.  The increase was due to increased  personnel  costs
resulting  from the hiring of additional  consultants to support the

                                     - 12 -
<PAGE>

increase  in demand for the  Company's  services.  The  Company's  gross  profit
increased by 9.4%, or $1.4 million,  from $15.2 million  during the three months
ended June 30,  1998 to $16.6  million  during the three  months  ended June 30,
1999.  Gross  profit  margin  decreased  from 37.9% of revenue  during the three
months  ended June 30, 1998 to 35.8% of revenue  during the three  months  ended
June 30, 1999.  While revenue from  implementation  services  increased from the
same  period in 1998,  the  Company  continued  to  experience  a decline in its
consultant  staff  utilization  during the second  quarter of 1999,  a result of
changing ERP market  dynamics.  As a  consequence,  gross margins were adversely
affected during the current period.

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative  expenses  consist  primarily  of  administrative  salaries,  and
related benefits costs,  occupancy costs, sales person compensation,  travel and
entertainment,  costs associated with the ADC and related  development costs and
professional fees.  Selling,  general and  administrative  expenses increased by
53.5%, or $5.3 million, from $9.8 million during the three months ended June 30,
1998 to $15.1 million during the three months ended June 30, 1999, and increased
as a percentage of revenue from 24.6% to 32.6%,  respectively.  The increases in
such  expenses  in  absolute  dollars and as a  percentage  of revenue  were due
primarily to the increase in salaries and related benefits, reflecting headcount
increases in the Company's  sales force and its marketing,  finance,  accounting
and administrative staff through acquisitions and in order to manage its growth.
The Company's  occupancy  costs  increased as a result of the  relocation of our
corporate  headquarters into  approximately  48,000 square feet of office space,
from our former location which consisted of approximately 17,000 square feet. In
addition,  the Company experienced  increases in sales and management recruiting
costs,  occupancy costs as additional  offices were opened in the United States,
support services and the provision for doubtful accounts.

     Acquisition  expense.  During the three  months  ended June 30,  1998,  the
Company  incurred  costs of $434,000 in connection  with the  acquisition of CPI
Resources  Limited,  which was accounted  for as a pooling of  interests.  These
costs primarily consisted of professional fees associated with the acquisition.

     Restructuring  and other special charges.  In connection with  management's
plan to reduce costs and improve operating efficiencies,  the Company incurred a
non-recurring charge of $5.6 million related to restructuring initiatives during
the  three  months  ended  June 30,  1999.  The  restructuring  charge  included
settlement  of the former Chief  Executive  Officer's  employment  agreement and
additional  severance  payment,  expenses  associated  with the  termination  of
certain  employees in the United States and the United  Kingdom,  the closing of
certain  satellite  offices in the United  States  and an  additional  office in
Belgium, and costs to exit certain contractual  obligations.  Additionally,  the
Company recorded a reserve of approximately  $1.7 million against an outstanding
receivable  from a  large  ERP  account,  whose  parent  corporation  filed  for
protection under Chapter 11 of the U.S. bankruptcy laws.

     Interest income (expense).  Interest  income has been  earned  on  interest
bearing cash accounts and short term investments.  In accordance with investment
guidelines approved by the Company's Board of Directors, cash balances in excess
of those  required to fund  operations  have been  invested in  short-term  U.S.
Treasury  securities  and  commercial  paper with a credit  rating no lower than
A1/P1.  The Company incurred  approximately  $200,000 in interest expense during
the three months ended June 30, 1999,  primarily related to its borrowings under
its line of  credit.  Borrowings  under  the line of  credit  were  used to fund
operating activities.

                                     - 13 -
<PAGE>

     Provision  (benefit) for income taxes. The Company's effective tax rate was
(32.0)% and 21.0% for the three months  ended June 30, 1999,  and June 30, 1998,
respectively.  In 1996, the Company elected a five year tax holiday in India, in
accordance with a local tax incentive  program whereby no income tax will be due
in such  period.  For the three  months  ended June 30,  1999,  the tax  holiday
impacted the Company's  effective tax rate by  approximately  (3.0)%,  while the
favorable effect in the three months ended June 30, 1998 was 6.0%.


SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998

     Revenue.  Revenue increased by 27.1%, or $19.9 million,  from $73.3 million
during the six months ended June 30, 1998 to $93.2 million during the six months
ended June 30,  1999.  This  increase  was  attributable  primarily to increased
demand for the Company's PeopleSoft implementation services as compared with the
same  period  in the  prior  year,  and,  to a lesser  extent,  an  increase  in
management  consulting  revenues,  as  well as  grown  in  internet  development
services,  partially related to the Company's acquisition of Network Publishing,
Inc. on January 8, 1999.  Revenue for the six month  period ended June 30, 1999,
included a fixed price project which accounted for approximately 4% of revenue.

