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SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

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FORM 10-Q

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

For the quarterly period ended June 30, 2005
Commission
file number 0-20943

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

|                                                              |  |                                     
|------------------------------------------------------------- |  | ------------------------------------
|New Jersey                                                    |  | 11-2880025                          
|                                                              |  |                                     
|(State or Other Jurisdiction ofIncorporation or Organization) |  | (I.R.S. Employer Identification No.)
|                                                              |  |                                     
|499 Thornall Street, Edison, New Jersey08837                 
|                                                             
|(Address of Principal
      Executive Offices)(Zip Code)     

|                                                                                |  | 
|------------------------------------------------------------------------------- |  | 
|(732)590-1600                                                                  
|                                                                               
|(Registrant's Telephone Number,Including
    Area Code)                        
|                                                                                |  | 
|Securities
          registered pursuant to Section 12(b) of
          the
Act:
|                                                                                |  | 

|Title of each class |  | Name of each exchange
              onwhich registered
|------------------- |  | ------------------------------------------------------
|                    |  |                                                       
|None                |  |                                                       
|                    |  |                                                       

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

|Common
    Stock, $.01 par value
|--------------------------------
|                                
|(Title of Class)                

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: |  | No:
|---- |  | ---

Indicate by check mark whether
    the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).


|Yes: |  | No:
|---- |  | ---

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


|Yes: |  | No:
|---- |  | ---

Indicate the number of shares
    outstanding of each of the registrant’s classes of common stock, as
    of October 28, 2005:


|Class                        |  | Number of Shares
|---------------------------- |  | ----------------
|                             |  |                 
|Common Stock, $.01 par value |  | 35,102,440      
|                             |  |                 

|
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|
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TABLE OF CONTENTS

|                                |                                                                                                                                                                        | Page
|------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                |                                                                                                                                                                        |     
|PART I.   FINANCIAL INFORMATION
|                                |                                                                                                                                                                        |     
|Item 1.                         | Unaudited Condensed Consolidated Financial Statements                                                                                                                  |     
|                                |                                                                                                                                                                        |     
|                                | Condensed
	        Consolidated Balance Sheets as of June 30, 2005
and December 31,
	      2004                                                                        | 4   
|                                |                                                                                                                                                                        |     
|                                | Condensed
	          Consolidated Statements of Operations and Comprehensive
	        Income (Loss) for the Six and Three Months Ended
	        June 30, 2005 and 2004 | 5   
|                                |                                                                                                                                                                        |     
|                                | Condensed Statements of Cash Flows for the Six Months Ended June
30, 2005 and 2004                                                                                     | 6   
|                                |                                                                                                                                                                        |     
|                                | Notes to Condensed Consolidated Financial Statements                                                                                                                   | 7   
|                                |                                                                                                                                                                        |     
|Item 2.                         | Managements Discussion and Analysis of Financial
    Condition and
Results of Operations                                                                              | 18  
|                                |                                                                                                                                                                        |     
|Item 3.                         | Quantitative and Qualitative Disclosures About Market Risk                                                                                                             | 33  
|                                |                                                                                                                                                                        |     
|Item 4.                         | Controls and Procedures                                                                                                                                                | 34  
|                                |                                                                                                                                                                        |     
|PART II.   OTHER INFORMATION   
|                                |                                                                                                                                                                        |     
|Item 1.                         | Legal Proceedings                                                                                                                                                      | 39  
|                                |                                                                                                                                                                        |     
|Item 5.                         | Other Information                                                                                                                                                      | 41  
|                                |                                                                                                                                                                        |     
|Item 6.                         | Exhibits                                                                                                                                                               | 42  
|                                |                                                                                                                                                                        |     
|SIGNATURES                      | 43                                                                                                                                                                    

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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 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this
quarterly report on Form 10-Q.


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PART I   FINANCIAL INFORMATION

ITEM 1.

INTELLIGROUP, INC.

CONDENSED CONSOLIDATED BALANCE
      SHEETSJUNE 30, 2005 (UNAUDITED) AND DECEMBER 31,
2004

|                                                                                                                                                                    |   | June 30,
2005 |   |   | December 31,
2004 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------- | - | - | ----------------- | -
|                                                                                                                                                                    |   |               |   |   |                   |  
|                                                                                                                                                                    |   | (unaudited)   |   |   | (see Note 1)      |  
|ASSETS                                                                                                                                                              |   |               |   |   |                   |  
|CURRENT ASSETS                                                                                                                                                      |   |               |   |   |                   |  
|Cash
    and cash equivalents                                                                                                                                       | $ | 5,705,000     |   | $ | 6,239,000         |  
|Accounts
            receivable, less allowance for doubtful accounts of $1,579,000 and $1,627,000
            at June 30, 2005 and December 31, 2004, respectively |   | 25,209,000    |   |   | 23,136,000        |  
|Unbilled
    services                                                                                                                                               |   | 11,092,000    |   |   | 10,482,000        |  
|Prepaid
    expenses and other current assets                                                                                                                       |   | 2,442,000     |   |   | 3,218,000         |  
|                                                                                                                                                                    |   |               |   |   |                   |  
|Total
    current assets                                                                                                                                            |   | 44,448,000    |   |   | 43,075,000        |  
|Property
    and equipment, net                                                                                                                                     |   | 2,907,000     |   |   | 3,485,000         |  
|Deferred
    tax and other assets                                                                                                                                   |   | 1,936,000     |   |   | 1,611,000         |  
|                                                                                                                                                                    |   |               |   |   |                   |  
|Total
    assets                                                                                                                                                    | $ | 49,291,000    |   | $ | 48,171,000        |  
|                                                                                                                                                                    |   |               |   |   |                   |  
|LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                                                |   |               |   |   |                   |  
|CURRENT LIABILITIES                                                                                                                                                 |   |               |   |   |                   |  
|Line
    of credit                                                                                                                                                  | $ | 4,034,000     |   | $ | 2,356,000         |  
|Accounts
    payable                                                                                                                                                |   | 4,301,000     |   |   | 3,424,000         |  
|Accrued
    payroll and related taxes                                                                                                                               |   | 9,426,000     |   |   | 10,635,000        |  
|Accrued
    expenses and other current liabilities                                                                                                                  |   | 5,521,000     |   |   | 5,074,000         |  
|Deferred
    revenue                                                                                                                                                |   | 895,000       |   |   | 977,000           |  
|Income
    taxes payable                                                                                                                                            |   | 1,006,000     |   |   | 196,000           |  
|Current
    portion of obligations under capital lease                                                                                                              |   | 94,000        |   |   | 422,000           |  
|                                                                                                                                                                    |   |               |   |   |                   |  
|Total
    current liabilities                                                                                                                                       |   | 25,277,000    |   |   | 23,084,000        |  
|Obligations
    under capital lease, net of current portion                                                                                                         |   | —             |   |   | 45,000            |  
|Other
    long-term liabilities                                                                                                                                     |   | 752,000       |   |   | 395,000           |  
|                                                                                                                                                                    |   |               |   |   |                   |  
|Total
    liabilities                                                                                                                                               |   | 26,029,000    |   |   | 23,524,000        |  
|                                                                                                                                                                    |   |               |   |   |                   |  
|Commitments
    and contingencies                                                                                                                                   |   |               |   |   |                   |  
|Shareholders’ Equity                                                                                                                                                |   |               |   |   |                   |  
|Preferred
	      stock, $.01 par value, 5,000,000 shares authorized, none issued
	      or outstanding                                                              |   | —             |   |   | —                 |  
|Common
	      stock, $.01 par value, 40,000,000 shares authorized,
    35,103,000 shares issued and outstanding                                                     |   | 351,000       |   |   | 351,000           |  
|Additional
    paid-in capital                                                                                                                                      |   | 58,012,000    |   |   | 58,012,000        |  
|Accumulated
    deficit                                                                                                                                             |   | (35,434,000   | ) |   | (33,455,000       | )
|Accumulated
    other comprehensive income (loss)                                                                                                                   |   | 333,000       |   |   | (261,000          | )
|                                                                                                                                                                    |   |               |   |   |                   |  
|Total
    shareholders’ equity                                                                                                                                      |   | 23,262,000    |   |   | 24,647,000        |  
|                                                                                                                                                                    |   |               |   |   |                   |  
|Total
    liabilities and shareholders’ equity                                                                                                                      | $ | 49,291,000    |   | $ | 48,171,000        |  
|                                                                                                                                                                    |   |               |   |   |                   |  

