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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 March 31, 2007

Commission file number 0-20943

|INTELLIGROUP,   INC.                                    
|--------------------------------------------------------
|                                                        
|(Exact   Name of Registrant as Specified In Its Charter)

|New Jersey                                                       |  | 11-2880025                            
|---------------------------------------------------------------- |  | --------------------------------------
|                                                                 |  |                                       
|(State or   Other Jurisdiction of Incorporation or Organization) |  | (I.R.S.   Employer Identification No.)
|                                                                 |  |                                       
|499 Thornall Street, Edison, New Jersey                          |  | 08837                                 
|                                                                 |  |                                       
|(Address   of Principal Executive Offices)                       |  | (Zip Code)                            
|                                                                 |  |                                       
|(732) 590-1600                                                  
|                                                                
|(Registrants   Telephone Number, Including Area Code)          

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

|Yes
x | No
o
|----- | ----

Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, or a non-accelerated filer.  See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

|Large   accelerated filer:
o | Accelerated   filer:
o | Non-accelerated   filer:
x
|---------------------------- | ---------------------- | --------------------------

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).

|Yes
o | No
x
|----- | ----

Indicate the number of shares outstanding of each of the registrants classes of common stock, as of May 15, 2007:

|Class                          |  | Number of   Shares
|------------------------------ |  | ------------------
|                               |  |                   
|Common Stock, $.01 par   value |  | 41,932,857        

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TABLE OF CONTENTS

|                                |                                                                                                                                                    |  | Page
|------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                |                                                                                                                                                    |  |     
|PART I.   FINANCIAL INFORMATION |                                                                                                                                                    | 
|                                |                                                                                                                                                    |  |     
|Item 1.                         | Financial   Statements                                                                                                                             |  |     
|                                |                                                                                                                                                    |  |     
|                                | Condensed   Consolidated Balance Sheets as of March 31, 2007 (unaudited) and December 31,   2006                                                   |  | 4   
|                                |                                                                                                                                                    |  |     
|                                | Condensed   Consolidated Statements of Operations and Comprehensive Income (Loss) for the   Three Months Ended March 31, 2007 and 2006 (unaudited) |  | 5   
|                                |                                                                                                                                                    |  |     
|                                | Condensed   Consolidated Statements of Cash Flows for the Three Months Ended March 31,   2007 and 2006 (unaudited)                                 |  | 6   
|                                |                                                                                                                                                    |  |     
|                                | Notes to   Condensed Consolidated Financial Statements                                                                                             |  | 7   
|                                |                                                                                                                                                    |  |     
|Item 2.                         | Managements   Discussion and Analysis of Financial Condition and Results of Operations                                                            |  | 16  
|                                |                                                                                                                                                    |  |     
|Item 3.                         | Quantitative   and Qualitative Disclosures About Market Risk                                                                                       |  | 21  
|                                |                                                                                                                                                    |  |     
|Item 4.                         | Controls   and Procedures                                                                                                                          |  | 21  
|                                |                                                                                                                                                    |  |     
|PART II.   OTHER INFORMATION    |                                                                                                                                                    | 
|                                |                                                                                                                                                    |  |     
|Item 1.                         | Legal   Proceedings                                                                                                                                |  | 22  
|                                |                                                                                                                                                    |  |     
|Item 1a.                        | Risk   Factors                                                                                                                                     |  | 23  
|                                |                                                                                                                                                    |  |     
|Item 6.                         | Exhibits                                                                                                                                           |  | 27  
|                                |                                                                                                                                                    |  |     
|Signatures                      |                                                                                                                                                    |  | 32  

2



FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include, among other things, business strategy and expectations concerning industry conditions, market position, future operations, margins, profitability, liquidity and capital resources. Forward-looking statements generally can be identified by the use of terminology such as may, will, expect, intend, estimate, anticipate or believe or similar expressions or the negatives thereof. These expectations are based on managements assumptions and current beliefs based on currently available information. Although the Company believes that the expectations reflected in such statements are reasonable, it can give no assurance that such expectations will be correct.
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this quarterly report on Form 10-Q. The Companys operations are subject to a number of uncertainties, risks and other influences, many of which are outside its control, and any one of which, or a combination of which, could cause its actual results of operations to differ materially from the forward-looking statements. Important factors that could cause actual results to differ materially from its expectations are disclosed in Part I, Item 2, Managements Discussion and Analysis of Financial Condition and Results of Operations, Part II, Item 1A, Risk Factors and elsewhere in this quarterly report on Form 10-Q.

3



PART I          FINANCIAL STATEMENTS

ITEM 1.

INTELLIGROUP, INC.CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands except par value)

|                                                                                                                                         |  | March 31   2007 |             | December   31,   2006 |  
|---------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | ----------- | --------------------- | -
|                                                                                                                                         |  |                 |             |                       |  
|                                                                                                                                         |  |                 | (unaudited) |                       |  
|ASSETS                                                                                                                                   |  |                 |             |                       |  
|CURRENT ASSETS                                                                                                                           |  |                 |             |                       |  
|Cash   and cash equivalents                                                                                                              |  | $               | 8,328       |                       | $
|Short-term   Investments                                                                                                                 |  |                 | 3,140       |                       |  
|Accounts   receivable, less allowance for doubtful accounts of $1,066 and $991 at March   31, 2007 and December 31, 2006, respectively   |  |                 | 18,439      |                       |  
|Unbilled   services, less allowance for doubtful accounts of $891 at March 31, 2007 and   December 31, 2006                              |  |                 | 12,124      |                       |  
|Prepaid   expenses                                                                                                                       |  |                 | 1,098       |                       |  
|Prepaid   Taxes                                                                                                                          |  |                 |            |                       |  
|Other   current assets                                                                                                                   |  |                 | 1,233       |                       |  
|                                                                                                                                         |  |                 |             |                       |  
|Total   current assets                                                                                                                   |  |                 | 44,362      |                       |  
|Property and equipment, net                                                                                                              |  |                 | 5,411       |                       |  
|Deferred taxes and other   assets                                                                                                        |  |                 | 2,740       |                       |  
|                                                                                                                                         |  |                 |             |                       |  
|Total   Assets                                                                                                                           |  | $               | 52,513      |                       | $
|                                                                                                                                         |  |                 |             |                       |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                     |  |                 |             |                       |  
|CURRENT LIABILITIES                                                                                                                      |  |                 |             |                       |  
|Line   of credit borrowings                                                                                                              |  | $               | 4,946       |                       | $
|Accounts   payable                                                                                                                       |  |                 | 3,984       |                       |  
|Accrued   payroll and related taxes                                                                                                      |  |                 | 11,388      |                       |  
|Accrued   expenses and other current liabilities                                                                                         |  |                 | 5,265       |                       |  
|Deferred   revenue                                                                                                                       |  |                 | 1,796       |                       |  
|Income   taxes payable                                                                                                                   |  |                 | 122         |                       |  
|Current   portion of obligations under capital lease                                                                                     |  |                 | 410         |                       |  
|                                                                                                                                         |  |                 |             |                       |  
|Total   current liabilities                                                                                                              |  |                 | 27,911      |                       |  
|Obligations under capital   lease, net of current portion                                                                                |  |                 | 566         |                       |  
|Deferred revenue, net of   current portion                                                                                               |  |                 | 660         |                       |  
|Other long-term liabilities                                                                                                              |  |                 | 63          |                       |  
|                                                                                                                                         |  |                 |             |                       |  
|Total   Liabilities                                                                                                                      |  |                 | 29,200      |                       |  
|                                                                                                                                         |  |                 |             |                       |  
|Commitments and   contingencies                                                                                                          |  |                 |             |                       |  
|Shareholders   Equity                                                                                                                   |  |                 |             |                       |  
|Preferred   stock, $.01 par value, 5,000 shares authorized, none issued or outstanding                                                   |  |                 |            |                       |  
|Common   stock, $.01 par value, 50,000 shares authorized, 41,933 shares issued and   outstanding at March 31, 2007 and December 31, 2006 |  |                 | 419         |                       |  
|Additional   paid-in capital                                                                                                             |  |                 | 70,028      |                       |  
|Accumulated   deficit                                                                                                                    |  |                 | (47,547     | )                     |  
|Accumulated   other comprehensive loss                                                                                                   |  |                 | 413         |                       |  
|                                                                                                                                         |  |                 |             |                       |  
|Total   shareholders equity                                                                                                             |  |                 | 23,313      |                       |  
|                                                                                                                                         |  |                 |             |                       |  
|Total   liabilities and shareholders equity                                                                                             |  | $               | 52,513      |                       | $

See accompanying notes.

4



INTELLIGROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) (in thousands except per share data)

|                                                                 |  | THREE MONTHS ENDED MARCH 31, |       
|---------------------------------------------------------------- |  | ---------------------------- | ------
|                                                                 |  |                              |       
|                                                                 |  | 2007                         |       
|                                                                 |  |                              |       
|Revenue                                                          |  | $                            | 32,700
|Cost of revenue                                                  |  |                              | 26,240
|                                                                 |  |                              |       
|Gross   profit                                                   |  |                              | 6,461 
|                                                                 |  |                              |       
|Selling, general and   administrative expenses                   |  |                              | 8,911 
|Depreciation and   amortization                                  |  |                              | 598   
|                                                                 |  |                              |       
|Total   operating expenses                                       |  |                              | 9,510 
|                                                                 |  |                              |       
|Operating   loss                                                 |  |                              | (3,049
|Interest expense, net                                            |  |                              | (192  
|Other income (expense)                                           |  |                              | 62    
|                                                                 |  |                              |       
|Loss before income tax   provision                               |  |                              | (3,179
|Provision for income taxes                                       |  |                              | 615   
|                                                                 |  |                              |       
|Net loss                                                         |  | $                            | (3,793
|                                                                 |  |                              |       
|Loss per share:                                                  |  |                              |       
|Basic   net loss per share                                       |  | $                            | (0.09 
|                                                                 |  |                              |       
|Weighted   average number of common shares outstanding - basic   |  |                              | 41,933
|Diluted   net loss per share                                     |  | $                            | (0.09 
|                                                                 |  |                              |       
|Weighted   average number of common shares outstanding - diluted |  |                              | 41,933
|Comprehensive loss                                               |  |                              |       
|Net   loss                                                       |  | $                            | (3,793
|Other   comprehensive income - currency translation adjustments  |  |                              | 387   
|                                                                 |  |                              |       
|Comprehensive loss                                               |  | $                            | (3,407

See accompanying notes.

5



INTELLIGROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)

|                                                                             |  | THREE MONTHS ENDED   MARCH 31, |       
|---------------------------------------------------------------------------- |  | ------------------------------ | ------
|                                                                             |  |                                |       
|                                                                             |  | 2007                           |       
|                                                                             |  |                                |       
|Cash flows from operating   activities:                                      |  |                                |       
|Net   loss                                                                   |  | $                              | (3,793
|Adjustments to reconcile   net loss to net cash used in operating activities |  |                                | 1,368 
|                                                                             |  |                                |       
|Net cash used in operating   activities                                      |  |                                | (2,425
|                                                                             |  |                                |       
|Cash flows from investing   activities:                                      |  |                                |       
|Purchases   of equipment                                                     |  |                                | (409  
|Proceeds   from sale of equipment                                            |  |                                | (21   
|Purchase   of Short Term Investments                                         |  |                                | (2,245
|Proceeds   from sale of Short Term Investments                               |  |                                | 1,420 
|                                                                             |  |                                |       
|Net cash used in investing   activities                                      |  |                                | (1,255
|                                                                             |  |                                |       
|Cash flows from financing   activities:                                      |  |                                |       
|Principal   payments under capital leases                                    |  |                                | (158  
|Net   proceeds from private placement                                        |  |                                |       
|Net   change in line of credit borrowings                                    |  |                                | (13   
|                                                                             |  |                                |       
|Net cash used in financing   activities                                      |  |                                | (171  
|                                                                             |  |                                |       
|Effect of foreign currency   exchange rate changes on cash                   |  |                                | (98   
|                                                                             |  |                                |       
|Net (decrease) increase in   cash and cash equivalents                       |  |                                | (3,949
|Cash and cash equivalents -   beginning of period                            |  |                                | 12,277
|                                                                             |  |                                |       
|Cash and cash equivalents -   end of period                                  |  | $                              | 8,328 

See accompanying notes.

6



INTELLIGROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 2007 AND 2006

|NOTE 1- | BASIS OF   PRESENTATION
|------- | -----------------------

The condensed consolidated financial statements and accompanying financial information as of March 31, 2007 and for the three months ended March 31, 2007 and 2006 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 unaudited condensed consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America and the instructions of Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to accounting requirements of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, the accompanying unaudited condensed consolidated financial statements
and these notes do not include all disclosures required by accounting principles generally accepted in the United States of America for audited financial statements. Accordingly, these statements should be read in conjunction with the accounting policies and Notes to Consolidated Financial Statements included in the Companys consolidated financial statements filed on Form 10-K for the year ended December 31, 2006.

The amounts for the December 31, 2006 balance sheet have been extracted from the audited consolidated financial statements included in Form 10-K for the year ended December 31, 2006.