     Gross profit.  The  Company's  cost of sales  increased by 33.0%,  or $15.1
million,  from $45.8 million  during the six months ended June 30, 1998 to $60.9
million  during the six months  ended June 30,  1999.  The  increase  was due to
increased personnel costs resulting from the hiring of additional consultants to
support the increase in demand for the Company's  services.  The Company's gross
profit  increased by 17.2% or $4.7 million,  from $27.5  million  during the six
months ended June 30, 1998 to $32.2 million during the six months ended June 30,
1999.  Gross profit margin decreased from 37.5% of revenue during the six months
ended  June 30,  1998 to 34.6% of revenue  during the six months  ended June 30,
1999. While revenue from implementation  services increased from the same period
in 1998, the Company  continued to experience a decline in its consultant  staff
utilization  during the six months ended June 30, 1999, a result of the changing
ERP market  dynamics.  As a consequence,  gross margins were adversely  affected
during the six months ended June 30, 1999.

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative  expenses increased by 57.5% or $10.2 million, from $17.8 million
during the six months ended June 30, 1998 to $28.0 million during the six months
ended June 30, 1999,  and  increased  as a  percentage  of revenue from 24.3% to
30.1%, respectively. The increases in such expenses in absolute dollars and as a
percentage of revenue were due primarily to the increase in salaries and related
benefits,  reflecting  headcount  increases in the Company's sales force and its
marketing, finance, accounting and administrative staff through acquisitions and
in order to manage its growth.  The  Company's  occupancy  costs  increased as a
result of the relocation of our corporate headquarters into approximately 48,000
square  feet of office  space,  from our  former  location  which  consisted  of
approximately 17,000 square feet. In addition, the Company experienced increases
in sales and management recruiting costs,  occupancy costs as additional offices
were  opened in the  United  States,  support  services  and the  provision  for
doubtful accounts.

     Acquisition expense. During the six months ended June 30, 1999, the Company
incurred  costs  of $2.1 in  connection  with  the  acquisition  of the  Empower
Companies.

                                     - 14 -
<PAGE>

     Restructuring  and other special charges.  In connection with  management's
plan to reduce costs and improve operating efficiencies,  the Company incurred a
non-recurring charge of $5.6 million related to restructuring initiatives during
the six months ended June 30, 1999. The restructuring charge included settlement
of the former Chief  Executive  Officer's  employment  agreement and  additional
severance payment, expenses associated with the termination of certain employees
in the United States and the United  Kingdom,  the closing of certain  satellite
offices in the United States and an additional  office in Belgium,  and costs to
exit  certain  contractual  obligations.  Additionally,  the Company  recorded a
reserve of approximately  $1.7 million against an outstanding  receivable from a
large ERP account,  whose parent  corporation filed for protection under Chapter
11 of the U.S. bankruptcy laws.

     Interest  income  (expense).  Interest  income has been  earned on interest
bearing cash accounts and short term investments.  In accordance with investment
guidelines approved by the Company's Board of Directors, cash balances in excess
of those  required to fund  operations  have been  invested in  short-term  U.S.
Treasury  securities  and  commercial  paper with a credit  rating no lower than
A1/P1.  The Company incurred  approximately  $300,000 in interest expense during
the six months ended June 30, 1999,  primarily  related to its borrowings  under
its line of  credit.  Borrowings  under  the line of  credit  were  used to fund
operating  activities,  purchases of computer equipment and office furniture and
fixtures, as well as for acquisitions.

     Provision  (benefit) for income taxes. The Company's effective tax rate was
(25.0)% and 21.0% for the six months  ended June 30,  1999,  and June 30,  1998,
respectively.  In 1996, the Company elected a five year tax holiday in India, in
accordance with a local tax incentive  program whereby no income tax will be due
in such period. For the six months ended June 30, 1999, the tax holiday impacted
the Company's  effective tax rate by approximately  (7.0)%,  while the favorable
effect in the six months ended June 30, 1998 was 6.0%.