See accompanying notes.

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INTELLIGROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2005
  AND 2004
  (UNAUDITED)

|                                                                              |                           |            |                             |   |            |   |   |            |   |   |           
|----------------------------------------------------------------------------- | ------------------------- | ---------- | --------------------------- | - | ---------- | - | - | ---------- | - | - | ----------
|                                                                              | SIX MONTHS ENDED JUNE 30, |            | THREE MONTHS ENDED JUNE 30, |  
|                                                                              |                           |            |                             |  
|                                                                              |                           | 2005       |                             |   | 2004       |   |   | 2005       |   |   | 2004      
|                                                                              |                           |            |                             |   |            |   |   |           
|Revenue                                                                       | $                         | 66,126,000 |                             | $ | 62,600,000 |   | $ | 33,690,000 |   | $ | 32,064,000
|Cost of revenue                                                               |                           | 48,690,000 |                             |   | 43,669,000 |   |   | 24,388,000 |   |   | 22,995,000
|                                                                              |                           |            |                             |   |            |   |   |            |   |   |           
|Gross
    profit                                                              |                           | 17,436,000 |                             |   | 18,931,000 |   |   | 9,302,000  |   |   | 9,069,000 
|                                                                              |                           |            |                             |   |            |   |   |            |   |   |           
|Selling, general and administrative expenses                                  |                           | 17,913,000 |                             |   | 17,731,000 |   |   | 9,494,000  |   |   | 9,249,000 
|Depreciation and amortization                                                 |                           | 1,045,000  |                             |   | 954,000    |   |   | 608,000    |   |   | 485,000   
|                                                                              |                           |            |                             |   |            |   |   |            |   |   |           
|Total
    operating expenses                                                  |                           | 18,958,000 |                             |   | 18,685,000 |   |   | 10,102,000 |   |   | 9,734,000 
|                                                                              |                           |            |                             |   |            |   |   |            |   |   |           
|Operating
    income (loss)                                                   |                           | (1,522,000 | )                           |   | 246,000    |   |   | (800,000   | ) |   | (665,000  
|Interest income                                                               |                           | 23,000     |                             |   | 18,000     |   |   | 7,000      |   |   | 1,000     
|Interest expense                                                              |                           | (176,000   | )                           |   | (230,000   | ) |   | (103,000   | ) |   | (124,000  
|Other income (expense)                                                        |                           | (588,000   | )                           |   | 35,000     |   |   | (368,000   | ) |   | 671,000   
|                                                                              |                           |            |                             |   |            |   |   |            |   |   |           
|Income (loss) before income tax provision (benefit)                           |                           | (2,263,000 | )                           |   | 69,000     |   |   | (1,264,000 | ) |   | (117,000  
|Provision for (benefit of) income taxes                                       |                           | (285,000   | )                           |   | 34,000     |   |   | 23,000     |   |   | 226,000   
|                                                                              |                           |            |                             |   |            |   |   |            |   |   |           
|Net income (loss)                                                             | $                         | (1,978,000 | )                           | $ | 35,000     |   | $ | (1,287,000 | ) | $ | (343,000  
|                                                                              |                           |            |                             |   |            |   |   |            |   |   |           
|Earnings (loss) per share:                                                    |                           |            |                             |   |            |   |   |            |   |   |           
|Basic
    earnings (loss) per share                                           | $                         | (0.06      | )                           | $ | 0.00       |   | $ | (0.04      | ) | $ | (0.02     
|                                                                              |                           |            |                             |   |            |   |   |            |   |   |           
|Weighted
	      average number of common sharesoutstanding
    – basic        |                           | 35,103,000 |                             |   | 17,282,000 |   |   | 35,103,000 |   |   | 17,403,000
|                                                                              |                           |            |                             |   |            |   |   |            |   |   |           
|Diluted
    earnings (loss) per share                                         | $                         | (0.06      | )                           | $ | 0.00       |   | $ | (0.04      | ) | $ | (0.02     
|                                                                              |                           |            |                             |   |            |   |   |            |   |   |           
|Weighted
    average number of common shares outstanding – diluted            |                           | 35,103,000 |                             |   | 19,255,000 |   |   | 35,103,000 |   |   | 17,403,000
|                                                                              |                           |            |                             |   |            |   |   |            |   |   |           
|Comprehensive income (loss)                                                   |                           |            |                             |   |            |   |   |            |   |   |           
|Net
    income (loss)                                                         | $                         | (1,978,000 | )                           | $ | 35,000     |   | $ | (1,287,000 | ) | $ | (343,000  
|Other
    comprehensive income (loss)  
    currency translation adjustments |                           | 594,000    |                             |   | 11,000     |   |   | 417,000    |   |   | (632,000  
|                                                                              |                           |            |                             |   |            |   |   |            |   |   |           
|Comprehensive income (loss)                                                   | $                         | (1,384,000 | )                           | $ | 46,000     |   | $ | (870,000   | ) | $ | (975,000  
|                                                                              |                           |            |                             |   |            |   |   |            |   |   |           

See accompanying notes.