The results of the Companys operations for the three months ended March 31, 2007 are not necessarily indicative of the results of operations to be expected for the full year ending December 31, 2007.

|NOTE 2- | SUMMARY OF   SIGNIFICANT ACCOUNTING POLICIES
|------- | --------------------------------------------

Earnings (loss) per Common Share

Basic net income (loss) per share (EPS) is computed using the weighted average number of common shares outstanding for the period. Diluted earnings per share includes additional dilution from potential common stock, such as stock issuable pursuant to the exercise of stock options and warrants. Potential common stock is not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for the periods presented.

For the three months ended March 31, 2007 and 2006, respectively, options to purchase 3,948,454 and 4,316,000 shares of common stock were not included in the computation of diluted earnings (loss) per share because inclusion would have been anti-dilutive.

Derivative Instruments

The Company
has entered into foreign currency derivative contracts to manage a portion of
its foreign currency risk related to U.S. Dollar denominated asset balances at
our Indian subsidiary.  The foreign currency derivative contract is
marked-to-market and recorded at fair value with unrealized gains and losses
reported along with foreign currency gains or losses in the caption other
income (expense), net on the Companys consolidated statements of
operations and comprehensive income (loss).

Income Taxes

The Company
records tax expense/benefit based upon the taxable income/loss recorded in each
tax jurisdiction. The Company recorded an income tax provision of $0.6 million
on a pretax loss of $3.2 million for the three months ended March 31, 2007 as
opposed to an income tax provision of $0.1 million on pretax loss of $1.9
million for the three months ended March 31, 2006 due to expiration of India tax
holiday as of March 31, 2006. The tax provision on a consolidated loss, is on
account of the Net Income at the India subsidiary for the three months ended
March 31, 2007 and three months ended March 31, 2006.

Effective January, 1 2007, the Company adopted the provisions of FIN 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109. FIN 48 contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (SFAS No. 109). The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The cumulative effect on adoption of FIN 48 is to be recorded as an adjustment to the opening

balance of accumulated earnings/deficit.

The adoption of FIN48 had no significant impact on operational or financial position as of and for the period ended March 31, 2007 and no adjustment has been recorded to the opening balance of accumulated deficit. The total amount of gross unrecognized tax benefits as of the date of adoption was $0.5million.

The total amount of gross unrecognized tax benefits was $0.5 million as of March 31, 2007. Any recognition of these tax benefits in the future would impact the Companys effective tax rate.

The Companys
policy to include interest and penalties related to unrecognized tax benefits
within the provision for taxes on the consolidated condensed statements of
income did not change as a result of implementing FIN 48. The Company had
accrued $.0.3 million for the payment of interest and penalties relating to
unrecognized tax benefits as of March 31, 2007. The amount of interest and
penalties expensed during the quarter ending March 31, 2007 is not
significant.

The Company files U.S. federal, U.S. state, and foreign tax returns. Apart from the U.S., the major tax jurisdiction is India. For U.S. federal and state tax returns the tax examinations are open for years after 2002. For India, the tax assessments are open for the fiscal years after March 31, 1997.

Although timing of the resolution and closure is highly uncertain, the Company does not believe it is reasonably possible that the unrecognized tax benefits would materially change in the next 12 months.

7



INTELLIGROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) MARCH 31, 2007 AND 2006

|NOTE 2- | SUMMARY OF   SIGNIFICANT ACCOUNTING POLICIES    (CONTINUED)
|------- | -----------------------------------------------------------

Share-Based Compensation Plans

The Companys share-based compensation plans are described in Note 6.  The Company adopted the provisions of Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment, (SFAS No. 123R) on January 1, 2006, using the modified prospective transition method.

There were eight share-based payment awards granted in the three months ended March 31, 2007.  The Company recognizes compensation expense for all share-based payment awards based on the grant date fair value estimated in accordance with the provisions of SFAS No. 123R.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The Company recognizes the fair value of each option as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period). The Black-Scholes model incorporates the following assumptions:

| |  | Expected volatility  the   Company estimates the volatility of common stock at the date of grant using a   combination of unadjusted historical volatility, and historical volatility   adjusted for periods of unusual stock price activity.                                                                                                                   
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                  
| |  | Expected term  the Company   estimates the expected term of options granted based on a combination of   vesting schedules, life of the option, historical experience and in cases   where the Company does not have significant historical experience, the   simplified method of determining expected term outlined in Staff Accounting   Bulletin 107 is used.
| |   |                                                                                                                                                                                                                                                                                                                                                                  
| |  | Risk-free interest rate    the Company estimates the risk-free interest rate using the U.S. Treasury   yield curve in effect at the time of grant for periods equal to the expected   life of the options.                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                  
| |  | Dividends  the Company   uses an expected dividend yield of zero since it has never declared or paid   any dividends on its capital stock. The Company intends to retain any   earnings to fund future growth and the operation of its business, and,   therefore does not anticipate paying any cash dividends in the foreseeable   future.                    

Additionally, the Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. It uses a combination of historical data, demographic characteristics and other factors to estimate pre-vesting option forfeitures and record share-based compensation expense only for those awards that are expected to vest. SFAS No. 123R requires the cash flows resulting from the tax benefits for tax deductions in excess of the compensation expense recorded for those options to be classified as financing cash flows.  No options were exercised during the three months ended March 31, 2007.

|NOTE 3- | LINE OF   CREDIT
|------- | ----------------

On May 23, 2006, the Company and its wholly-owned subsidiary Empower, Inc. entered into a second amended and restated revolving credit loan and security agreement and second amended and restated revolving secured note (collectively Credit Agreement) with Steel City Capital Funding, a division of PNC Bank, National Association (the Bank).  The Credit Agreement is comprised of a two year revolving line of credit pursuant to which the Company can borrow up to $15.0 million at the Banks Base Rate (as defined in the Credit Agreement) of 8.25% as of March 31, 2007, plus two (2%) percent.  The credit facility is collateralized by substantially all of the assets of the United States based operations and all subsidiary stock (not to exceed 65% of the Equity Interests of any Foreign Subsidiary).  The maximum borrowing availability under the Credit Agreement is based upon

a percentage of eligible billed and unbilled accounts receivable.  The Credit Agreement  provides for certain financial covenants that shall only be tested as of the end of any fiscal quarter in which the average undrawn availability has been less than five million dollars ($5.0 million) for a period of thirty (30) consecutive days during such fiscal year.

The Company was in
compliance with the applicable financial covenants of the loan agreement related to the Credit Agreement as of March
31, 2007.

As of March 31,
2007, the Company had $4.9 million outstanding borrowings under the Credit
Agreement. The Company estimates undrawn availability under the Credit Facility
to be $9.1 million as of March 31, 2007.

|NOTE 4- | RELATED   PARTY TRANSACTIONS
|------- | ----------------------------

Effective August 1, 2005, Intelligroup Asia Pvt. Ltd. (IGA)  entered into an agreement to lease certain premises for certain of the Companys India operations from iLabs Hyderabad Technology Center Pvt. Ltd. (iLabs), a party with which two members of the Companys Board of Directors, Srini Raju and Sandeep Reddy, are affiliated.  The terms of the lease agreement provide for, among other things: (1) a minimum lease period of five years with an option for two three-year renewal periods; (2) payment of a security deposit equivalent to nine (9) months rent in the amount of 15.3 million Indian rupees (approximately $352,000); (3) payment of monthly lease fees in the amount of 1.7 million Indian rupees (approximately $38,000), subject to yearly five percent (5%) escalation; and (4) monthly operations and maintenance fees of 0.3 million Indian rupees
(approximately $6,000). Rent expense for the three months ended March 31, 2007 towards the said lease was 7.1 million rupees (approximately $160,000). There are no advance lease rentals as of March 31, 2007.

8



INTELLIGROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) MARCH 31, 2007 AND 2006

|NOTE 5- | LITIGATION
|------- | ----------

India Tax Assessments

The Companys India subsidiary has received tax assessments from the India taxing authority denying tax exemptions claimed for certain revenue earned and disallowing certain expenses claimed during the India subsidiarys fiscal years ended March 31, 1998 through March 31, 2003. The combined revised additional tax demands were for 32.2 million Indian rupees (or approximately $0.7 million) for those years. They include tax penalties for the fiscal years ended March 31, 2001 of 1.4 million Indian rupees (or approximately $32,000). Against the total additional tax demand of $0.7 million, the Company has made payments of approximately $0.7 million under protest to the India tax authority. The Company has reserved the full amount of additional tax demand against this potential liability.

The Company is currently appealing at the Appellant Tribunal stage for the fiscal years ended March 31, 1998 through March 31, 2002.  For the fiscal year ended March 31, 2003, the Company has filed an appeal with the Commissioner of Income Tax (Appeals) against the assessment order passed. In the event the Companys appeal is not successful, there will not be any additional future cash outlay.  However, in the event the Company is successful, an amount up to approximately $0.7 million could be refunded to the Company.

Shareholder Class Actions

On or about October 12, 2004, the first of six class action lawsuits was filed, on behalf of a purported class of investors who purchased the Companys common stock, against the Company and former officers Arjun Valluripalli, Nicholas Visco, Edward Carr and David Distel (Defendants) in the United States District Court, District of New Jersey (District of New Jersey). In August 2005, the United States District Court, District of New Jersey consolidated the six class actions (the Shareholder Class Action) and appointed a lead plaintiff.  Plaintiffs subsequently dropped Mr. Distel and Mr. Carr from the Shareholder Class Action, failing to name either of them as a defendant in the amended consolidated complaint filed on or about October 10, 2005.  The Shareholder Class Action generally alleges violations of federal securities laws, including allegations that
the Defendants made materially false and misleading statements regarding the Companys financial condition and that the Defendants materially overstated financial results by engaging in improper accounting practices.  The Class Period alleged is May 1, 2001 through September 24, 2004.  The Shareholder Class Action generally seeks relief in the form of unspecified compensatory damages and reasonable costs, expenses and legal fees.  On December 5, 2005, Defendants filed motions to dismiss the amended consolidated complaint.  On February 10, 2006, prior to the hearing on Defendants motions to dismiss, Plaintiffs filed a second amended consolidated complaint.  Defendants motions to dismiss the second amended consolidated complaint are currently pending before the District of New Jersey.  On or about December 20, 2006, the District of New Jersey granted Defendants motion and dismissed the second amended complaint without prejudice.  On or about January
25, 2007, plaintiffs filed the third consolidated amended complaint.  On or about March 5, 2007, Defendants filed a motion to dismiss the third consolidated amended complaint.  No trial date has been scheduled and no discovery has taken place.

There is no other litigation pending to which the Company is a party or to which any of its property is subject which would have a material impact on the Companys consolidated financial condition, results of operations or cash flows in the event the Company was unsuccessful in such litigation.

Legal fees arising in connection with litigation are expensed as incurred.

9



INTELLIGROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) MARCH 31, 2007 AND 2006

|NOTE 6- | SHAREHOLDERS   EQUITY
|------- | ----------------------

Share-Based Compensation Plans

The Company has four share-based compensation plans that reserve common shares for issuance to key employees, consultants and directors, as described below.  The compensation cost that has been charged against income for those plans was $0.3 million for the three months ended March 31, 2007.  The Company did not recognize income tax benefit in the condensed consolidated statement of operations and comprehensive loss for the first three months of 2007, due to its history of net operating losses.   No options were exercised during the three months ended March 31, 2007.

Stock Options:

The 2004 Equity Incentive Award Plan (2004 Plan) was approved by the Companys Board of Directors on April 5, 2004 and adopted by the Companys shareholders on June 8, 2004. The maximum number of shares of Common Stock reserved for issuance under the 2004 Plan shall be equal to 1,600,000, plus the number of shares of Common Stock which are or become available for issuance under the Companys 1996 Stock Plan (the Prior Plan), and which are not issued under such plan, which includes an increase of 500,000 shares pursuant to the third amendment to the 2004 plan which was adopted by the Board of Directors on May 4, 2006 and approved by the stockholders of the Company on June 8, 2006. Those eligible to receive stock option grants or stock purchase rights under the 2004 Plan include employees, non employee Directors and consultants.  The Compensation Committee of the Board of D

irectors of the Company administers the 2004
Plan.  Subject to the provisions of the 2004 Plan, the administrator of the 2004 Plan has the discretion to determine the optionees and/or grantees, the type of equity awards to be granted (incentive stock options and nonqualified stock options, restricted stock, stock appreciation rights, performance shares, performance stock units, stock payments, deferred stock, restricted stock units, other stock-based awards, and performance-based awards), the vesting provisions, the terms of the grants and such other related provisions as are consistent with the 2004 Plan.