BACKLOG

     The Company  normally  enters into written  contracts with its customers at
the time it commences work on a project. These written contracts contain varying
terms  and  conditions  and  the  Company  does  not  generally  believe  it  is
appropriate  to  characterize  such written  contracts as creating  backlog.  In
addition, because these written contracts often provide that the arrangement can
be terminated with limited advance notice and without significant  penalty,  the
Company does not believe that projects in process at any one time are a reliable
indicator or measure of expected  future  revenue.  In the event that a customer
terminates  a project,  the  customer  remains  obligated to pay the Company for
services performed by it through the date of termination.

LIQUIDITY AND CAPITAL RESOURCES

     The Company had cash and cash equivalents of $3.7 million at June 30, 1999,
and $4.2 million at December 31, 1998. The Company had working  capital of $28.6
million at June 30, 1999, and $32.6 million at December 31, 1998.

     Cash used in operating  activities  was $7.4 million  during the six months
ended June 30, 1999, resulting primarily from the net loss, as well as growth in
accounts receivable and unbilled services. Cash used in operating activities for
the six months ended June 30, 1998 was $1.3 million.

                                     - 15 -
<PAGE>

     The Company  invested  $1.5 million and $2.6 million in computer  equipment
and furniture during the six months ended June 30, 1999 and 1998,  respectively.
The increase  reflects  both the  purchases  of computer  and  telecommunication
equipment for consultants and  administrative  staff,  and office  furniture and
fixtures.

     On January 29, 1999, the Company  entered into an unsecured  three-year $30
million  Revolving  Credit Loan Agreement (the "Loan  Agreement") with PNC Bank,
N.A.  (the  "Bank").  The  proceeds  of the credit  facility  may be used by the
Company for  financing  acquisitions  and  general  corporate  purposes.  At the
Company's option, for each loan, interest shall be computed either at the Bank's
prime rate per annum or the Adjusted Libor Rate plus the Applicable  Margin,  as
such terms are defined in the Loan Agreement.  The Company's  obligations  under
the credit  agreement are payable at the  expiration of such facility on January
29, 2002. Approximately $10.6 million was outstanding under this credit facility
at June 30, 1999.

     The credit agreement contains financial covenants which require the Company
to (i) maintain a  consolidated  cash flow leverage  ratio equal to or less than
2.5 to 1.0  for the  period  of  four  fiscal  quarters  preceding  the  date of
determination  taken together as one accounting period  ("Consolidated Cash Flow
Leverage  Ratio"),  (ii)  maintain  a  consolidated  net  worth of not less than
consolidated  net worth of the prior fiscal year plus 50% of positive net income
for such  fiscal  year  ("Consolidated  Net  Worth"),  (iii) not enter  into any
agreement  to purchase  and/or pay for, or become  obligated  to pay for capital
expenditures, long term leases, capital leases or sale lease-backs, in an amount
at any time  outstanding  aggregating in excess of $5,000,000  during any fiscal
year,  provided,  however,  in a one year  carry-forward  basis, the Company may
incur capital  expenditures not to exceed $8,000,000 during any fiscal year, and
(iv)  shall  not  cause or permit  the  minimum  fixed  charge  coverage  ratio,
calculated on the basis of a rolling four quarters to be less than 1.4 to 1.0 as
at the end of each fiscal quarter.

     As a result of the  restructuring and other special charges incurred during
the  quarter  ended June 30,  1999,  at June 30,  1999,  the  Company was not in
compliance with the  Consolidated  Cash Flow Leverage Ratio and Consolidated Net
Worth  financial  covenants.  As of the date of this  filing,  the Company is in
discussions with the Bank regarding a waiver and amendment to the Loan Agreement
with respect to such covenants.  There can be no assurance that the Company will
obtain a waiver or an amendment on terms acceptable to the Company, if at all.

     The Company believes that its available funds, together with current credit
arrangements and the cash flows expected to be generated from  operations,  will
be adequate to satisfy its current and planned  operations  through at least the
next 12 months.

YEAR 2000 COMPLIANCE

     Historically,  certain computer programs have been written using two digits
rather  than four to define  the  applicable  year,  which  could  result in the
computer  recognizing a date using "00" as the year 1900 rather than 2000.  This
in turn,  could  result in major  system  failures  or  miscalculations,  and is
generally  referred to as the "Year 2000 Problem".  The Company believes that it
has  sufficiently  assessed its state of readiness with respect to its Year 2000
compliance. Based on its assessment, the Company does not believe that Year 2000
compliance  will result in material  investments  by the  Company,  nor does the
Company  anticipate  that the Year 2000 Problem will have any adverse effects on
the business  operations or financial  performance  of the

                                     - 16 -
<PAGE>

Company.  The Company does not believe that it has any material  exposure to the
Year 2000 Problem with respect to its own information  systems and believes that
all  of its  business-critical  systems  correctly  define  the  Year  2000  and
subsequent  years.  Based upon its  assessment,  the Company has  established no
reserve  nor  instituted  any  contingency  plans.  There  can be no  assurance,
however,  that the Year 2000 problem  will not  adversely  affect the  Company's
business operating results and financial condition.