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INTELLIGROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004(UNAUDITED)

|                                                                                            |   | June 30,
2005 |   |   | June 30,
2004 |  
|------------------------------------------------------------------------------------------- | - | ------------- | - | - | ------------- | -
|                                                                                            |   |               |   |   |               |  
|Cash flows from operating activities:                                                       |   |               |   |   |               |  
|Net income (loss)                                                                           | $ | (1,978,000    | ) | $ | 35,000        |  
|                                                                                            |   |               |   |   |               |  
|Adjustments
    to reconcile net income (loss) to net cash used in operating activities     |   | 216,000       |   |   | (898,000      | )
|                                                                                            |   |               |   |   |               |  
|Net cash used in operating activities                                                       |   | (1,762,000    | ) |   | (863,000      | )
|                                                                                            |   |               |   |   |               |  
|Cash flows from investing activities:                                                       |   |               |   |   |               |  
|Purchase of property and equipment                                                          |   | (226,000      | ) |   | (1,513,000    | )
|                                                                                            |   |               |   |   |               |  
|Net cash used in investing activities                                                       |   | (226,000      | ) |   | (1,513,000    | )
|                                                                                            |   |               |   |   |               |  
|Cash flows from financing activities:                                                       |   |               |   |   |               |  
|Principal payments under capital leases                                                     |   | (183,000      | ) |   | (197,000      | )
|Proceeds
	      from exercise of stock options                                              |   | —             |   |   | 1,294,000     |  
|Net change
	      in line of credit borrowings                                              |   | 1,678,000     |   |   | 3,462,000     |  
|                                                                                            |   |               |   |   |               |  
|Net cash provided by financing activities                                                   |   | 1,495,000     |   |   | 4,559,000     |  
|                                                                                            |   |               |   |   |               |  
|Effect of foreign currency exchange rate changes on cash                                    |   | (41,000       | ) |   | (40,000       | )
|                                                                                            |   |               |   |   |               |  
|Net increase (decrease) in cash and cash equivalents                                        |   | (534,000      | ) |   | 2,143,000     |  
|Cash and cash equivalents - beginning of period                                             |   | 6,239,000     |   |   | 1,872,000     |  
|                                                                                            |   |               |   |   |               |  
|Cash and cash equivalents - end of period                                                   | $ | 5,705,000     |   | $ | 4,015,000     |  
|                                                                                            |   |               |   |   |               |  
|Supplemental disclosure of cash flow information
     equipment obtained with capital lease | $ | 251,000       |   | $ | 58,000        |  
|                                                                                            |   |               |   |   |               |  

See accompanying notes.

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INTELLIGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004

NOTE 1-
BASIS OF PRESENTATION

The condensed consolidated financial statements and accompanying financial information as of June 30, 2005 and for the six and three months ended June 30, 2005 and 2004 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, 2004.


The amounts for December 31, 2004 have been extracted from the audited consolidated financial statements included in Form 10-K for the year ended December 31, 2004.


The results of the Companys operations for the six and three months ended June 30, 2005 are not necessarily indicative of the results of operations to be expected for the full year ending December 31, 2005.


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INTELLIGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Stock - Based Compensation

Employee stock awards under the Company's compensation plans are accounted for in accordance with Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees, and related
  interpretations. The Company provides the disclosure requirements of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS 123), and related interpretations. Stock-based awards to
  non-employees are accounted for under the provisions of SFAS 123 and the Company has adopted the enhanced disclosure provisions of SFAS 148 Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of SFAS No. 123.


The Company
    measures compensation expense for its employee stock-based compensation using
      the intrinsic-value method. Under the intrinsic-value method of accounting
      for stock-based compensation, when the exercise price of options granted
      to employees is less than the estimated fair value of the underlying stock
      on the date of grant, deferred compensation is recognized and is amortized
      to compensation expense over the applicable vesting period. In each of the
      periods presented, the vesting period varies
    from immediate to four years.


For disclosure purposes, pro forma net loss
        and loss per share impacts are provided as if the fair value method under
        SFAS 123 had been applied:


|                                                                                                                                                                         |   | Six Months Ended |   |   | Three Months Ended |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | - | ---------------- | - | - | ------------------ | -
|                                                                                                                                                                         |   | June 30,
2005    |   |   | June 30,
2004      |  
|                                                                                                                                                                         |   |                  |   |   |                    |  
|Net income (loss), as reported                                                                                                                                           | $ | (1,978,000       | ) | $ | 35,000             |  
|Less:
	        Total stock-based employee compensation expense
	        determined under fair-value based method for
	        all awards,
    net of related tax effects |   | 409,000          |   |   | 710,000            |  
|                                                                                                                                                                         |   |                  |   |   |                    |  
|Pro forma net loss                                                                                                                                                       | $ | (2,387,000       | ) | $ | (675,000           | )
|                                                                                                                                                                         |   |                  |   |   |                    |  
|Basic and diluted income (loss) per share:                                                                                                                               |   |                  |   |   |                    |  
|As reported                                                                                                                                                              | $ | (0.06            | ) | $ | 0.00               |  
|                                                                                                                                                                         |   |                  |   |   |                    |  
|Pro forma                                                                                                                                                                | $ | (0.07            | ) | $ | (0.04              | )
|                                                                                                                                                                         |   |                  |   |   |                    |  

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INTELLIGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(CONTINUED) 
JUNE 30, 2005 AND 2004

NOTE 2 - SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

Earnings (Loss) Per Share of
      Common
Stock

Basic earnings (loss) per common 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 are 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.


The following is a reconciliation of the computation for basic and diluted EPS:


|                                      |                                                 |            | Six Months Ended |   |        | Three Months Ended |  
|------------------------------------- | ----------------------------------------------- | ---------- | ---------------- | - | ------ | ------------------ | -
|                                      |                                                 |            | June 30,
2005    |   |        | June 30,2004       |  
|                                      |                                                 |            |                  |   |        |                    |  
|Net income (loss)                     | $                                               | (1,978,000 | )                | $ | 35,000 |                    | $
|                                      |                                                 |            |                  |   |        |                    |  
|Weighted-average common shares        |                                                 |            |                  |   |        |                    |  
|outstanding :                         |                                                 |            |                  |   |        |                    |  
|                                      | Basic                                           |            | 35,103,000       |   |        | 17,282,000         |  
|                                      | Effect
    of dilutive securities-stock options |            | —                |   |        | 1,973,000          |  
|                                      |                                                 |            |                  |   |        |                    |  
|                                      | Diluted                                         |            | 35,103,000       |   |        | 19,255,000         |  
|                                      |                                                 |            |                  |   |        |                    |  
|Basic net earnings (loss) per share   | $                                               | (0.06      | )                | $ | 0.00   |                    | $
|                                      |                                                 |            |                  |   |        |                    |  
|Diluted net earnings (loss) per share | $                                               | (0.06      | )                | $ | 0.00   |                    | $
|                                      |                                                 |            |                  |   |        |                    |  

In September 2004, the Company issued 17,647,000 shares of common stock in a private placement transaction for gross proceeds of $15,000,000 and net proceeds of $14,675,000. For the six months ended June 30,
    2005 and 2004, respectively, options to purchase 4,167,000 and 3,225,000
    shares of common stock were not included in the computation of diluted EPS
    because inclusion would have been anti-dilutive. Options to purchase 4,167,000
    and 431,000 shares of common stock
  for the three months ended June 30, 2005 and 2004, respectively, were excluded
  in the computation of diluted EPS because inclusion would have been anti-dilutive.