The exercise price of a stock option may not be less than the fair market value per share of the Common Stock on the date of grant or, in the case of an optionee receiving incentive stock option award who beneficially owns 10% or more of the outstanding capital stock of the Company, not less than 110% of the fair market value per share on the date of grant.  Notwithstanding the foregoing, the Compensation Committee may in its discretion issue non-qualified stock options to purchase up to 500,000 shares of Common Stock with an option exercise price of less than 100% of the fair market value of the Common Stock on the date of grant.  The options terminate not more than ten years from the date of grant, subject to earlier termination on the optionees death, disability or termination of employment with the Company, provided however that the term of any incentive stock options granted to a
holder of more than 10% of the outstanding shares of capital stock may be no longer than five years.  Options are not assignable or otherwise transferable except by will or the laws of descent and distribution.

The Compensation Committee may provide that if a Change of Control (as defined in the 2004 Plan) of the Company occurs and any awards made pursuant to the 2004 Plan are not converted, assumed or replaced by a successor, then all outstanding awards that are not converted, assumed or replaced may become fully vested and exercisable.  The Compensation Committee, subject to approval of the Board, may terminate, amend, or modify the 2004 Plan at any time; provided, however, that stockholder approval must be obtained for any amendment to the extent necessary or desirable to comply with any applicable law, regulation or stock exchange rule, to increase the number of shares available under the 2004 Plan, to permit the Compensation Committee to grant options with an exercise price below fair market value on the date of grant, or to extend the exercise period for an option beyond ten years from the date of
grant. The 2004 Plan terminates on June 8, 2014 unless terminated earlier by the Companys Board of Directors.

10



INTELLIGROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) MARCH 31, 2007 AND 2006

|NOTE 6- | SHAREHOLDERS   EQUITY(CONTINUED)
|------- | ---------------------------------

Share-Based Compensation Plans (Continued)

The 1996 Stock Plan (1996 Plan) was adopted by the Board of Directors and approved by the shareholders of the Company on June 3, 1996, and became effective on July 12, 1996.  Those eligible to receive stock option grants or stock purchase rights under the 1996 Plan include employees, non employee Directors and consultants.  The Compensation Committee of the Board of Directors of the Company administers the 1996 Plan.  Subject to the provisions of the 1996 Plan, the administrator of the 1996 Plan has the discretion to determine the optionees and/or grantees, the type of options to be granted (incentive stock options or nonqualified stock options), the vesting provisions, the terms of the grants and such other related provisions as are consistent with the 1996 Plan.  The exercise price of an incentive stock option may not be less than the fair market value per share of the
Common Stock on the date of grant or, in the case of an optionee who beneficially owns 10% or more of the outstanding capital stock of the Company, not less than 110% of the fair market value per share on the date of grant.  The exercise price of nonqualified stock options granted under the 1996 Plan may not be less than 85% of the fair market value per share of the Common Stock on the date of grant or, in the case of an optionee who beneficially owns 10% or more of the outstanding capital stock of the Company, not less than 110% of the fair market value per share on the date of grant.  The purchase price of shares issued pursuant to stock purchase rights may not be less than 50% of the fair market value of such shares as of the offer date of such rights.  The options terminate not more than ten years from the date of grant, subject to earlier termination on the optionees death, disability or termination of employment with the Company, provided however that the term of any options
granted to a holder of more than 10% of the outstanding shares of capital stock may be no longer than five years.  Options are not assignable or otherwise transferable except by will or the laws of descent and distribution.  In the event of a merger or consolidation of the Company with or into another corporation or the sale of all or substantially all of the Companys assets in which the successor corporation does not assume outstanding options or issue equivalent options, the Board of Directors of the Company is required to provide accelerated vesting of outstanding options.  As of June 8, 2004, the Company ceased granting options under the 1996 Plan.

The 1996 Non-Employee Director Plan was approved by the Board of Directors on June 3, 1996. The shareholders adopted the Companys 1996 Non-Employee Director Stock Option Plan (the Director Plan) and it became effective on July 12, 1996. The Director Plan provides for the grant of options to purchase a maximum of 140,000 shares of Common Stock of the Company to non-employee Directors of the Company.  The Board of Directors administers the Director Plan.

In October and November 2000, the Companys Board of Directors approved grants of options for equity compensation plans not approved by security holders (the Out of Plan options).  Each of the Out of Plan options vest in four equal semiannual installments beginning on the first six-month anniversary of the date of grant and expire on the tenth anniversary of the date of grant. The price of the options granted pursuant to the Out of Plan options is equal to the fair market value of the shares on the date of grant.

11



INTELLIGROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) MARCH 31, 2007 AND 2006

|NOTE 6- | SHAREHOLDERS   EQUITY(CONTINUED)
|------- | ---------------------------------

The fair value of option grants is estimated on the date of grant using the Black-Scholes option-pricing model using the following weighted average assumptions:

|                        |  | Three Months Ended March 31 |               
|----------------------- |  | --------------------------- | --------------
|                        |  |                             |               
|                        |  | 2 0 0 7                     |               
|                        |  |                             |               
|Expected Volatility     |  |                             | 88.70         
|Expected Lives          |  |                             | 6.0625   years
|Risk free Interest Rate |  |                             | 4.49          
|Expected Dividends      |  |                             | 0             

The weighted average grant date fair value of options granted during the three months ended March 31, 2007 and 2006 was $0.97 and $0.95, respectively.  The aggregate intrinsic value of options outstanding as of March 31, 2007 is calculated as the difference between the exercise price of the underlying options and the market price of common shares for the shares that were in-the-money at that date.

As of March 31, 2007, there was $2.7 million of total unrecognized compensation cost related to the stock options.  That cost is expected to be recognized over the next four years.

12



INTELLIGROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) MARCH 31, 2007 AND 2006

|NOTE 6- | SHAREHOLDERS   EQUITY(CONTINUED)
|------- | ---------------------------------

Share-Based Compensation Plans (Continued)

The following table summarizes the share-based compensation expense for stock options that were recorded in accordance with SFAS No. 123R for the three months ended March 31, 2007 and March 31, 2006 (in thousands except per share information):

|                                               |  | Three Months   Ended   March 31,   2007 |       | Three Months   Ended   March 31,   2006 |  
|---------------------------------------------- |  | --------------------------------------- | ----- | --------------------------------------- | -
|                                               |  |                                         |       |                                         |  
|Cost of Revenue                                |  | $                                       | 161   |                                         | $
|Selling, general and administrative   expenses |  |                                         | 164   |                                         |  
|Increase to net loss                           |  | $                                       | 325   |                                         | $
|Change in loss per share:                      |  |                                         |       |                                         |  
|Basic and diluted                              |  | $                                       | (0.01 | )                                       | $

|NOTE 7- | SEGMENT   DATA AND GEOGRAPHIC INFORMATION
|------- | -----------------------------------------

The Company operates in one industry segment, information technology solutions and services.

The Company has four reportable geographic operating segments, which are organized and managed on a geographical basis, as follows:

| |  | United States (US)  the   largest segment of the Company, with operations in the US and Puerto Rico.   Includes the operations of the Companys US subsidiary, Empower, Inc., and   all corporate functions and activities. The US and corporate headquarters is   located in Edison, New Jersey;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                     
| |  | India  includes the   operations of the Company in India, including services provided on behalf of   other group subsidiaries, primarily to the US. The India headquarters is   located in Hyderabad, India;                                                                                       
| |   |                                                                                                                                                                                                                                                                                                     
| |  | Europe  includes the   operations of the Company in Denmark and the United Kingdom. The European   headquarters is located in Milton Keynes, United Kingdom; and                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                     
| |  | Japan  includes the   operations of the Company in Japan. The Japanese headquarters is located in   Tokyo, Japan.                                                                                                                                                                                  

| | The CEO has been identified   as the Chief Operating Decision Maker (CODM) because he has final authority   over resource allocation decisions and performance assessment. The CODM   regularly receives certain discrete financial information about the   geographical operating segments, including primarily revenue and operating   income, to evaluate segment performance.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                    
| | Accordingly, the Companys   consolidated operating results for the three months ended March 31, 2007 and   2006 are presented in the following geographic segments (in thousands):                                                                                                                                                                                                

13



INTELLIGROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) MARCH 31 2007 AND 2006

|NOTE 7- | SEGMENT   DATA AND GEOGRAPHIC INFORMATION(CONTINUED)
|------- | ----------------------------------------------------

|                                  |  | United   States |        | India |   | Europe |  | Japan |       | Total |  
|--------------------------------- |  | --------------- | ------ | ----- | - | ------ |  | ----- | ----- | ----- | -
|                                  |  |                 |        |       |   |        |  |       |       |       |  
|Three months ended March 31, 2007 |  |                 |        |       |   |        |  |       |       |       |  
|Revenue                           |  | $               | 20,553 |       | $ | 9,026  |  | $     | 2,409 |       | $
|Operating (loss)/Income           |  |                 | (3,475 | )     |   | 774    |  |       | (232  | )     |  
|Income tax expense                |  |                 | 5      |       |   | 610    |  |       |      |       |  
|Net (Loss)/Income                 |  |                 | (3,474 | )     |   | 40     |  |       | (264  | )     |  
|Long-lived assets, net (1)        |  |                 | 832    |       |   | 3,282  |  |       | 1,244 |       |  
|Total assets                      |  |                 | 31,996 |       |   | 14,374 |  |       | 4,942 |       |  
|Three months ended March 31, 2006 |  |                 |        |       |   |        |  |       |       |       |  
|Revenue                           |  | $               | 19,036 |       | $ | 7,408  |  | $     | 1,551 |       | $
|Operating (loss)/Income           |  |                 | (2,516 | )     |   | 836    |  |       | (41   | )     |  
|Income tax   (benefit)/expense    |  |                 | (87    | )     |   | 172    |  |       |      |       |  
|Net (Loss)/Income                 |  |                 | (2,349 | )     |   | 422    |  |       | 7     |       |  
|Long-lived assets, net            |  |                 | 1,297  |       |   | 2,995  |  |       | 41    |       |  
|Total assets                      |  |                 | 33,536 |       |   | 9,733  |  |       | 1,601 |       |  

|   
|---
|(1)

|NOTE 8- | COMMITMENTS   AND CONTINGENCIES
|------- | -------------------------------

Tax-Free Spin-off of SeraNova

On July 5, 2000, the Company distributed SeraNova common stock to its shareholders in a transaction that was structured to be and reported as a tax-free spin-off pursuant to Section 355 of the Internal Revenue Code (IRC Section 355). For distributions of stock qualifying under IRC Section 355, neither the Company nor the Companys shareholders recognize any gain or income in connection with the transaction. The Company and SeraNova executed a Tax Sharing Agreement, dated January 1, 2000 (Tax Sharing Agreement), whereby SeraNova would indemnify the Company for any tax liabilities in the event a future transaction of SeraNova results in the spin-off being deemed a taxable event. However, subsequently SeraNova and its parent company, Silverline Technologies, Inc. filed for Chapter 7 Bankruptcy. Additionally, as a condition to the distribution, SeraNova management represented that
there was no present plan, nor intent to enter into a subsequent transaction that would disturb the intended taxfree nature of the distribution.

On October 27, 2000, SeraNova and Silverline Technologies, Inc. announced that they had entered into an agreement and plan of merger, under which Silverline Technologies, Inc. would acquire control of SeraNova in exchange for American depository shares of Silverline.  Subsequently, SeraNova and Silverline Technologies, Inc. filed for Chapter 7 Bankruptcy on August 8, 2003.

IRC Section 355(e) provides that the Company may be required to recognize a gain equal to the excess of the fair market value of the SeraNova shares distributed over their tax basis if the distribution is part of a plan pursuant to which one or more persons acquire 50% or more of SeraNova common stock within two years of the distribution date. Should the spin-off ultimately be construed as taxable, the resultant tax liability could be up to $65.0 million, plus interest and penalties, depending on the facts that ultimately are established. No future benefits would inure to the Company as a result of imposition of a tax on the SeraNova distribution, and no reserve has been recorded for this potential tax.  However, should such a tax liability be imposed, the Company may be able to utilize some of its existing net operating losses to mitigate this tax liability.

14



INTELLIGROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) MARCH 31 2007 & 2006

|NOTE 8- | COMMITMENTS   AND CONTINGENCIES (CONTINUED)
|------- | -------------------------------------------

Employment Agreements

As of March 31, 2007, the Company had employment agreements with certain of its executive officers, which provide for minimum payments in the event of termination for reasons other than just cause.  The aggregate amount of compensation commitment in the event of termination under such agreements is approximately $1.1 million.  In addition, Intelligroup Asia Pvt. Ltd. (IGA) had entered into Severance Packages totaling approximately $0.6 million with certain former members of the IGA management team.  Pursuant to the terms of the Agreement for Severance Package, the Severance Package is activated upon the fulfillment of certain events, including a change in management of the Company or IGA.  In April 2005, following the termination of the Companys Chief Executive Officer, three members of the IGA management team, each of whom had a Severance Package, resigned. 
Except as set forth below, to date, the Company has not received any claim for payment of the Severance Package.  On or about September 2005, two former members of the IGA management team sent IGA notices under Section 433 and 434 of the Indian Companies Act, 1956 for payment of such Severance Package. The Company does not believe that such severance amount is owed. In the event the Company is unsuccessful in defending against such claim for payment, the Company would owe approximately $0.6 million to such individuals.

|NOTE 9- | RECENT   ACCOUNTING PRONOUNCEMENTS
|------- | ----------------------------------

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 157, Fair Value Measurements (FAS 157), which defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America, and expands disclosures about fair value measurements.  The provisions are effective for the Company beginning in the first quarter of 2008, with the cumulative effect, if any, of the change in accounting principle recorded as an adjustment to the opening balance of retained earnings. The Company is currently evaluating the impact of adopting FAS 157 on its consolidated financial statements.