     However,  the purchasing  patterns of customers and potential customers may
be affected by issues associated with the Year 2000 Problem. As companies expend
significant  resources to correct  their current data storage  solutions,  these
expenditures  may result in reduced  funds to  purchase  products  or  undertake
projects  such as those offered by the Company.  There can be no assurance  that
the Year 2000 Problem, as it relates to customers, potential customers and other
third-parties,  will not  adversely  affect the  Company's  business,  operating
results and  financial  condition.  Conversely,  the Year 2000 Problem may cause
other  companies  to  accelerate  purchases,  thereby  causing  an  increase  in
short-term  demand  and a  consequent  decrease  in  long-term  demand  for  the
Company's products.

EUROPEAN MONETARY UNION (EMU)

     The euro was  introduced  on  January  1,  1999,  at which  time the eleven
participating  EMU member countries  established  fixed conversion rates between
their  existing   currencies  (legacy  currencies)  and  the  euro.  The  legacy
currencies  will  continue to be used as legal tender  through  January 1, 2002;
thereafter, the legacy currencies will be canceled and euro bills and coins will
be used for cash  transactions  in the  participating  countries.  The Company's
European  sales and  operations  offices  affected by the euro  conversion  have
established  plans to address the  systems  issues  raised by the euro  currency
conversion  and  are  cognizant  of  the  potential  business   implications  of
converting to a common currency. The Company is unable to determine the ultimate
financial  impact of the  conversion on its  operations,  if any, given that the
impact will be  dependent  upon the  competitive  situations  which exist in the
various  regional  markets in which the Company  participates  and the potential
actions  which  may or may  not  be  taken  by  the  Company's  competitors  and
suppliers.




                                     - 17 -
<PAGE>

PART II.       OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

     On February 13, 1998,  Russell  Schultz,  a former employee of the Company,
filed a complaint in the Superior  Court of New Jersey,  Law Division,  Monmouth
County, naming the Company as a defendant.  The complaint,  which seeks damages,
alleges,  among other things,  that the Company  misrepresented  plaintiff's job
description in order to induce plaintiff to leave his prior employer,  failed to
provide  stock  options  to  the  plaintiff  and  violated  plaintiff's  written
employment  contract.  The Company was served  with the  complaint  on March 16,
1998.  Subsequently,  on July 10,  1998,  upon the  Company's  Motion  to Compel
Arbitration,  the court dismissed the plaintiff's  complaint without  prejudice.
Subsequently, the plaintiff's motion to reconsider the dismissal was denied. The
plaintiff  filed  his  demand  for  Arbitration  with the  American  Arbitration
Association  on February  17, 1999 and the Company  filed its answer on February
26, 1999. An  arbitration  hearing is expected to take place in October 1999. It
is too early in the dispute  process to determine the impact,  if any, that such
dispute will have upon the Company's business, financial condition or results of
operations.

     On January 20, 1999, Tony Knight, a former employee of the Company, filed a
complaint in the Superior  Court of the State of  California,  San Mateo County,
naming the Company,  among others,  as a defendant.  The complaint,  which seeks
damages,  alleges,  among other things, that the Company  discriminated  against
plaintiff because of his race, ancestry, religious creed and national origin and
thereafter  wrongfully  terminated the plaintiff's  employment with the Company.
The  Company,  through  its  counsel,  acknowledged  receipt of the  summons and
complaint on April 20, 1999.  On May, 19, 1999,  the Company  removed the action
from the California  Superior Court to the United States  District Court for the
Northern  District of California.  It is too early in the litigation  process to
determine the impact,  if any, that such litigation will have upon the Company's
business, financial condition or results of operations.

     There is no other  material  litigation  pending to which the  Company is a
party or to which any of its property is subject.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     On July 19, 1999,  subsequent  to the end of the quarter,  the Company held
its Annual Meeting of Shareholders ("Annual Meeting").