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INTELLIGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 3 -LINE
OF CREDIT

On May 31, 2000, the Company and
    PNC Bank, N.A. (the Bank) entered into a three-year revolving
    credit facility. In July 2003, the credit facility was extended until May
    31, 2006. The credit facility is currently comprised of a revolving line
    of credit pursuant to which the Company could borrow up to $15,000,000
    at the Bank's prime rate per annum. The
    credit facility is collateralized by substantially all of the assets of the
    Company's
    United States based operations. The maximum borrowing availability under
    the line of credit is based upon a percentage of eligible billed and unbilled
  accounts receivable, as defined.


As of June 30, 2005, the Company
    was in default under the terms of its credit facility due to the Companys
    failure to timely deliver to the Bank certain monthly reporting schedules,
    monthly financial statements, quarterly financial statements, and annual
    financial statements during 2004 and 2005. On September 30, 2005, the Company
    and the Bank executed the Sixth Amendment to the Loan Documents and Waiver
    Agreement (the Sixth Amendment). The terms of the Sixth Amendment
    amend the Loan Documents as follows: (i) to prevent the Company from electing
    to borrow, convert to or continue a Eurodollar Rate Loan and to provide that
    all Advances bear an interest rate per annum equal to the Base Rate (as such
    term is defined in the Credit Agreement); (ii) to define Change in
    Management as any change in the Companys Chief Executive Officer
    or Chief Financial Officer, which is not acceptable to the Bank; (iii) to
    define Revolving Interest Rate as interest rate per annum equal
    to the Base Rate; (iv) to define Undrawn Availability to include
    the redemption value of a specified bank account in the calculation of Undrawn
    Availability; and (v) to add an early termination fee in an amount equal
    to one-half of one percent (.50%) of the maximum revolving advance amount.
    Under the terms of the Sixth Amendment, the Company was required, among other
    things, to deliver draft, unaudited financial statements to the Bank on or
    before September 30, 2005 and to deliver audited annual financial statements
    to the Bank on or before October 15, 2005. The Company has satisfied each
    of these two requirements. The Company also agreed to resume timely filing
    of the periodic reports due to the listing exchange upon which the Companys
    shares are traded and to any governmental agency beginning with the filing
    of the Companys annual report on Form 10-K for the year ending December
    31, 2005. The Bank agreed to waive any events of default arising from the
    Companys failure to timely deliver to the Bank the monthly reporting
    schedules, monthly financial statements, quarterly financial statements and
    annual financial statements and the Companys removal of Arjun Valluri
    from his position as Chief Executive Officer, President and Chairman of the
Board.


As of June 30, 2005, the Company
    had outstanding borrowings under the credit facility of $4,034,000. The
    Company estimates undrawn availability under the credit facility to be $10,966,000
  as of June 30, 2005.


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INTELLIGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 4- RELATED PARTY TRANSACTIONS

For the six months ended June 30, 2005 and 2004, the Company paid $39,657
  and $40,200, respectively, in fees to SBLI USA Mutual Life Insurance Company,
  Inc. A member of the Board of Directors served as the Chief Financial Officer
  of SBLI USA Mutual Life Insurance Company during 2004.


Nagarjun Valluripalli, the Companys former Chairman of the Board, President,
  Chief Executive Officer and a former Director of the Company is an owner (the Owner)
  of real estate located at 5-9-22, Secretariat Road in Hyderabad, India. On
  October 2, 2003, Intelligroup Asia Private, Ltd. (IGA) and the
  Owner executed a memorandum of understanding (the MOA) relating
  to a proposed lease whereby the Owner would lease the 5th and 6th floors
  of the property (Premises) to the Company for certain of the Companys
  India operations. As contemplated in the MOA, on June 18, 2004, the Owner and
  IGA executed leases for the Premises and the amenities, furnishings and fittings.
  The leases provide for a minimum lease period of three years with a renewal
  option for an additional three years. The leases provide for a three-month
  notice period for either party to terminate the lease. Under the terms of the
  lease for the amenities, IGA paid a deposit of 5,820,000 Indian rupees (approximately $133,000)
  and advance lease rentals of 11,640,000 Indian rupees (approximately $266,000)
  upon the handing over of the amenities and shall pay monthly rent of 1,164,000
  Indian rupees (approximately $27,000). Under the terms of the lease for
  the Premises, IGA paid a deposit of 4,656,000 Indian rupees (approximately $106,000)
  and advance lease rentals of 9,312,000 Indian rupees (approximately $213,000)
  upon handing over of the Premises and shall pay monthly rent of 931,000 Indian
  rupees (approximately $21,000). Rent expense for the six months ended June
  30, 2005 towards the lease was 14,626,000 Indian rupees (approximately $335,000).
  The value of un-amortized rentals as of June 30, 2005 was 8,381,000 Indian
  rupees (approximately $192,000).


NOTE 5- LITIGATION

India Tax Assessments

The Company's India subsidiary has received tax assessments dated February
  12, 2002, July 23, 2002, August 22, 2003, and December 31, 2003 from the India
  taxing authority denying tax exemptions claimed for certain revenue earned
  and disallowing certain expenses claimed during the Indian subsidiarys
  fiscal years ended March 31, 1998 through March 31, 2001. The revised tax assessments
  were for 14.6 million, 9.5 million, 2.8 million, and 5.6 million Indian rupees,
  respectively, or approximately $742,000 in total. An additional assessment
  for tax penalties and interest for the fiscal year ended March 31, 2001 of
  1.7 million Indian rupees, or approximately $39,000, was also received.
  The Company has made payments of approximately $815,000 (consisting of $682,000
  for taxes paid under protest, $39,000 for tax penalties and interest and $94,000
  for other tax adjustments not in dispute) to the India tax authority. The Companys
  resulting overpayment of $34,000 has been refunded.


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INTELLIGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

On March 29, 2005, the Companys India subsidiary received an additional revised assessment for 15.0 million Indian rupees, or approximately $345,000, for the fiscal year ended March 31, 2002. The assessment disallowed
  some of the export revenue claimed by the Company and also disallowed certain expenses claimed by the Company. The Company has paid approximately 6.0 million Indian rupees, or approximately $137,000, under protest and has also paid an additional
  5.1 million Indian rupees, or approximately $118,000, for agreed-to adjustments through October 2005. The Company is currently challenging the remaining unpaid assessment with the Commissioner of Tax Appeals but pending resolution of such
  appeal, the Company plans to pay the remaining $89,000 tax assessment in
  installments over the following 12 to 18 months as permitted by the India tax
authority.


The Company is currently at the Appellant Tribunal stage for the fiscal years
  ended March 31, 1998 through March 31, 2001 and at the Commissioner of Income
  Tax Appeals stage for fiscal year ended March 31, 2002. All applicable amounts
  noted above had been paid or accrued as of June 30, 2005.