In February, 2007, the FASB issued SFAS No. 159 The Fair Value Option for Financial Assets and Financial Liabilities (SFAS No. 159).  SFAS No. 159 permits entities to choose to measure financial assets and financial liabilities at fair value.  Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings.  SFAS No. 159 is effective for fiscal years beginning after November 15, 2007.  The Company is currently assessing the impact of SFAS No. 159 on its consolidated financial position and results of operations.

|NOTE 10- | OTHER   INCOME
|-------- | --------------

Other income (expense) results from transaction gains or losses associated with changes in foreign currency exchange rates, sublease income, dividend income from investments and other items.

For the three months ended March 31, 2007 and March 31, 2006, the Company recorded transaction losses of approximately $0.2 million, as a result of currency translation, primarily as a result of currency fluctuations in Asia and Europe.  Additionally, for the three months ended March 31, 2007 and March 31, 2006 the Company recorded sublease income, dividend income and other items of approximately $0.2 million.

15



|Item 2 | Managements   Discussion and Analysis of Financial Condition and Results of Operations
|------ | ---------------------------------------------------------------------------------------

Overview

In this Section, the Company will discuss the following:  (i)  key factors in evaluating the Companys financial performance;  (ii) application of critical accounting principles, which explains the accounting principles necessary to understand how the Company records its financial information; (iii)  results of operations - consolidated, in which the Companys consolidated results are compared period to period to recognize trends; (iv)  results of operations by business segment, which allows the Company to compare the results of its different business units; (v) liquidity and capital resources; and (vi) recent accounting pronouncements, which identifies new accounting literature that may have an impact on the Companys future results.

Key Factors in Evaluating the Companys Financial Performance

Management believes the following factors should be considered when evaluating the Companys reported financial information contained in Managements Discussion and Analysis of Financial Condition and Results of Operations.

Revenue

The majority of the Companys revenue is derived from professional services rendered to customers. Revenue is typically recognized as services are performed. The Companys services range from providing customers with a single consultant to multi-personnel full-scale projects. Although the Company has contracts with many of its customers to provide its services, in general, such contracts are terminable upon relatively short notice, typically not more than 30 days. There can be no assurance that the Companys customers will continue to enter into contracts with the Company or that existing contracts will not be terminated. The Company provides its services either directly to end-user organizations, or as a member of a consulting team assembled by another IT consulting firm. Where contractual provisions permit, customers also are billed for reimbursement of expenses incurred by the Company on
the customers behalf.

Fixed Price Projects

The Company has provided services on certain projects in which it, at the request of the clients, offers a fixed price for its services. For the three months ended March 31 2007 and 2006, revenue derived from projects under fixed price contracts represented approximately 39% of the Companys total revenue. No single fixed price project was material to the Companys business during  the three months ended March 31, 2007 or 2006. The Company believes that, as it pursues its strategy of providing application management services to customers, it will continue to offer fixed price projects. The Company believes that there are certain risks related to fixed price arrangements and thus prices such arrangements to reflect the associated risk. There 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.

Customer Concentration

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 three months ended March 31, 2007 and 2006, the Companys ten largest customers accounted for in the aggregate approximately 41% and 55% of its revenue, respectively. During the three months ended March 31, 2007 no single customer accounted for 10% or more of revenues.  For the three months ended March 31, 2006, one customer accounted for more than 10% of the revenues. For the three months ended March 31, 2007 and 2006, 13% and 20%, respectively, of the Companys revenue was generated by providing supplemental resources directly to the end-customer or as part of a consulting team assembled by another IT consulting firm.  There can be no assurance that such IT consulting firms will continue to engage the Company in the future
at current levels of retention, if at all.

Software Partners

For the three months ended March 31, 2007 and 2006 the Company derived the following percentages of total revenue from projects in which the Company implemented, extended, maintained, managed or supported software developed by SAP, PeopleSoft and Oracle.

|           |  | Percentage of Revenue   Three Months Ended |    
|---------- |  | ------------------------------------------ | ---
|           |  |                                            |    
|           |  | March 31, 2007                             |    
|           |  |                                            |    
|SAP        |  |                                            | 73 
|PeopleSoft |  |                                            | 10 
|Oracle     |  |                                            | 9  
|e-Business |  |                                            | 5  
|Others     |  |                                            | 4  
|           |  |                                            |    
|Total      |  |                                            | 100
|           |  |                                            |    

Markets

The Company currently serves the United States market with its headquarters in Edison (New Jersey), and branch offices in Atlanta (Georgia), Warrenville (Illinois) and Santa Clara (California). The Company also maintains local offices to serve the markets in India, the United Kingdom, Denmark and Japan.  The Company leases its headquarters in Edison, New Jersey. Such lease has an initial term of ten (10) years, which commenced in September 1998.

16



Expenses

The Companys
most significant cost is project personnel expenses, which consist of consultant
salaries, payroll taxes, benefits and subcontractor fees. 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).

Application of Critical Accounting Policies

The preparation of the Companys condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  The Companys estimates, judgments and assumptions are continually evaluated based on available information and experience.  Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates.

Certain of the Companys accounting policies require higher degrees of judgment than others in their application.  These include revenue recognition and allowance for doubtful accounts, impairments and estimation of useful lives of long-term assets, income tax recognition of current and deferred tax items, assumptions used in valuing stock-based compensation arrangements, and accruals for contingencies.

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations, included in our 10-K for the fiscal year ended December 31, 2006 except as follows:

Income Tax

Effective at the beginning of the first quarter of 2007, the Company adopted the provision of FIN 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109. FIN 48 contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with SFAS No. 109, Accounting for Income Taxes. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The cumulative effect on adoption of FIN 48 is to be recorded as an adjustment to the opening balance of accumulated
earnings (deficit).  See Note 2 to the Consolidated Financial Statements (Unaudited)  Summary of Significant Accounting Policies, Income Tax for additional detail.

There was no significant impact on account of the adoption of FIN 48 as of March 31, 2007 and no adjustment has been recorded to the opening balance of accumulated deficit.

Results of Operations - Consolidated

The following table sets forth for the periods indicated certain financial data expressed as a percentage of total revenue:

|                                               |  | Percentage of Revenue   Three Months Ended March 31, |      
|---------------------------------------------- |  | ---------------------------------------------------- | -----
|                                               |  |                                                      |      
|                                               |  | 2007                                                 |      
|                                               |  |                                                      |      
|Revenue                                        |  |                                                      | 100.0
|Cost of revenue                                |  |                                                      | 80.2 
|                                               |  |                                                      |      
|Gross   profit                                 |  |                                                      | 19.8 
|                                               |  |                                                      |      
|Selling, general and   administrative expenses |  |                                                      | 27.3 
|Depreciation and   amortization                |  |                                                      | 1.8  
|                                               |  |                                                      |      
|Total   operating expenses                     |  |                                                      | 29.1 
|                                               |  |                                                      |      
|Operating   income loss                        |  |                                                      | (9.3 
|Interest expense                               |  |                                                      | (0.6 
|Other income (expense)                         |  |                                                      | 0.2  
|                                               |  |                                                      |      
|Loss before income tax   benefit               |  |                                                      | (9.7 
|Income tax provision                           |  |                                                      | 1.9  
|                                               |  |                                                      |      
|Net loss                                       |  |                                                      | (11.6

17



Three Months Ended March 31, 2007 Compared to Three Months Ended March 31, 2006

The following discussion compares the consolidated results of operations for the three months ended March 31, 2007 and 2006.

Revenue. 
Total revenue increased by 12.1%, or $3.5 million, from $29.2 million for the
three months ended March 31, 2006 to $32.7 million for the three months ended
March 31, 2007.  This increase is due to an increase in India revenues of
$1.6 million, an increase in US revenues of $1.5 million, an increase in Europe
revenues of $1.0 million partly offset by a decrease in Japan revenues of $0.5
million.  The increase in India revenues was primarily attributable to
increased demand for offshore services from customers in the United States, as a
majority of the total revenue generated in India is derived from providing
offshore development and support services to customers sourced through the
Companys affiliated entities in other parts of the world, but most
predominantly with the United States. The increase in US revenue results
primarily from increased demand for the Companys consulting services in
the local SAP and Oracle market. The increase in European revenue results
primarily from revenues derived from one large contract entered into during the
three months ended June 30, 2006.

Cost of revenue and gross profit.  The Companys cost of revenue increased by 23.5%, or $5.0 million, from $21.2 million for the three months ended March 31, 2006 to $26.2 million for the three months ended March 31, 2007, due primarily to the increase in headcount and related compensation and travel related costs for consultants.  The Companys gross profit decreased by 18.5%, or $1.5 million, from $7.9 million for the three months ended March 31, 2006 to $6.5 million for the three months ended March 31, 2007. Gross margin decreased from 27.2% for the three months ended March 31, 2006 to 19.8% for the three months ended March 31, 2007. The decrease in gross profit and gross margin is primarily on account of increased headcount and related compensation and travel related costs and decrease in the proportion of contracts with higher margins.

Selling, general and administrative expenses.  Selling, general and administrative expenses primarily consist of salaries and related benefits for sales and general administrative personnel, occupancy costs, related travel and entertainment and professional fees. Selling, general and administrative expenses decreased by 2.6%, or $0.2 million, from $9.1 million for the three months ended March 31, 2006 to $8.9 million for the three months ended March 31, 2007, and decreased as a percentage of revenue from 31.4% for the three months ended March 31, 2006 to 27.3% for the three months ended March 31, 2007.  The decrease in selling, general and administrative expenses was related primarily to a reduction in general and administrative compensation costs and professional fees.

Income tax provision (benefit).  The Company recorded an income tax provision of $0.6 million on a pretax loss of $3.2million for the three months ended March 31, 2007 as opposed to an income tax provision of $0.1 million on pretax loss of $1.9 million for the three months ended March 31, 2006 due to expiration of India tax holiday as of March 31, 2006.

Results of Operations by Business Segment

The Company operates in one industry segment, information technology solutions and services.

The Company has four reportable geographic operating segments, which are organized and managed on a geographical basis, as follows:

| |  | United States (US)  the   largest segment of the Company, with operations in the US and Puerto Rico.   Includes the operations of the Companys US subsidiary, Empower, Inc., and   all corporate functions and activities. The US and corporate headquarters is   located in Edison, New Jersey;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                     
| |  | India  includes the   operations of the Company in India, including services provided on behalf of   other group subsidiaries, primarily to the US. The India headquarters is   located in Hyderabad, India;                                                                                       
| |   |                                                                                                                                                                                                                                                                                                     
| |  | Europe  includes the   operations of the Company in Denmark and the United Kingdom. The European   headquarters is located in Milton Keynes, United Kingdom; and                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                     
| |  | Japan  includes the   operations of the Company in Japan. The Japanese headquarters is located in   Tokyo, Japan.                                                                                                                                                                                  

The revenues are attributed to each segment on the basis of the location of the entity which contracts with customer. The CEO has been identified as the Chief Operating Decision Maker (CODM) because he has final authority over resource allocation decisions and performance assessment. The CODM regularly receives certain discrete financial information about the geographical operating segments, including primarily revenue and operating income, to evaluate segment performance.

During the
fourth quarter of 2006, the Companys India subsidiary engaged an
accounting firm to evaluate and recommend changes, if any, to its existing
transfer pricing methodology.  As a result of such transfer pricing study,
the Company changed its transfer pricing methodology and adopted a cost
plus fixed margin methodology, which applies a fixed margin to the total
cost of services performed as opposed to a net margin method in which revenues
are allocated on a fixed percentage without regard to cost of services. 
While the application of the new transfer pricing methodology did not change the
Companys revenue or operating performance on a consolidated basis, it
impacted the allocation of revenue between the Company and its international
subsidiaries.  Revenues and operating performance reported for the
geographic segments for the three months ended March 31, 2007 are as per the new
transfer pricing methodology cost plus fixed margin; whereas revenue
and operating performance reported for the geographic segments for the three
months ended March 31, 2006 reflect the net margin method which the Company had
previously used.

18



Three Months Ended March 31, 2007 Compared to Three Months Ended March 31, 2006

The following
discussion compares the segment results of operations for the three months ended
March 31, 2007 and 2006.

Revenue.  The following table displays revenues by reportable segment (in thousands).

|              |  | Three Months Ended March 31, |       
|------------- |  | ---------------------------- | ------
|              |  |                              |       
|              |  | 2007                         |       
|              |  |                              |       
|              |  | Dollars                      |       
|              |  |                              |       
|United States |  | $                            | 20,553
|India         |  |                              | 9,026 
|Europe        |  |                              | 2,409 
|Japan         |  |                              | 713   
|              |  |                              |       
|Total         |  | $                            | 32,700
|              |  |                              |       

US revenue increased by 8%, or $1.5 million, from $19 million for the three months ended March 31, 2006 to $20.6 million for the three months ended March 31, 2007. The increase is primarily on account of increased demand for the Companys consulting services in the local SAP and Oracle markets.