     There  were  present  at the  meeting  in person  or by proxy  shareholders
holding an aggregate of 10,007,596  shares of Common  Stock.  The results of the
vote taken at such meeting  with  respect to each  nominee for director  were as
follows:

     Common Stock Nominees                  For                 Withheld
     ---------------------                  ---                 --------

     Ashok Pandey                         9,960,525               47,044
     Rajkumar Koneru                      9,960,525               47,044
     Nagarjun Valluripalli                9,960,525               47,044
     Klaus P. Besier                      9,959,525               48,044
     Maxine Ballen                        9,959,525               48,044


                                     - 18 -
<PAGE>

     In addition,  a vote was taken on the proposal to amend the Company's  1996
Stock Plan (the "Plan") to increase the maximum number of shares of Common Stock
available for issuance under the Plan from 2,200,000 to 4,700,000  shares and to
reserve  an  additional  2,500,000  shares of Common  Stock of the  Company  for
issuance upon the exercise of stock options granted or for the issuance of stock
purchase  rights under the Plan. Of the shares  present at the meeting in person
or by  proxy,  9,769,379  shares  of Common  Stock  were  voted in favor of such
proposal,  230,957  shares of Common Stock were voted  against such proposal and
7,233 shares of Common Stock abstained from voting.

     Finally,  a vote was taken on the  proposal  to ratify the  appointment  of
Arthur  Andersen LLP as the  independent  auditors of the Company for the fiscal
year ending December 31, 1999. Of the shares present at the meeting in person or
by proxy, 9,998,936 shares of Common Stock were voted in favor of such proposal,
5,500 shares of Common Stock were voted  against such  proposal and 3,133 shares
of Common Stock abstained from voting.

ITEM 5.   OTHER INFORMATION.

     Management  Restructuring.  On  May  24,  1999,  the  Company  completed  a
management  restructuring.  The  Company  named  Nagarjun  Valluripalli  as  its
Chairman of the Board and each of Rajkumar  Koneru and Ashok  Pandey as Co-Chief
Executive  Officers.  Each of  Messrs.  Valluripalli,  Koneru  and  Pandey  were
founders of the Company and have resumed their active role in the  management of
the Company's operations.  In addition,  Stephen A. Carns resigned effective May
24,  1999 as the  Company's  President  and  Chief  Executive  Officer  and as a
director. Mr. Carns had served in such capacities since 1998.

     As  part  of the  management  restructuring,  also  on May  24,  1999,  the
Company's three outside directors,  David A. Finley,  Kevin P. Mohan and John E.
Steuri, resigned from the Board of Directors of the Company (the "Board").

     A former director,  Klaus P. Besier,  who resigned from the Board in April,
1999,  rejoined the Board upon his election by the reconstituted Board following
the aforementioned management restructuring.

     Adjournment of Annual Meeting of  Shareholders.  In light of the management
restructuring and Board  resignations,  the Company adjourned its Annual Meeting
of  Shareholders  originally  scheduled  for  Tuesday,  May 25, 1999 in order to
designate  a new slate of  director  nominees  and to prepare  additional  proxy
material.  The Company  rescheduled and held its Annual Meeting on Monday,  July
19, 1999. See "Item 4, Submission of Matters to a Vote of Security Holders."




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<PAGE>

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.

     (a)  Exhibits.

               10.1  1996 Stock Plan, as amended

               27.1  Financial Data Schedule for the six-month period ended June
                     30, 1999.

               27.2  Financial Data Schedule for the  three-month  period  ended
                     June 30, 1999.

               27.3  Financial Data Schedule for the six-month period ended June
                     30, 1998.

               27.4  Financial Data Schedule for the  three-month  period  ended
                     June 30, 1998.

      (b) Reports on Form 8-K.

               On May 3, 1999, the Company filed a report on form 8-K/A relating
               to the Company's  acquisition of Empower  Solutions,  L.L.C., and
               its affiliate Empower, Inc.

               On May 27, 1999,  the Company filed a report on Form 8-K relating
               to the Company's management restructuring, resignation of certain
               outside directors,  election of a former outside director and the
               adjournment of the Company's Annual Meeting of Shareholders.





                                     - 20 -
<PAGE>

                                   SIGNATURES


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


                                             Intelligroup, Inc.


DATE:  August 16, 1999                       By:  /s/ Ashok Pandey
                                                --------------------------------
                                             Ashok Pandey,
                                             Co-Chief Executive Officer
                                             (Principal Executive Officer)


DATE:  August 16, 1999                       By:   /s/ Gerard E. Dorsey
                                                --------------------------------
                                             Gerard E. Dorsey,
                                             Executive Vice President
                                             Finance and Administration
                                             Chief Financial Officer
                                             (Principal Financial and Accounting
                                             Officer)






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