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 the Companys 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 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.


SEC Investigation

On January 28, 2005, the Company received subpoenas in connection with a formal
investigation by the Securities and Exchange Commission (the SEC)
regarding whether federal securities laws were violated in connection with the
issuance of the Companys financial statements for prior periods. The Company
is cooperating with the SEC to produce documents in response to the
subpoenas.


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INTELLIGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
  (CONTINUED)
  JUNE 30, 2005 AND 2004

NOTE 5- LITIGATION (CONTINUED)

Broadview Claim

On or about March 23, 2005, Jefferies & Company, Inc. initiated an arbitration
proceeding to recover fees in the amount of $750,000 plus interest and reasonable
attorneys fees and costs allegedly owed to Broadview International, a division
of Jefferies & Company (Broadview) as a result of the private
placement transaction that the Company closed on September 30, 2004 with SB Asia
Infrastructure Fund, L.P. and Venture Tech Assets Pvt. Ltd. The arbitration proceeding
is in the discovery phase. In the event the Company does not prevail at the arbitration
proceeding the Company will be liable for $750,000 plus interest and reimbursement
of attorneys fees
and costs.


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.


NOTE 6- 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 United States
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,
Sweden and the United Kingdom. The European headquarters
is located in Milton Keynes, United Kingdom;                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                  
| | • | Japan  includes the operations
          of the Company in Japan.
The Japanese headquarters is located in Tokyo, Japan.                                                                                                                                                                                         

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INTELLIGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 6- SEGMENT DATA AND GEOGRAPHIC INFORMATION (CONTINUED)

Each of the operating segments has a Managing Director, or equivalent position,
  who reports directly to the Chief Executive Officer (CEO). Currently,
  the CEO and President is fulfilling the requirements of this position in the
  US. 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 six
  and three months ended June 30, 2005 and 2004 and financial position as of
  June 30, 2005 and 2004 are presented in the following geographic segments:


|                                  |   | United     |   |   |            |  |   |           |   |   |           |   |   |            |  
|--------------------------------- | - | ---------- | - | - | ---------- |  | - | --------- | - | - | --------- | - | - | ---------- | -
|                                  |   | States     |   |   | India      |  |   | Europe    |   |   | Japan     |   |   | Total      |  
|                                  |   |            |   |   |            |  |   |           |   |   |           |   |   |            |  
|Six months ended June 30, 2005    |   |            |   |   |            |  |   |           |   |   |           |   |   |            |  
|Revenue                           | $ | 46,436,000 |   | $ | 14,144,000 |  | $ | 3,830,000 |   | $ | 1,716,000 |   | $ | 66,126,000 |  
|Operating income (loss)           |   | (3,328,000 | ) |   | 2,300,000  |  |   | (193,000  | ) |   | (301,000  | ) |   | (1,522,000 | )
|Income (loss) before income taxes |   | (3,189,000 | ) |   | 2,111,000  |  |   | (824,000  | ) |   | (361,000  | ) |   | (2,263,000 | )
|Total assets                      |   | 38,762,000 |   |   | 7,841,000  |  |   | 1,289,000 |   |   | 1,399,000 |   |   | 49,291,000 |  
|                                  |   |            |   |   |            |  |   |           |   |   |           |   |   |            |  
|Six months ended June 30, 2004    |   |            |   |   |            |  |   |           |   |   |           |   |   |            |  
|Revenue                           | $ | 46,972,000 |   | $ | 9,430,000  |  | $ | 3,795,000 |   | $ | 2,403,000 |   | $ | 62,600,000 |  
|Operating income (loss)           |   | (1,782,000 | ) |   | 1,265,000  |  |   | 221,000   |   |   | 542,000   |   |   | 246,000    |  
|Income (loss) before income taxes |   | (1,879,000 | ) |   | 1,429,000  |  |   | (57,000   | ) |   | 576,000   |   |   | 69,000     |  
|Total assets                      |   | 31,393,000 |   |   | 9,689,000  |  |   | 2,624,000 |   |   | 1,668,000 |   |   | 45,374,000 |  

| |   |                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | Of the total capital expenditures
            incurred for the six months ended June 30, 2005, $130,000
            was incurred in the US and $88,000
was incurred in India.

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INTELLIGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 6- SEGMENT DATA AND GEOGRAPHIC INFORMATION
      (CONTINUED)

|                                  |   | United     |   |   |           |  |   |           |   |   |           |   |   |            |  
|--------------------------------- | - | ---------- | - | - | --------- |  | - | --------- | - | - | --------- | - | - | ---------- | -
|                                  |   | States     |   |   | India     |  |   | Europe    |   |   | Japan     |   |   | Total      |  
|                                  |   |            |   |   |           |  |   |           |   |   |           |   |   |            |  
|Three months ended June 30, 2005  |   |            |   |   |           |  |   |           |   |   |           |   |   |            |  
|Revenue                           | $ | 23,542,000 |   | $ | 7,353,000 |  | $ | 1,881,000 |   | $ | 914,000   |   | $ | 33,690,000 |  
|Operating income (loss)           |   | (1,736,000 | ) |   | 1,095,000 |  |   | (45,000   | ) |   | (114,000  | ) |   | (800,000   | )
|Income (loss) before income taxes |   | (1,680,000 | ) |   | 949,000   |  |   | (418,000  | ) |   | (115,000  | ) |   | (1,264,000 | )
|Total assets                      |   | 38,762,000 |   |   | 7,841,000 |  |   | 1,289,000 |   |   | 1,399,000 |   |   | 49,291,000 |  
|                                  |   |            |   |   |           |  |   |           |   |   |           |   |   |            |  
|Three months ended June 30, 2004  |   |            |   |   |           |  |   |           |   |   |           |   |   |            |  
|Revenue                           | $ | 23,563,000 |   | $ | 5,245,000 |  | $ | 1,717,000 |   | $ | 1,539,000 |   | $ | 32,064,000 |  
|Operating income (loss)           |   | (1,814,000 | ) |   | 729,000   |  |   | (27,000   | ) |   | 447,000   |   |   | (665,000   | )
|Income (loss) before income taxes |   | (1,739,000 | ) |   | 1,278,000 |  |   | (89,000   | ) |   | 433,000   |   |   | (117,000   | )
|Total assets                      |   | 31,393,000 |   |   | 9,689,000 |  |   | 2,624,000 |   |   | 1,668,000 |   |   | 45,374,000 |  

| |   |                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | Of the total capital expenditures
            incurred for the three months ended June 30, 2005, $50,000
            was incurred in the US and $17,000
was incurred in India.

NOTE 7- COMMITMENTS AND CONTINGENCIES

Tax-Free Spin-off of SeraNova

On July 5, 2000, the Company distributed all of the outstanding common stock
    of SeraNova Inc. (SeraNova)
to its shareholders in a transaction that was structured to be and
reported as a tax-free spinoff 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 agreed to 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.