India revenue increased by 21.8%, or $1.6 million, from $7.4 million for the three months ended March 31, 2006 to $9.0 million for the three months ended March 31, 2007. The increase is attributable primarily to increased demand for offshore services from customers in the United States, as a majority of the total revenue generated in India is derived from providing offshore development and support services to customers sourced through the Companys affiliated entities in other parts of the world, but most predominantly with the United States.

Europe revenue increased by 55.3%, or $1.0 million, from $1.5 million for the three months ended March 31, 2006 to $2.4 million for the three months ended March 31, 2007.  The increase in European revenue results primarily from revenues derived from one large contract entered into during the three months ended June 30, 2006.

Japan revenue decreased by 39.4% or
$0.5 million, from $1.2 million for the three months ended March 31, 2006 to $0.7 million for the three months ended March 31, 2007.  The decrease was due primarily to decreased demand for the Companys consulting services within the local SAP market.

19



Operating Loss.  The following table displays operating income (loss) by reportable segment (in thousands).

|              |  | Three Months Ended March 31, |       
|------------- |  | ---------------------------- | ------
|              |  |                              |       
|              |  | 2007                         |       
|              |  |                              |       
|United States |  | $                            | (3,475
|India         |  |                              | 774   
|Europe        |  |                              | (232  
|Japan         |  |                              | (116  
|              |  |                              |       
|Total         |  | $                            | (3,049
|              |  |                              |       

US operating performance decreased by $1.0 million from an operating loss of $2.5 million for the three months ended March 31, 2006 to an operating loss of $3.5 million for the three months ended March 31, 2007.  The increase in the operating loss was primarily related to an increase in consultant and sales compensation costs on account of increased head count and related travel and marketing expenses. This is partly offset by an increase in revenues and a decrease in general and administration costs.

India operating performance remained relatively flat during the three months ended March 31, 2007 when compared to the three months ended March 31, 2006.

Europe operating performance decreased by $0.2 million from an operating loss of $0.1 million for the three months ended March 31, 2006 to an operating loss of $0.2 million for the three months ended March 31, 2007. The decrease is primarily attributable to increased project related costs.

Japan operating performance remained relatively flat during the three months ended March 31, 2007 when compared to the three months ended March 31, 2006.

Liquidity and Capital Resources

Cash Position and Cash Flows

The Company
had cash and cash equivalents of $8.3 million at March 31, 2007 and $12.3
million at December 31, 2006.  The Company had working capital of $16.5
million at March 31, 2007 and $20.1 million at December 31, 2006.  The
decrease in working capital resulted primarily from an increase in cash used in
operating activities. The Company had short-term investments of $3.1 million at
March 31, 2007 and $2.2 million at December 31, 2006.

Cash used in operating activities was $2.3 million for the three months ended March 31, 2007, resulting primarily from the net loss of $3.6 million.

The Company invested $0.4 million and $0.3 million in computer equipment, internal-use computer software and office furniture, fixtures and leasehold improvements during the three months ended March 31, 2007 and 2006, respectively.

Credit Facility

On May 23, 2006, the Company and its wholly-owned subsidiary Empower, Inc. entered into a second amended and restated revolving credit loan and security agreement and second amended and restated revolving secured note (collectively Credit Agreement) with Steel City Capital Funding, a division of PNC Bank, National Association (the Bank.)  The Credit Agreement is comprised of a two year revolving line of credit pursuant to which the Company can borrow up to $15.0 million at the Banks Base Rate (as defined in the Credit Agreement) plus two (2%) percent.  The credit facility is collateralized by substantially all of the assets of the United States based operations and all subsidiary stock (not to exceed 65% of the Equity Interests of any Foreign Subsidiary).  The maximum borrowing availability under the Credit Agreement is based upon a percentage of eligible
billed and unbilled accounts receivable.

The Company was in compliance with the loan agreement related to the credit facility as of March 31, 2007.  The Company estimates undrawn availability under the credit facility to be $9.1 million as of March 31, 2007.

Cash to Fund Operating Activities

The Company relies on the cash generated by operating activities, cash on hand and the financing available under its credit facility to fund ongoing operations.  The Companys credit facility with the Bank represents its sole source of external financing for ongoing business operations.  The Companys operating plan depends on continued borrowing availability under this credit facility or securing alternate sources of financing.  The Company must comply with certain covenants or secure from the Bank waivers of any default on such covenants to maintain its line of credit with the Bank.  Given the Companys variable operating performance in the past few years, there can be no assurances that the Company will be able to maintain compliance with its bank covenants or obtain waivers of any defaults.

The
Companys 2007 operating plan contains assumptions regarding revenue and
expenses. The achievement of the operating plan depends heavily on the timing of
work performed by the Company on existing projects and the ability of the
Company to gain and perform work on new projects.  Project cancellations,
delays in the timing of work performed by the Company on existing projects or
the inability of the Company to gain and perform work on new projects, or
ability to timely collect cash from its customers could have an adverse impact
on the Companys ability to execute its operating plan and maintain
adequate cash flow.  In the event actual results do not meet the operating
plan, management believes it could execute contingency plans to mitigate such
effects.  Such plans include reductions in capital expenditures and
operating costs, and/or seeking additional financing.  In addition, the
Company may seek additional financing from time to time to fund its cash
requirements for operating expenses and capital expenses, however, the
availability of financing may be limited because, among other things, the
Company is not currently listed on a national stock exchange.  Assuming
that the Company achieves the revenue and expense targets included in the
Companys operating plan, management believes that the Companys cash
on hand and cash generated by operations and borrowings under its credit
facility will be sufficient to fund the Companys current and planned
operations through at least the next twelve months.

20



|Item 3. | Quantitative   and Qualitative Disclosures about Market Risk.
|------- | -------------------------------------------------------------

Although the Company cannot accurately determine the precise effect thereof on its operations, it does not believe inflation or interest rate changes have historically had a material effect on its revenues or results of operations.  Significant effects of inflation, currency fluctuations and changes in interest rates on the economies of the United States, Asia and Europe could favorably or adversely impact the Companys revenues and results of operations in the future. If there is a material change in the relationship between European currencies and/or Asian currencies and the United States Dollar, such change could materially affect the result of the Companys European and/or Asian operations as reflected in the Companys consolidated financial statements.

The Company is exposed to foreign currency exchange rate risk in the ordinary course of doing business as it transacts or holds a portion of funds in foreign currencies, particularly the Indian Rupee. Accordingly, management periodically evaluates the need for hedging strategies to mitigate the effect of foreign currency fluctuations. During the three months ended March 31, 2007, the Company entered into a foreign currency European Option contract totaling $15.5 million to sell the U.S. Dollars for Indian Rupees.  As of March 31, 2007, $12.0 million of the foreign currency European Option contract remains, which is expected to be settled by December 2007. Management may continue to enter into such contracts in the future to reduce foreign currency exposure to appreciation or depreciation in the value of certain foreign currencies. Other than the aforementioned derivative contracts, the Company has
not engaged in hedging activities nor entered into off-balance sheet transactions, arrangements or other relationships with unconsolidated entities or other persons that are likely to affect liquidity or the availability of or requirements for capital resources.

|Item 4. | Controls   and Procedures.
|------- | --------------------------

Disclosure Controls and Procedures

The Company is responsible for maintaining disclosure controls and procedures designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities Exchange Commissions rules and regulations, and that such information is accumulated and communicated to its management, including its chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure.  The Companys management, with the participation of the Companys Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report.   In designing and evaluating

the Companys disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures and implementing controls and procedures based upon the application of managements judgment.  Based on its  evaluation, the Companys principal executive officer and principal financial officer have concluded that, as of March 31, 2007, our disclosure controls and procedures were not effective as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act , because management determined that the following  material weaknesses in internal control over financial reporting as disclosed in the Companys annual report on Form 10-K for the period ended December 31, 2006, have not been remediated.

        The Company did not have sufficient review of the selection and application of US GAAP to significant non-routine and complex matters such as expected term and vesting period calculations in accordance with FAS123R. Also there was inadequate review and application of FAS 52 to the realization of the cumulative translation adjustments resulting from the liquidation of the Swedish subsidiary and inadequate review of the calculation of the fair value of equipment acquired in connection with an outsourcing agreement and

        The Company did not have personnel with sufficient accounting and financial reporting expertise resulting in insufficient oversight review of account analyses, transactions and preparation of the financial statements in accordance with US GAAP and SEC rules, specifically with regard to the classification of account balances such as short-term investments, allowance for doubtful accounts, foreign income taxes, and fixed assets.

The Company disclosed the following remediation efforts in its annual report on Form 10-K for the period ended December 31, 2006:

| |  | Hire an additional US GAAP   expert in the finance and accounting team with the objective to provide   overview and guidance for dealing with non-routine or complex   transactions.  We expect to hire such a resource by the end of the   quarter ended June 30, 2007 and we expect that hiring such resource shall   cost us an additional $40,000 in increased compensation costs per year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | Increase focus on   proactively training existing members of the finance and accounting team on   new accounting pronouncements and rules and provide additional training on   accounting treatment for non-routine or complex transactions to the current   members of finance and accounting team through a series of external seminars   and training programs or workshops.  We expect such additional,   increased training to be completed during fiscal 2007 and to cost   approximately $50,000.                                                                                                                                                                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | Thoroughly evaluate the   experience, qualifications and expertise of the external accounting firm   engaged during 2006 and any other external accounting firms before engaging   such firms to provide advice and assistance in connection with non-routine or   complex transactions and engage in substantive discussions with such external   firms on the procedures used by such firms in rending such assistance.    For the firm that we have currently retained, we expect such evaluation to be   completed by the end of the quarter ended June 30, 2007.  If we   determine that this firm is sufficiently qualified, we intend to retain it   again for 2007 and do not expect to incur substantial additional incremental   cost.  Effective immediately, such evaluation procedures shall be   conducted for any other firms that may be engaged in the future.

Below is the progress during the three months ended March 31, 2007 on the above proposed remedial measures to address the material weaknesses identified:

| |  | The Company is currently   engaged in discussions with an internationally reputed firm to appoint them   as US GAAP advisors and is expected to complete the process of appointment by   May 2007
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                  
| |  | The Company has initiated   the search for hiring of additional US GAAP expert and expects to complete   such search by July 2007.                                                               

Section 404 of the Sarbanes-Oxley Act of 2002 requires a company that is not an accelerated filer, such as the Company, to report on the effectiveness of their internal control over financial reporting beginning with their 2007 Annual Report on Form 10-K, which we are required to file with the SEC no later than March 31, 2008. Our independent registered public accounting firm will be required to attest to the Companys effectiveness of internal controls over financial reporting beginning with the Companys 2008 Annual Report. Our management has been and is continuing to work to remediate the material weaknesses identified as of December 31, 2006 and to ensure that our internal control over financial reporting provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with US
GAAP.

21



Changes in Internal Controls

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2007, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

|PART II. | OTHER   INFORMATION
|-------- | -------------------
|         |                    
|Item 1.  | Legal   Proceedings

India Tax Assessments

The Companys India subsidiary has received tax assessments from the India taxing authority denying tax exemptions claimed for certain revenue earned and disallowing certain expenses claimed during the India subsidiarys fiscal years ended March 31, 1998 through March 31, 2003. The combined revised additional tax demands were for 32.2 million Indian rupees (or approximately $0.7 million) for those years. They include tax penalties for the fiscal years ended March 31, 2001 of 1.4 million Indian rupees (or approximately $32,000). Against the total additional tax demand of $0.7 million, the Company has made payments of approximately $0.7 million under protest to the India tax authority. The Company has reserved the full amount of additional tax demand against this potential liability.

The Company is currently appealing at the Appellant Tribunal stage for the fiscal years ended March 31, 1998 through March 31, 2002.  For the fiscal year ended March 31, 2003, the Company has filed an appeal with the Commissioner of Income Tax (Appeals) against the assessment order passed. In the event the Companys appeal is not successful, there will not be any additional future cash outlay.  However, in the event the Company is successful, an amount up to approximately $0.7 million could be refunded to the Company.