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INTELLIGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 7- COMMITMENTS AND CONTINGENCIES (CONTINUED)

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 $65,000,000,
  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, an
issue that is currently being analyzed.


Employment Agreements

As of June 30, 2005, 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 $1,297,000. In addition, the Companys India subsidiary
had severance packages with certain employees who resigned in April 2005 which
provided for severance obligations in the amount of approximately $652,000
upon the fulfillment of certain events, including a Change in Management (as
defined in the severance package) of the Company or IGA. In April 2005,  following
the termination of the Companys Chief Executive Officer, certain members
of the IGA management team, some of whom had a severance package, resigned. Except
as set forth below, to date, the Company has not received any claim for  payment
of amounts potentially due under the severance package as a result of these resignations.
In or about September 2005, two former members of the IGA management team sent
IGA notices under Sections 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 $560,000
to such individuals.


Tax Contingency in India

The Company is currently appealing the tax assessments received
by the Companys India subsidiary denying tax exemptions claimed during each of the fiscal years ended March 31, 1999 through March 31, 2002. In the event the
Companys appeal is not successful, future cash outlays of approximately $89,000
would be required. The tax provisions for these assessments have already been
recorded in prior year consolidated financial statements (see Note 5).


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INTELLIGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(CONTINUED) 
JUNE 30, 2005 AND 2004

NOTE 8 -SUBSEQUENT
EVENTS

Effective August 1, 2005, the
          Companys India subsidiary 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 related party. The terms of the lease agreement provide for, among other
  things: (i) a minimum lease period of five years with an option for two three-year
  renewal periods; (ii) payment of a security deposit in the amount of 15,282,000
  Indian rupees (approximately $352,000); (iii) payment of monthly lease fees in the amount of 1,698,000 Indian rupees (approximately $40,000), subject to yearly five percent (5%) escalation; and (iv) monthly operations and maintenance fees of
283,000 Indian rupees (approximately $6,500). On September 30, 2005, the Company and the Bank executed the Sixth
	Amendment to the Loan Documents and Waiver Agreement. Please see Note 3.


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

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) forward looking statements; (iv) results of operations – consolidated,
  in which the Companys
  consolidated results are compared year to year to recognize trends; (v) results
  of operations by business segment, which allows the Company to compare the
results of its different business units; and (vi) liquidity and capital resources.


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 both the six months ended June 30, 2005 and 2004, revenue
  derived from projects under fixed price contracts represented approximately 44% of the Company's total revenue. No single fixed price project was material to the Company's business during 2005 or 2004. 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 six months ended June 30, 2005
  and
      2004, the Company's ten largest customers accounted
      for in the aggregate approximately 49% and 46% of its revenue, respectively.
      During the six months ended June 30, 2005, one customer accounted for 10%
      or more of revenue. During the six months ended June 30, 2004, no single
      customer accounted for 10% or more of revenue. For
  the six months ended June 30, 2005 and 2004, 12% and 24%, 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.


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Software Partners

For the six months ended June 30, 2005 and 2004, 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 |  
|---------- | --------------------- | -
|           |                       |  
|           | Six Months Ended      |  
|           | June 30, 2005         |  
|           |                       |  
|SAP        | 72                    | %
|PeopleSoft | 19                    | %
|Oracle     | 2                     | %

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 Pleasanton (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.


Expenses

The Company's most significant cost is project personnel expenses, which consist of consultant salaries, benefits and payroll-related expenses. Thus, the Company's financial performance is based
primarily upon billing margin (billable hourly rate less the cost to the Company of a consultant on an hourly basis) and personnel utilization rates (billable hours divided by paid hours).


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.


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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
  and accruals for contingencies.


The accounting policies and estimates used as of December 31, 2004, as outlined
      in our previously filed Form 10-K, have been applied consistently for the
six and three months ended June 30, 2005.


Forward Looking Statements

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. Such forward-looking statements are subject
  to risks and uncertainties, including, but not limited to:


|• | the Companys ability to remediate its
        material weaknesses in its internal control over financial reporting
        and to continue to improve its control environment in order to effectively
        manage the business and to timely record, process, summarize and report
        financial statements that fairly present, in all material aspects, the
        Companys financial condition, statements of operations and cash
    flows;                                                                                                             
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|• | compliance with the Sarbanes-Oxley Act of
        2002, including without limitation Section 404, and other regulations
        may be costly, time consuming and may divert management attention from
    managing ongoing business operations;                                                                                                                                                                                                                                                                                                                      
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|• | the Companys ability to manage and
        grow the business in light of the executive and Board level turnover
    and the associated loss of historical knowledge and experience;                                                                                                                                                                                                                                                                                                                                                                                  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|• | the
      Companys ability to manage increasing compensation costs for its
      existing and prospective India employees which is driven by the increasing
      demand for global delivery and competition for skilled, experienced information
      technology personnel in the India market. The Company expects that such
      compensation costs will continue to increase in the future, and any such
      increases could adversely affect the Companys results of operations;                                                                           
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|• | the Company's ability to attract and retain
        a sufficient number of highly skilled employees including, but not limited
        to, concerns regarding the Companys financial condition, competition
        from departing executives 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 pending changes in accounting rules related
    to stock options;
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|• | the Companys ability to manage the
        transition to a new Chief Executive Officer without a significant disruption
    in business;                                                                                                                                                                                                                                                                                                                                                                                                                             
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|• | the Companys ability to continue to
        generate new business given the turnover in the Companys sales
    managers and personnel;                                                                                                                                                                                                                                                                                                                                                                                                                              
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|• | the Companys ability to maintain compliance
        with the financial and other covenants in its credit facility and thereby
        continue its access to its line of credit or in the event of default
        the Companys ability to negotiate a waiver with the Bank which
        may be unavailable or if available may only be on terms disadvantageous
    to the Company;                                                                                                                                                                               

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|• | the Companys reliance on continued
        borrowing availability under the credit facility with the Bank as its
        sole source of external financing and the cash generated by its operating
        activities to fund its ongoing operations and growth. However, in the
        event such borrowing is not available or the Company is unable to timely
        collect cash from its customers, the Company may be forced to secure
        alternate financing to operate the business and such financing may be
        unavailable and, if available, may be available only on disadvantageous
    terms to the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|• | the Companys ability to obtain an
        extension of its existing credit facility beyond May 31, 2006 or to secure
        an alternate credit facility either of which may be unavailable or if
    available may only be available on terms disadvantageous to the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|• | the uncertainty surrounding the technology
    consulting outsourcing market and revenues derived from such market;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|• | the continued availability of a market in
    which the Companys securities may be traded;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|• | the Company's ability to cause its Common
        Stock to be listed on a national stock exchange and the ability to comply
        with ongoing
listing requirements;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|• | the Company's reliance on continued relationships
        and business associated with SAP America and Oracle, including, but not
        limited to, 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 and,
        accordingly, its ability to continue to sell professional consulting
        services relating to PeopleSoft applications; the Company's limited operating
    history within the outsourcing line of business;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|• | the substantial variability of the Company's
        quarterly operating results caused by a variety of factors, many of which
        are not within the Company's control, including (i) patterns of software
        and hardware capital spending by customers, (ii) IT outsourcing trends,
        (iii) the timing, size and stage of projects, (iv) timing and impact
        of acquisitions, (v) new service introductions by the Company or its
        competitors and the timing of new product introductions by the Company's
        ERP partners, (vi) levels of market acceptance for the Company's services,
        (vii) general economic conditions and (viii) the hiring of additional
    staff;                                                                                                                                                                                                                                                                                                                                                                             
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|• | increased competition in the industry may,
        among other negative effects, cause a decrease in the Company's billing
    and employee utilization rates;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|• | uncertainty relating to worldwide currency
        exchange rates particularly in regard to the Indian rupee, U.S. Dollar,
        the Euro, British Pound and Japanese Yen, and the effect that fluctuations
        in such exchange rates may have on the Companys quarterly and/or
    annual financial results;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|• | the Company's ability to manage its business
        effectively, which will require the Company: (i) to continue developing
        and improving its operational, financial and other internal systems and
        controls, as well as its business development capabilities, (ii) to attract,
        train, retain, motivate and manage its employees, (iii) to continue to
        maintain high rates of employee utilization at profitable billing rates,
        (iv) to successfully transition certain operations and executive functions;
        (v) to successfully integrate the personnel and businesses acquired by
        the Company, (vi) to maintain project quality, particularly if the size
        and scope of the Company's projects increase, (vii) to properly plan,
        price and deliver fixed bid projects and service level based agreements
        within the requisite timeframes and quality levels and (viii) to reorganize
        its internal structure and personnel and to improve its processes without
    suffering a loss in business momentum;

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|• | the potential for future legislation regulating
    or taxing outsourcing;                                                                                                                                                                                                                                                     
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                
|• | the Companys substantial reliance
    on key customers and large projects;                                                                                                                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                
|• | the Companys ability to manage fixed
    price projects effectively and efficiently;                                                                                                                                                                                                                                          
|  |                                                                                                                                                                                                                                                                                                                                
|• | the potential for significant claims against
        the Company relating to its professional services from customers or otherwise
        and the inability of the Company to adequately mitigate the risk of such
    potential claims;                                                                                      
|  |                                                                                                                                                                                                                                                                                                                                
|• | the potential risks and penalties associated
        with the ongoing investigation by the United States Securities and Exchange
        Commission (SEC) related to the Companys restatement
        of prior
periods consolidated financial statements;                                                                  
|  |                                                                                                                                                                                                                                                                                                                                
|• | the Companys ability to defend itself
        and resolve the ongoing shareholder litigation related to the Companys
        restatement of prior periods consolidated financial statements
        within the limits of the Companys director and officer liability
    insurance policy;                                 
|  |                                                                                                                                                                                                                                                                                                                                
|• | the Company's ability to successfully address
        the continuing changes in IT, evolving industry standards and changing
    customer objectives and preferences;                                                                                                                                                          
|  |                                                                                                                                                                                                                                                                                                                                
|• | the Company's reliance on the continued
    services of its key technical personnel;                                                                                                                                                                                                                                           
|  |                                                                                                                                                                                                                                                                                                                                
|• | the 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 the Companys business model;
|  |                                                                                                                                                                                                                                                                                                                                
|• | the Company's ability to protect its intellectual
    property rights; and                                                                                                                                                                                                                                                     
|  |                                                                                                                                                                                                                                                                                                                                
|• | uncertainties resulting from pending litigation
        matters and from potential administrative and regulatory issues including,
        but not limited to, accounting, corporate governance, immigration and
    taxation matters.                                                                                         

In addition, in July 2000, the Company completed the tax-free spin-off of SeraNova,
    its former subsidiary. In March 2001, SeraNova and Silverline Technologies
    Limited consummated the acquisition of SeraNova by Silverline. Had the acquisition
    of SeraNova by Silverline been contemplated at the time of the spin-off,
    the spinoff 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 the Company, and accordingly should not impact the tax-free
    nature of the spin-off. Although the Company and SeraNova are parties to
    a tax sharing agreement pursuant to which SeraNova agreed to indemnify the
    Company 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 the Company.
    If it were determined that the spin-off was taxable, the Company would bear
    the liability to pay such the tax liability, which would be material. Please
    refer to Note 7 to the unaudited condensed consolidated financial statements
of the Company included elsewhere in this report for further information.


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


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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     |   
|-------------------------------------------------------- | ------------------------- | --
|                                                         |                           |   
|                                                         | Six Months Ended June 30, |   
|                                                         |                           |   
|                                                         | 2005                      |   
|                                                         |                           |   
|Revenue                                                  | 100.0                     | % 
|Cost of revenue                                          | 73.6                      |   
|                                                         |                           |   
|Gross
	    profit                                        | 26.4                      |   
|                                                         |                           |   
|Selling, general and administrative
	    expenses        | 27.1                      |   
|Depreciation and amortization                            | 1.6                       |   
|                                                         |                           |   
|Total
	    operating expenses                            | 28.7                      |   
|                                                         |                           |   
|Operating
	    income (loss)                             | (2.3                      | ) 
|Interest income                                          | 0.1                       |   
|Interest expense                                         | (0.3                      | ) 
|Other income (expense)                                   | (0.9                      | ) 
|                                                         |                           |   
|Income (loss) before income
	    tax provision (benefit) | (3.4                      | ) 
|Income tax provision (benefit)                           | (0.4                      | ) 
|                                                         |                           |   
|Net income (loss)                                        | (3.0                      | )%
|                                                         |                           |   

Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004


The following discussion
    compares the consolidated results of operations for the six months ended
June 30, 2005 and 2004.


Revenue.
    Total revenue increased by 5.6%, or $3.5 million, from $62.6 million
    for the six months ended June 30, 2004 to $66.1 million for the six months
     ended June 30, 2005. The increase was attributable primarily to growth in
    revenue generated in India (an increase of $4.7 million), offset by decreases
    in revenue generated in the United States (a decrease of $0.5 million),
    and Japan (a  decrease of $0.7 million). The revenue growth in India
    results directly from the increased demand in the US from both new and existing
    customers for the Companys
    offshore services, including traditional consulting service offerings, application
    management and support services, and offshore development services. However,
    the Company does not expect that revenue for the full
    year
    2005 will exceed revenue for 2004.