Shareholder Class Actions

On or about October 12, 2004, the first of six class action lawsuits was filed, purportedly on behalf of plaintiffs who purchased our securities, against the Company and former officers Arjun Valluri, Nicholas Visco, Edward Carr and David Distel (Defendants) in the United States District Court, District of New Jersey (District of New Jersey). In August 2005, the District of New Jersey consolidated the six class actions (the Shareholder Class Action) and appointed a lead plaintiff.  Plaintiffs subsequently dropped Mr. Distel and Mr. Carr from the Shareholder Class Action, failing to name either of them as a defendant in the amended consolidated complaint filed on or about October 10, 2005.  The Shareholder Class Action generally alleges violations of federal securities laws, including allegations that the Defendants made materially false and misleading
statements regarding our financial condition and that the Defendants materially overstated financial results by engaging in improper accounting practices.  The Class Period alleged is May 1, 2001 through September 24, 2004.  The Shareholder Class Action generally seeks relief in the form of unspecified compensatory damages and reasonable costs, expenses and legal fees.  The Defendants filed a Motion to Dismiss on or about November 30, 2005.  Thereafter in about February 2006, the lead plaintiff filed its second consolidated amended complaint.  On or about March 27, 2006, the Defendants filed a motion to dismiss the second amended complaint.  On or about December 20, 2006, the District of New Jersey granted Defendants motion and dismissed the second amended complaint without prejudice.  On or about January 25, 2007, plaintiffs filed the third consolidated amended complaint.    On or about March 5, 2007, Defendants filed a motion to dismiss the
third consolidated amended complaint.  No trial date has been scheduled and no discovery has taken place.

There is no other litigation pending to which we are a party or to which any of its property is subject which would have a material impact on our consolidated financial condition, results of operations or cash flows in the event we were unsuccessful in such litigation.

22



|Item 1a. | Risk   Factors
|-------- | --------------

There have been no material changes to our risk factors previously disclosed in our annual report on Form 10-K for the period ended December 31, 2006.

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 more of its focus towards the management and support of customers enterprise, e-commerce and m-commerce applications. The factors discussed below could cause actual results and developments to be materially different from those expressed in or implied by such statements.

If we are unable to generate new sales and attain profitability, our business and financial condition and results of operations may be adversely impacted.

Our lack of profitability over recent periods may impact our ability to attract customers, employees, investors and creditors. Our ability to achieve profitability in future periods will depend in large part on our ability to generate new sales, particularly annuity-based engagements, to improve our rate of employee utilization, and to manage selling, general and administrative expenses in proportion to our top line. We cannot assure you that we will be able to generate profits or that a failure to do so would not have a material adverse effect on our financial condition and results of operations.

The departure of one or more key employees may have a material adverse effect on our ability to operate our business.

Our future performance depends to a significant degree upon the continued service of the key members of our management team, as well as marketing and sales personnel, and our ability to attract retain new management and other personnel.  In addition, our future performance depends on the ability to effectively transition key management, sales and operational roles, including adequate knowledge transfer, in the event any turnover in our key personnel.  The loss of any one or more of our key personnel or the failure to attract and retain key personnel or the ability to effectively manage changes in key personnel could have a material adverse effect on our business, results of operations and financial condition.

If we are unable to remediate the material weaknesses in our internal control over financial reporting identified in this report or to improve our control environment, it could result in adverse consequences to us, including, but not limited to, a loss of investor confidence in the reliability of our financial statements, which could cause the market price of our stock to decline; increased costs and efforts to comply with Section 404 of the Sarbanes-Oxley Act of 2002; and further disclosures that could be viewed negatively by our stakeholders.

We have reported material weaknesses in our internal controls over financial reporting. If we are unable to remediate such material weaknesses, to continue to improve our control environment and to prevent future material weaknesses, or to remediate any weaknesses that may arise, such failure will adversely impact our ability to:  (i) effectively manage the business; (ii) timely record, process, summarize and report financial statements that fairly present, in all material aspects, our financial condition, statements of operations and cash flows; and (iii) comply with applicable law, including the Sarbanes-Oxley Act of 2002.  Furthermore, it could result in additional adverse consequences to us, including, but not limited to, a loss of investor confidence in the reliability of our financial statements, which could cause the market price of our stock to decline and further disclosures that could
be viewed negatively by our stakeholders.  In addition, we will be required to comply with the internal control reporting requirements of Section 404 of the Sarbanes-Oxley Act of 2002 beginning in 2007.  If we are unable to maintain effective internal control over financial reporting, complying with Section 404 of the Sarbanes-Oxley Act of 2002 may be costly, require a significant portion of our senior managements time and result in disclosures that could be viewed negatively by the our stakeholders.

If we are unable to attract and retain a sufficient number of highly skilled employees it may adversely affect our profitability.

Our business is labor intensive and, therefore, our success depends in large part on our ability to recruit, retain, train and motivate highly skilled employees, particularly project managers and other senior level technical personnel. Our ability to attract and retain a sufficient number of highly skilled employees is impacted by a number of factors including, but not limited to, concerns regarding our financial condition and competition for employees in India which may cause increasing compensation for existing and prospective employees, and the continued ability to use stock options to compensate such highly skilled employees in light of recent changes in accounting rules related to stock options. We cannot assure you that we will be able to attract and retain a sufficient number of highly skilled employees or that a failure to do so would not have a material adverse effect on our financial condition
and results of operations.

We may not be able to compete effectively for technical personnel in India.

The market for technical personnel in India, which represents the primary recruiting market for our technical personnel, is extremely competitive resulting in increased compensation costs. These increasing compensation costs have contributed to the deterioration of our gross margins. We cannot assure you that we will be able to effectively compete for technical personnel in India or that a failure to compete would not have a material adverse effect on our financial condition and results of operations.

Our performance could be materially adversely affected by a general economic downturn or lessening demand in the information technology services industry.

Our business and financial condition depends on the health of the general economy, as well as the information technology services industry. Our revenue and profits are driven by demand for our products and services. A lessening demand in either the overall economy or the software sector could lead to a material decrease in our future revenues and earnings. Other factors, that are beyond our control, that can also impact our performance include: (i) patterns of software and hardware capital spending by customers, (ii) information technology outsourcing trends, (iii) the timing, size and stage of projects, (iv)  new service introductions by us or our competitors and the timing of new product introductions by our ERP partners, (v) levels of market acceptance for our services, (vi) general economic conditions, and (vii) the hiring of additional staff. We cannot that assure you that there will not be a
general economic downturn or that such a downturn would not have a material adverse effect on our business and financial condition.

23



If we are unable to maintain access to external funding, we may be unable to continue our ongoing business or fund future growth.

In addition to cash generated by our on-going operations, we rely on access to external sources of funding and our ability to timely collect cash from our customers to manage our business. Our ability to continue our ongoing business operations and fund future growth depends on our ability to maintain compliance with the financial and other covenants in our credit facility or to secure alternate sources of financing.  However, such alternate financing may not be available or if available may not be on terms favorable to us.

The information technology services industry is highly competitive and we may not be able to compete effectively.

The markets for our services are highly competitive. Many of our competitors have greater financial, technical and marketing resources than we do. The increased competition in the industry, among other negative effects, may cause a decrease in our billing and employee utilization rates. We cannot assure you that we will be able to compete effectively or that our inability to compete effectively would not have a material adverse effect on our financial condition and results of operations.

Business and financial risks to important business partners may negatively impact our financial condition.

We rely on continued relationships and business associated with SAP America and Oracle. The continued uncertainty relating to Oracles integration of PeopleSoft into its product offerings and the affect that this may have on general market acceptance of PeopleSofts products, could adversely impact our ability to sell professional consulting services related to such enterprise resource applications.

If we lose any large customer, our financial condition could be materially, negatively impacted.

We derive a significant portion of our revenue from a limited number of customers and projects. Our ability to grow our business depends in large part on maintaining such customer relationships and the continuing purchasing power of such customers. The loss of any large customer could have a material adverse effect on our business, financial condition and results of operations. There can be no assurance that we will not lose a large customer or that losing a large customer would not have a material adverse effect on our financial condition and results of operations.

The fact that our common stock is not listed on a national exchange may negatively impact our ability to attract investors and to use our common stock to fund future growth.

Our common stock trades on the Pink Sheets. In order to maintain liquidity in our common stock, we depend upon the continuing availability of a market on which our securities may be traded. The fact that our common stock is not listed on a national exchange may impact our ability to attract investors and to use our common stock to fund future growth.

We are unable to predict the outcomes of various lawsuits and legal claims or the potential losses related to those lawsuits and claims.

We and certain former officers are defendants in a shareholder class action suit relating to the restatement of historical financial statements. If we are unable to defend ourselves and resolve the ongoing shareholder litigation related to our restatement of prior periods consolidated financial statements within the limits of our director and officer liability insurance policy such failure will adversely affect our financial condition.

In addition, there is the potential for significant claims against us relating to our professional services from customers or otherwise and our ability to adequately mitigate the risk of such potential claims may impact our future financial condition. Our ability to comply with existing and future immigration regulations may impact our ability to engage and deploy consultants on billable engagements.  Uncertainties resulting from pending litigation matters and from potential administrative and regulatory issues may adversely affect our business, including, but not limited to, accounting, corporate governance, immigration and taxation matters.

Currency fluctuations may negatively impact our financial results, and this may in turn discourage investment.

Uncertainty relating to worldwide currency exchange rates, particularly in regard to the Indian rupee, the Euro, British Pound, Danish Krone and Japanese Yen, and the fluctuations in such exchange rates may impact our quarterly and/or annual financial results. We cannot assure you that such a fluctuation in currency would not have a material adverse effect on our financial condition and results of operations.

We can not predict shifts in policy or political changes in governments which can regulate or impact our business operations, specifically in the United States and India.

There is the potential for future legislation by the U.S. government regulating or taxing outsourcing which may adversely affect our business model. In addition, there is continued uncertainty relating to the current geopolitical climate, particularly relative to internal India politics and their relation to Indias continuing efforts to liberalize its economy and be receptive to economic conditions and policies favorable to our business model. Changes in Indias economic policies or additional legislation regarding information technology services businesses may adversely affect our business model.

24



If our measures to protect our intellectual property rights are inadequate, our financial condition could be negatively impacted.

We rely upon a combination of trade secrets, nondisclosure and other contractual arrangements, and copyright and trademark laws to protect our proprietary rights. Our future success is dependent, in part, upon our proprietary methodologies and toolsets, development tools and other intellectual property rights. We enter into confidentiality agreements with our employees, generally require that our consultants and customers enter into such agreements, and limit access to and distribution of our proprietary information. We also require that substantially all of our employees and consultants assign to us their rights in intellectual property developed while employed or engaged by us. There can be no assurance that the steps taken by us in this regard will be adequate to deter misappropriation of our proprietary information or that we will be able to detect unauthorized use of and take appropriate steps to
enforce our intellectual property rights.

We may be subject to increased tax liabilities, including if the spin-off of our former subsidiary, SeraNova, is determined to be taxable, we would be liable for up to approximately $65 million, which would negatively impact our financial condition.

We were previously entitled to a tax holiday for certain revenue earned and expenses incurred by our existing Software Technology Parks of India Unit (STPI Unit) of our Hyderabad operations. Such tax holiday expired effective March 31, 2006 and therefore our future tax liability will increase. In addition, in July 2000, we completed the tax-free spin-off of SeraNova, our former subsidiary. In March 2001, SeraNova and Silverline Technologies Limited (Silverline) consummated the acquisition of SeraNova by Silverline. Had the acquisition of SeraNova by Silverline been contemplated at the time of the spin-off, the spin-off would have been a taxable transaction. SeraNovas management has represented that such acquisition was not contemplated at the time of the spin-off of SeraNova by Intelligroup, and accordingly should not impact the tax-free nature of the spin-off. Although we
and SeraNova are parties to a tax sharing agreement pursuant to which SeraNova agreed to indemnify Intelligroup with respect to any possible tax liability related to the spin-off, SeraNova has filed for bankruptcy protection under Chapter 7 of the United States Bankruptcy Code and would be unable to pay the resultant tax liability pursuant to SeraNovas indemnification obligations under its tax sharing agreement with Intelligroup. If it were determined that the spin-off was taxable, Intelligroup may have to bear the liability to pay such the tax liability, which would be material. Please refer to Note 8 to the unaudited consolidated statements of the Company included elsewhere in this report for further information.

Third parties may claim that our services or deliverables infringe upon their intellectual property rights, which could result in material costs.

Third parties may assert infringement claims against us in the future, especially in light of recent developments in patent law expanding the scope of patents on software and business methods.  These assertions, regardless of their validity, could result in costly and time-consuming litigation, including damage awards and indemnification payments to customers, or could require costly redesign of products or present the need to enter into royalty arrangements which could decrease margins and could adversely affect our results of operations. Any such litigation or redesign of products could also negatively impact customer confidence in our services or deliverables and could result in damage to our reputation and reduced licensing revenue.

If accounting interpretations relating to revenue recognition change, our reported revenues could decline or we could be forced to make changes in our business practices.

There are several
accounting standards and interpretations covering revenue recognition for the
software industry. These pronouncements include Statement of Position
(SOP) Accounting for Performance of Construction Type and
Certain Contracts, and EITF 00-21, Accounting for Revenue Arrangements
with Multiple Deliverables, and the Securities and Exchange Commission
Staff Accounting Bulletin No. 101 and 104, Revenue Recognition in
Financial Statements. These standards address revenue recognition for
Milestone contracts and contracts with multiple deliverables, primarily from a
conceptual level and do not include specific implementation guidance. We
believe that our revenue has been recognized in compliance with
pronoucements.

The accounting profession and regulatory agencies continue to discuss various provisions of these pronouncements with the objective of providing additional guidance on their application. These discussions and the issuance of new interpretations, once finalized, could lead to unanticipated reductions in recognized revenue. They could also drive significant adjustments to our business practices which could result in increased administrative costs, lengthened sales cycles and other changes which could adversely affect our reported revenues and results of operations.

Some of our clients may experience unique economic conditions that are specific to their particular industry.

We provide services to clients in a wide variety of industries.  Many of the industries are subject to factors and economic conditions that are unique to the particular industry and may not be reflected in the overall health of the economy in general. Our revenue growth and the realizability of our accounts receivable could be adversely affected if our clients in these particular industries encounter economic difficulties. Such difficulties could include:  (1) inability of participants in the industry to access the capital or credit markets; (2) business slowdowns due to excess inventory; and (3) shortfalls in demand for the product or service produced by a particular industry.

We frequently need to negotiate customer contract renewals on comparable terms to maintain our profitability.

Contracts continually expire and must be renegotiated or rebid. Due to the competitive nature of our industry and variable economic status of our clients, we may experience difficulty in negotiating terms comparable to current or recently expired contracts. There can be no assurance that difficulty in renegotiating or renewing contracts would not have a material adverse effect on our financial condition and results of operations.

25



Our stock price may be extremely volatile, and you may not be able to resell your shares of common stock at or above your purchase price.

There has been significant volatility in the market price and trading volume of equity securities, which is unrelated to the financial performance of the companies issuing the securities. These broad market fluctuations may negatively affect the market price of our common stock. You may not be able to resell your shares at or above the price you pay for your shares due to fluctuations in the market price of our common stock caused by changes in our operating performance or prospects and other factors.

Some specific factors that may have a significant effect on our common stock market price include:

| |  | actual or anticipated   fluctuations in our operating results or future prospects;                                                                                                                                                
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                   
| |  | the publics reaction to   our press releases, our other public announcements and our filings with the   SEC;                                                                                                                     
| |   |                                                                                                                                                                                                                                   
| |  | strategic actions by us or   our competitors, such as acquisitions or restructurings;                                                                                                                                             
| |   |                                                                                                                                                                                                                                   
| |  | new laws or regulations or   new interpretations of existing laws or regulations applicable to our   business;                                                                                                                    
| |   |                                                                                                                                                                                                                                   
| |  | changes in accounting   standards, policies, guidance, interpretations or principles;                                                                                                                                             
| |   |                                                                                                                                                                                                                                   
| |  | changes in the information   technology services industry as a result of changes in financial markets or   general economic conditions, including those resulting from war, incidents of   terrorism and responses to such events;
| |   |                                                                                                                                                                                                                                   
| |  | sales of common stock by us   or members of our management team; and                                                                                                                                                              
| |   |                                                                                                                                                                                                                                   
| |  | changes in stock market   analyst recommendations or earnings estimates regarding our common stock,   other comparable companies or the information technology services industry   generally.                                     

There may be circumstances in which the interests of our major shareholders could be in conflict with your interests as a shareholder.

Our major shareholders collectively own approximately 62% of our common stock on a consolidated basis as of the date of this report and control our board of directors. So long as our majority shareholders continue to own a majority to controlling interest of our common stock and control our board of directors, circumstances may occur in which the major shareholders (or other major investors) may have an interest in pursuing acquisitions, divestitures or other transactions, including among other things, taking advantage of certain corporate opportunities that, in their judgment, could enhance their investment in us or another company in which they invest.  These transactions might invoke risks to our other holders of common stock or adversely affect us or other investors, including investors who purchase common stock.

As a result of these factors and others, our actual results may differ materially from the results disclosed in the forward-looking statements contained in this report.

|Item 2. | Unregistered   Sales of Equity Securities and Use of Proceeds
|------- | -------------------------------------------------------------

There are no matters to report subject to this Item for the period ended March 31, 2007.

|Item 3. | Defaults   Upon Senior Securities
|------- | ---------------------------------

There are no matters to report subject to this Item for the period ended March 31, 2007.

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

There are no matters to report subject to this Item for the period ended March 31, 2007.

|Item 5. | Other   Information
|------- | -------------------

There are no matters to report subject to this Item for the period ended March 31, 2007.

26



|Item 6. | Exhibits.
|------- | ---------

|Exhibit   No. |  | Description   of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|2             |  | Agreement and Plan of   Merger of the Company and its wholly owned subsidiary Oxford Systems Inc.   (Incorporated by reference to the Companys Annual Report on Form 10-KSB for   the year ended December 31, 1996.)                                                                                                                                                                                                                                                                                       
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.1           |  | Amended and Restated   Certificate of Incorporation. (Incorporated by reference to the Companys   Annual Report on Form 10-K for the year ended December 31, 2005, filed with   the Securities and Exchange Commission on June 30, 2006.)                                                                                                                                                                                                                                                                  
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.2           |  | Amended and Restated   Bylaws. (Incorporated by reference to the Companys Registration Statement on   Form SB-2 (Registration Statement No. 333-5981) declared effective on   September 26, 1996.)                                                                                                                                                                                                                                                                                                         
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.1           |  | Shareholder Protection   Rights Agreement dated as of November 6, 1998, between the Company and   American Stock Transfer & Trust Company which includes (I) the Form of   Rights Certificate and (ii) the Certificate of Amendment to the Amended and   Restated Certificate of Incorporation of Intelligroup, Inc. (Incorporated by   reference to Exhibit No. 4.1 of the Companys Report on Form 8-K dated   November 9, 1998, filed with the Securities and Exchange Commission on   November 9, 1998.)
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.2           |  | Amendment dated September   29, 2004 to the Shareholder Protection Rights Agreement dated November 6,   2004. (Incorporated by reference to Exhibit No. 4.1 of the Companys Report   on Form 8-K dated September 29, 2004, filed with the Securities and Exchange   Commission on October 5, 2004.)                                                                                                                                                                                                        
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.1*         |  | 1996 Stock Plan, as   amended, of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.2*         |  | 1996 Non-Employee Director   Stock Option Plan. (Incorporated by reference to the Companys Registration   Statement on Form SB-2 (Registration Statement No. 333-5981) declared   effective on September 26, 1996.)                                                                                                                                                                                                                                                                                        
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.3*         |  | Form of Indemnification   Agreement entered into by the Company and each of its Directors and officers.   (Incorporated by reference to the Companys Registration Statement on Form   SB-2 (Registration Statement No. 333-5981) declared effective on September   26, 1996.)                                                                                                                                                                                                                              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.4*         |  | Employment Agreement dated   October 1, 1999 between the Company and Nicholas Visco. (Incorporated by   reference to the Companys Annual Report on Form 10-K for the year ended   December 31, 1999.) See Exhibit 10.23.                                                                                                                                                                                                                                                                                   
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.5*         |  | Employees Invention   Assignment and Confidentiality Agreement. (Incorporated by reference to the   Companys Registration Statement on Form SB-2 (Registration Statement No.   333-5981) declared effective on September 26, 1996.)                                                                                                                                                                                                                                                                       
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.6          |  | Services Provider Agreement   by and between Oracle Corporation and the Company dated July 26, 1994.   (Incorporated by reference to the Companys Registration Statement on Form   SB-2 (Registration Statement No. 333-5981) declared effective on September   26, 1996.) See Exhibit 10.8.                                                                                                                                                                                                               
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.7          |  | Agreement by and between   the Company and Intelligroup Asia Private Limited (Intelligroup Asia)   relating to operational control of Intelligroup Asia, with related   agreements. (Incorporated by reference to the Companys Registration   Statement on Form SB-2 (Registration Statement No. 333-5981) declared   effective on September 26, 1996.)                                                                                                                                                  
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.8          |  | Amendment No. 1 to Services   Provider Agreement by and between Oracle Corporation and the Company dated   December 30, 1996. (Incorporated by reference to the Companys Annual Report   on Form 10-KSB for the year ended December 31, 1996.) See Exhibit 10.6.                                                                                                                                                                                                                                           

27



|Exhibit   No. |  | Description   of Exhibit                                                                                                                                                                                                                                                                                                                                  
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              |  |                                                                                                                                                                                                                                                                                                                                                           
|10.9          |  | R/3 National Logo Partner   Agreement by and between SAP America, Inc. and the Company dated as of April   29, 1997. (Incorporated by reference to the Companys Registration Statement   on Form SB-2 (Registration Statement No. 333-29119) declared effective on   June 26, 1997.) See Exhibits 10.10, 10.14 and 10.24.                                
|              |  |                                                                                                                                                                                                                                                                                                                                                           
|10.10         |  | ASAP Partner Addendum to   R/3 National Logo Partner Agreement between SAP America, Inc. and the Company   effective July 1, 1997 (amends existing R/3 National Logo Partner Agreement).   (Incorporated by reference to the Companys Quarterly Report on Form 10-QSB   for the quarter ended September 30, 1997.)  See Exhibits 10.9, 10.14 and   10.24.
|              |  |                                                                                                                                                                                                                                                                                                                                                           
|10.11         |  | Implementation Partner   Agreement between PeopleSoft, Inc. and the Company effective July 15, 1997.   (Incorporated by reference to the Companys Quarterly Report on Form 10-QSB   for the quarter ended September 30, 1997.)  See Exhibit 10.13.                                                                                                       
|              |  |                                                                                                                                                                                                                                                                                                                                                           
|10.12         |  | Lease Agreement between   Alfieri-Parkway Associates, as Landlord, and Intelligroup, Inc., as Tenant,   dated March 17, 1998. (Incorporated by reference to the Companys Quarterly   Report on Form 10-Q for the quarter ended March 31, 1998.)                                                                                                          
|              |  |                                                                                                                                                                                                                                                                                                                                                           
|10.13         |  | Fifth Amendment to the   Implementation Partner Agreement dated July 15, 1998, between the Company and   PeopleSoft, Inc.  See Exhibit 10.11.                                                                                                                                                                                                             
|              |  |                                                                                                                                                                                                                                                                                                                                                           
|10.14         |  | Amendment to the National   Implementation Partner Agreement dated as of January 1, 1999, between SAP   America and the Company.  See Exhibits 10.9, 10.10 and 10.24.                                                                                                                                                                                     
|              |  |                                                                                                                                                                                                                                                                                                                                                           
|10.15         |  | Contribution Agreement by   and between Intelligroup, Inc. and SeraNova, Inc. dated as of January 1,   2000. (Incorporated by reference to the Companys Annual Report on Form 10-K   for the year ended December 31, 1999.)                                                                                                                              
|              |  |                                                                                                                                                                                                                                                                                                                                                           
|10.16         |  | Distribution Agreement by   and between Intelligroup, Inc. and SeraNova, Inc. dated as of January 1,   2000. (Incorporated by reference to the Companys Annual Report on Form 10-K   for the year ended December 31, 1999.)                                                                                                                              
|              |  |                                                                                                                                                                                                                                                                                                                                                           
|10.17         |  | Services Agreement by and   between Intelligroup, Inc. and SeraNova, Inc. dated as of January 1, 2000.   (Incorporated by reference to the Companys Annual Report on Form 10-K for   the year ended December 31, 1999.)                                                                                                                                  
|              |  |                                                                                                                                                                                                                                                                                                                                                           
|10.18         |  | Space Sharing Agreement by   and among Intelligroup, Inc. and SeraNova, Inc. dated as of January 1, 2000.   (Incorporated by reference to the Companys Annual Report on Form 10-K for the   year ended December 31, 1999.)                                                                                                                               
|              |  |                                                                                                                                                                                                                                                                                                                                                           
|10.19         |  | Tax Sharing Agreement by   and between Intelligroup, Inc. and SeraNova, Inc. dated as of January 1,   2000. (Incorporated by reference to the Companys Annual Report on Form 10-K   for the year ended December 31, 1999.)                                                                                                                               
|              |  |                                                                                                                                                                                                                                                                                                                                                           
|10.20         |  | Amended and Restated   Revolving Credit Loan and Security Agreement among the Company, Empower, Inc.   and PNC Bank, National Association.  (Incorporated by reference to the   Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.)                                                                                             
|              |  |                                                                                                                                                                                                                                                                                                                                                           
|10.21         |  | Amended and Restated   Promissory Note by and between the Company and SeraNova, Inc. dated as of May   31, 2000.  (Incorporated by reference to the Companys Report on Form   8-K/A filed September 14, 2000.)  See Exhibit 10.22.                                                                                                                       
|              |  |                                                                                                                                                                                                                                                                                                                                                           
|10.22         |  | Agreement and Waiver with   respect to Amended and Restated Promissory Note by and between the Company   and SeraNova, Inc. dated as of September 29, 2000.  (Incorporated by   reference to the Companys Quarterly Report on Form 10-Q for the quarter   ended September 30, 2000.)  See Exhibit 10.21.                                                 

28



|Exhibit   No. |  | Description   of Exhibit                                                                                                                                                                                                                                                                                                   
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              |  |                                                                                                                                                                                                                                                                                                                            
|10.23*        |  | First Amendment to   Employment Agreement between the Company and Nicholas Visco dated November 1,   2000.  (Incorporated by reference to the Companys Annual Report on Form   10-K for the year ended December 31, 2000.)  See Exhibit 10.4.                                                                             
|              |  |                                                                                                                                                                                                                                                                                                                            
|10.24         |  | mySap.com Partner-Services   Addendum effective June 7, 2000 to R/3 National Logo Partner Agreement   between SAP America, Inc. and the Company.  (Incorporated by reference   to the Companys Annual Report on Form 10-K for the year ended December 31,   2000.) See Exhibits 10.9, 10.10 and 10.14.                    
|              |  |                                                                                                                                                                                                                                                                                                                            
|10.25         |  | Service Alliance Master   Agreement and Addendums dated May 5, 2000 between PeopleSoft, Inc. and the   Company. (Incorporated by reference to the Companys Annual Report on Form   10-K for the year ended December 31, 2000.)                                                                                            
|              |  |                                                                                                                                                                                                                                                                                                                            
|10.26         |  | First Amendment to Loan   Documents and Waiver Agreement dated March 27, 2002 between the Company,   Empower, Inc. and PNC Bank, National Association. (Incorporated by reference   to the Companys Annual Report on Form 10-K for the year ended December 31,   2001.)                                                   
|              |  |                                                                                                                                                                                                                                                                                                                            
|10.27*        |  | Amended and Restated   Employment Agreement dated September 20, 2002 between the Company and   Nagarjun Valluripalli.  (Incorporated by reference to the Companys   Quarterly Report on Form 10-Q for the quarter ended September 30, 2002.)                                                                              
|              |  |                                                                                                                                                                                                                                                                                                                            
|10.28         |  | Second Amendment to Loan   Documents and Waiver Agreement dated January 6, 2003 between the Company,   Empower, Inc. and PNC Bank, National Association. (Incorporated by reference   to the Companys Annual Report on Form 10-K for the year ended December 31,   2002.)                                                 
|              |  |                                                                                                                                                                                                                                                                                                                            
|10.29         |  | Third Amendment to Loan   Documents and Waiver Agreement dated July 31, 2003 between the Company,   Empower, Inc. and PNC Bank, National Association. (Incorporated by reference   to the Companys Current Report on Form 8-K dated July 31, 2003, filed with   the Securities and Exchange Commission on August 5, 2003.)
|              |  |                                                                                                                                                                                                                                                                                                                            
|10.30         |  | Agreement dated August 7,   2003, by and between Intelligroup, Inc. and Ashok Pandey. (Incorporated by   reference to the Companys Current Report on Form 8-K dated August 7, 2003,   filed with the Securities and Exchange Commission on August 12, 2003.)                                                              
|              |  |                                                                                                                                                                                                                                                                                                                            
|10.31*        |  | Employment Agreement dated   March 25, 2004 between the Company and Christian Misvaer.  (Incorporated   by reference to the Companys Annual Report filed on Form 10-K for the year   ended December 31, 2003.                                                                                                             
|              |  |                                                                                                                                                                                                                                                                                                                            
|10.32         |  | Fourth Amendment to Loan   Documents and Waiver Agreement dated October 22, 2003 between the Company, Empower,   Inc. and PNC Bank, National Association.  (Incorporated by reference to   the Companys Quarterly Report on Form 10-Q for the quarter ended September   30, 2003.)                                        
|              |  |                                                                                                                                                                                                                                                                                                                            
|10.33*        |  | Separation Agreement   between Nicholas Visco and Intelligroup, Inc. dated November 24, 2003.    (Incorporated by reference to the Companys Current Report on Form 8-K   dated November 24, 2003, filed with the Securities and Exchange Commission on   November 24, 2003.)                                              
|              |  |                                                                                                                                                                                                                                                                                                                            
|10.34         |  | Waiver Agreement dated   March 22, 2004 between the Company, Empower, Inc. and PNC Bank, National   Association.  (Incorporated by reference to the Companys Annual Report   on Form 10-K for the year ended December 31, 2003.)                                                                                          
|              |  |                                                                                                                                                                                                                                                                                                                            
|10.35*        |  | Employment Agreement   effective as of April 5, 2004 between the Company and David J. Distel.    (Incorporated by reference to the Companys Current Report on Form 8-K dated   March 31, 2004, filed with the Securities and Exchange Commission on April 5,   2004.)                                                     
|              |  |                                                                                                                                                                                                                                                                                                                            
|10.36*        |  | Separation Agreement   between the Company and Ed Carr.  (Incorporated by reference to the   Companys Current Report on Form 8-K dated March 31, 2004, filed with the   Securities and Exchange Commission on April 5, 2004.)                                                                                             

29



|Exhibit   No. |  | Description   of Exhibit                                                                                                                                                                                                                                                                                                              
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              |  |                                                                                                                                                                                                                                                                                                                                       
|10.37         |  | 2004 Equity Incentive Award   Plan. (Incorporated by reference to the Companys Definitive Proxy Statement   for the 2004 Annual Meeting of Shareholders, included within Form 14A as   filed on April 29, 2004.)                                                                                                                     
|              |  |                                                                                                                                                                                                                                                                                                                                       
|10.38*        |  | Employment Agreement dated   July 26, 2004 between the Company and Douglas Berto.  (Incorporated by   reference to the Companys Current Report on Form 8-K dated August 23, 2004,   filed with the Securities and Exchange Commission on August 23, 2004.)                                                                           
|              |  |                                                                                                                                                                                                                                                                                                                                       
|10.39*        |  | First Amendment to the 2004   Equity Incentive Award Plan.  (Incorporated by reference to the   Companys Current Report on Form 8-K dated September 29, 2004, filed with the   Securities and Exchange Commission on October 5, 2004.)                                                                                               
|              |  |                                                                                                                                                                                                                                                                                                                                       
|10.40         |  | Common Stock Purchase   Agreement dated September 29, 2004 by and between the Company, SB Asia   Infrastructure Fund LP and Venture Tech Assets Ltd. (Incorporated by   reference to the Companys Current Report on Form 8-K dated September 29,   2004, filed with the Securities and Exchange Commission on October 5, 2004.)      
|              |  |                                                                                                                                                                                                                                                                                                                                       
|10.41         |  | Fifth Amendment to Loan   Documents and Waiver Agreement dated September 29, 2004 between the Company,   Empower, Inc. and PNC Bank, National Association. (Incorporated by reference   to the Companys Current Report on Form 8-K dated September 29, 2004, filed   with the Securities and Exchange Commission on October 5, 2004.)
|              |  |                                                                                                                                                                                                                                                                                                                                       
|10.42*        |  | Separation Agreement   between the Company and David J. Distel dated October 15, 2004.    (Incorporated by reference to the Companys Current Report on Form 8-K dated   October 15, 2004, filed with the Securities and Exchange Commission on   October 15, 2004.)                                                                  
|              |  |                                                                                                                                                                                                                                                                                                                                       
|10.43*        |  | Separation Agreement   between the Company and Douglas Berto dated December 6, 2004.    (Incorporated by reference to the Companys Current Report on Form 8-K dated   December 6, 2004, filed with the Securities and Exchange Commission on   December 10, 2004.)                                                                   
|              |  |                                                                                                                                                                                                                                                                                                                                       
|10.44         |  | Amendment No. 1 to the   Common Stock Purchase Agreement dated September 29, 2004.  (Incorporated   by reference to the Companys Current Report on Form 8-K dated March 25,   2005, filed with the Securities and Exchange Commission on March 25, 2005.)                                                                            
|              |  |                                                                                                                                                                                                                                                                                                                                       
|10.45*        |  | Employment Agreement   effective June 1, 2005 between the Company and Madhu Poomalil.    (Incorporated by reference to the Companys Current Report on Form 8-K dated   June 2, 2005, filed with the Securities and Exchange Commission on June 7,   2005.)                                                                           
|              |  |                                                                                                                                                                                                                                                                                                                                       
|10.46*        |  | Second Amended and Restated   Employment Agreement effective June 21, 2005 between the Company and Shirley   Spoors.  (Incorporated by reference to the Companys Current Report on   Form 8-K dated June 21, 2005, filed with the Securities and Exchange   Commission on June 27, 2005.)                                            
|              |  |                                                                                                                                                                                                                                                                                                                                       
|10.47*        |  | Employment Agreement   effective July 1, 2005 between the Company and Ranjit Prithviraj.    (Incorporated by reference to the Companys Current Report on Form 8-K dated   June 29, 2005, filed with the Securities and Exchange Commission on July 5,   2005.)                                                                       
|              |  |                                                                                                                                                                                                                                                                                                                                       
|10.48*        |  | Separation Agreement dated   June 29, 2005 between the Company and Christian Misvaer.  (Incorporated   by reference to the Companys Current Report on Form 8-K dated June 29, 2005,   filed with the Securities and Exchange Commission on July 5, 2005.)                                                                            
|              |  |                                                                                                                                                                                                                                                                                                                                       
|10.49*        |  | Independent Contractor   Agreement dated July 1, 2005 between the Company and Pontus, Inc.    (Incorporated by reference to the Companys Current Report on Form 8-K dated   June 29, 2005, filed with the Securities and Exchange Commission on July 5,   2005.)                                                                     

30



|Exhibit   No. |  | Description   of Exhibit                                                                                                                                                                                                                                                                                                                                                                          
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|10.50*        |  | Employment Agreement   effective June 30, 2005 between the Company and Vikram Gulati.    (Incorporated by reference to the Companys Current Report on Form 8-K dated   June 30, 2005, filed with the Securities and Exchange Commission on July 7,   2005.)                                                                                                                                      
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|10.51         |  | Sixth Amendment to Loan   Documents and Waiver Agreement dated September 30, 2005 between the Company,   Empower, Inc. and PNC Bank, National Association. (Incorporated by reference   to the Companys Current Report on Form 8-K dated September 30, 2005, filed   with the Securities and Exchange Commission on October 6, 2005.)                                                            
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|10.52*        |  | Second Amendment to the   2004 Equity Incentive Award Plan. (Incorporated by reference to the Companys   Annual Report on Form 10-K for the year ended December 31, 2005, filed with   the Securities and Exchange Commission on March 31, 2006.)                                                                                                                                                
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|10.53         |  | Common Stock Purchase   Agreement dated March 30, 2006 by and between Intelligroup Inc., SB Asia   Infrastructure Fund LP and Venture Tech Assets, Ltd. (Incorporated by   reference to the Companys current report on Form 8-K dated March 30, 2006   filed with the Securities and Exchange Commission on April 5, 2006.)                                                                      
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|10.54*        |  | First Amendment to the   Employment Agreement dated June 30, 2005 between Intelligroup Inc. and Vikram   Gulati. (Incorporated by reference to the Companys current report on Form   8-K dated April 6, 2006, filed with the Securities and Exchange Commission on   April 13, 2006.)                                                                                                            
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|10.55         |  | Second Amended and Restated   Revolving Credit Loan and Security Agreement dated May 23, 2006 by and   between Intelligroup, Inc., Empower Inc. and Steel City Capital Funding, a   division of PNC Bank, National Association.  (Incorporated by reference   to the Companys current report on Form 8-K dated May 23, 2006 filed with the   Securities and Exchange Commission on May 30, 2006.)
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|10.56         |  | Second Amended and Restated   Revolving Secured Note dated May 23, 2006.  (Incorporated by reference   to the Companys current report on Form 8-K dated May 23, 2006 filed with the   Securities and Exchange Commission on May 30, 2006.)                                                                                                                                                       
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|10.57*        |  | Second Amendment to   Employment Agreement dated June 30, 2005, between Intelligroup, Inc. and   Vikram Gulati.  (Incorporated by reference to the Companys current   report on Form 8-K dated June 8, 2006 filed with the Securities and Exchange   Commission on June 12, 2006.)                                                                                                               
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|10.58*        |  | Third Amendment to the 2004   Equity Incentive Award Plan.                                                                                                                                                                                                                                                                                                                                        
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|10.59*        |  | Separation Agreement dated   July 21, 2006 by and between Intelligroup, Inc. and Madhu Poomalil.    (Incorporated by reference to the Companys Current Report on Form 8-K dated   July 21, 2006, filed with the Securities and Exchange Commission on July 21,   2006.)                                                                                                                          
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|10.60*        |  | Employment Agreement dated   September 7, 2006 by and between Intelligroup, Inc. and Alok Bajpai.    (Incorporated by reference to the Companys Current Report on Form 8-K dated   September 7, 2006, filed with the Securities and Exchange Commission on   September 7, 2006.)                                                                                                                 
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|31.1         |  | Certifications of Chief   Executive Officer Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section   301 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                    
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|31.2         |  | Certifications of Chief   Financial Officer Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section   301 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                    
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|32.1         |  | Certifications of Chief   Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to   Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                            
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|32.2         |  | Certifications of Chief   Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to   Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                            

| 
|-
|*
| 
|

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 this 15th day of May 2007.

|                   | INTELLIGROUP, INC.
|------------------ | ------------------
|                   |                   
|                   |                   
|Date: May 15, 2007 | By:               
|                   |                   
|                   |                   
|                   |                   
|                   |                   
|                   |                   
|Date: May 15, 2007 | By:               
|                   |                   
|                   |                   
|                   |                   

32