Cost of revenue and gross profit.
    The Company's cost of revenue increased by 11.5%, or $5.0 million, from $43.7
    million for the six months ended June 30, 2004,  to $48.7 million for
    the six months ended June 30, 2005, due primarily to the increase in headcount
    and compensation costs for consultants. The Company's gross profit decreased
    by 7.9%, or $1.5 million, from $18.9 million for the six
    months ended June 30, 2004, to $17.4 million for the six months ended
    June 30, 2005. Gross margin decreased to 26.4% for the six months ended June
    30,
    2005, from 30.2% for the six months ended June 30, 2004. The decrease in
    gross profit and gross margin primarily results from an increase in headcount, compensation
    costs and certain project related expenses. The Company expects lower
  gross margin through the full year 2005.


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Selling, general and administrative expenses.
    Selling, general and administrative expenses primarily consist of salaries,
    and related benefits costs for sales and general administrative personnel,
    occupancy costs, travel and entertainment and professional fees. Selling,
    general and administrative expenses increased by 1.0%, or $0.2 million, to $17.9 million for the six months ended June 30, 2005, from
$17.7 million for the six months ended June 30, 2004, but decreased as a
  percentage of revenue to 27.1% from 28.3%, respectively. The decrease in selling,
  general and administrative expenses, as a percentage of revenue, was related
  primarily to the increase in revenues, partially offset by the costs associated
  with accounting and legal fees and costs associated with restating and re-auditing
prior period financials.


Depreciation and amortization.
    Depreciation and amortization expenses remained constant at approximately $1.0
million for the six months ended June 30, 2005 and 2004.


Interest income.
    The Company earned $23,000 in interest income for the six months ended June 30, 2005, compared with $18,000
    for the six months ended June 30, 2004. The interest income is related primarily
to certain interest-bearing bank accounts in India and Japan.


Interest expense.The
    Company incurred approximately $0.2 million in interest expense for both
    the six months ended June 30, 2005 and 2004, respectively, related to borrowings
    under its
    credit facility. Borrowings under the credit facility were used primarily
to fund operating activities.


Other income (expense).Other
    income (expense) results primarily from foreign currency transaction gains
    or (losses)
    associated with changes in foreign currency exchange rates. The Company reported
    other expense of $0.6 million for the six months ended June 30, 2005 versus other income of $35,000
    for the six months ended June 30, 2004. The change primarily results from
foreign currency fluctuations in the UK, Denmark and India.


Income tax provision.
    The Company recorded a benefit for income taxes of $285,000 on a pretax loss of $2.0 million for the six months ended June 30, 2005, and
    a provision for taxes of $34,000 on pretax income of $69,000 for the six months ended June 30, 2004. The tax provision of $34,000 for the six months ended June 30, 2004 consisted principally of foreign income tax liability in certain
    foreign tax jurisdictions reduced by state and local income tax claims for refund and the recognition of deferred income tax benefits from its India operations. For the six months ended June 30, 2005, the overall tax benefit of $285,000
    consisted primarily of state and local income taxes reduced by the recognition
of deferred and income tax benefits recorded at the Companys India and Japan operations.


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Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004 The following table sets
      forth for the periods indicated certain financial data expressed as a percentage
  of total revenue, for continuing operations:


|                                                               | Percentage of Revenue       |   
|-------------------------------------------------------------- | --------------------------- | --
|                                                               |                             |   
|                                                               | Three Months Ended June 30, |   
|                                                               |                             |   
|                                                               | 2005                        |   
|                                                               |                             |   
|Revenue                                                        | 100.0                       | % 
|Cost of revenue                                                | 72.4                        |   
|                                                               |                             |   
|Gross profit                                                   | 27.6                        |   
|                                                               |                             |   
|Selling, general and administrative expenses                   | 28.2                        |   
|Depreciation and amortization                                  | 1.8                         |   
|                                                               |                             |   
|Total operating expenses                                       | 30.0                        |   
|                                                               |                             |   
|Operating loss                                                 | (2.4                        | ) 
|Interest income                                                | 0.0                         |   
|Interest expense                                               | (0.3                        | ) 
|Other income (expense)                                         | (1.1                        | ) 
|                                                               |                             |   
|Loss from
    operations before income tax provision (benefit) | (3.8                        | ) 
|Income tax provision (benefit)                                 | 0.0                         |   
|                                                               |                             |   
|Net loss                                                       | (3.8                        | )%
|                                                               |                             |   

The following discussion compares the consolidated results of operations for the three months ended June 30, 2005 and 2004.


Revenue.
      Total revenue increased by 5.0%, or $1.6 million, from $32.1 million
      for the three months ended June 30, 2004 to $33.7 million for the three
       months ended June 30, 2005. The increase was attributable primarily to
      growth in revenue generated in India (an increase of $2.1 million)
      and Europe (an increase of $0.2 million), offset by decreases in revenue
      generated in Japan (a decrease
of $0.6 million). The United States had no material revenue change. The revenue
growth in India results directly from increased demand in the US from both new
and existing customers for the majority of the Companys
offshore services, including traditional consulting service offerings, application
management and support services, and offshore development services. However, the Company
does not expect revenue for the full year 2005 to exceed revenue for 2004.


Cost of revenue and gross profit.
      The Company’s cost of revenue increased by 6.1%, or $1.4 million,
      from $23.0 million for the three months ended June 30,
2004, to $24.4 million for the three months ended June 30, 2005, due primarily
to the increase in headcount and compensation costs for consultants. The Company’s
gross profit increased by 2.6%, or $0.2 million, from $9.1 million for
the
three months ended June 30, 2004, to $9.3 million for the three months ended
June 30, 2005, primarily as a result of increased revenues. Gross margin decreased
to
27.6% for the three months ended June 30, 2005, from 28.3% for the three months
ended
June 30, 2004. The decrease in gross margin results from an increase in headcount
and compensation costs and certain project related expenses. The Company expects
lower gross margin for the full year 2005.


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Selling, general and administrative expenses.
      Selling, general and administrative expenses primarily consist of salaries,
      and related benefits costs for sales and general administrative personnel,
      occupancy costs, sales person compensation, travel and entertainment and
      professional fees. Selling, general and administrative expenses increased
      by 2.6%, or $0.3 million, to $9.5 million for the three months

ended June 30, 2005 from $9.2 million for the three months ended June 30,
2004, and decreased as a percentage of revenue to 28.2% from 28.8%, respectively.
The decrease in selling, general and administrative expenses, as a percentage
of revenue,
was related primarily to the increase in revenues.


Depreciation and amortization.
      Depreciation and amortization expenses increased to $0.6 million for
      the three months ended June 30,
2005, compared to $0.5 million for the three months ended June 30, 2004.
The increase was due to purchases of fixed assets during the three months ended
June 30, 2005.


Interest income.
      The Company earned $7,000 in interest income for the three months ended June 30, 2005, compared with $1,000
      for the three months ended June 30, 2004. The interest income is related
      primarily to certain interest-bearing bank accounts in India and Japan.


Interest expense.The
      Company incurred $0.1 million in interest expense for the three months
      ended June 30, 2005 and 2004, respectively, related to borrowings under
      its line of credit. Borrowings under the line of credit were used primarily
      to fund operating activities.


Other income (expense).Other
      income (expense) results primarily from foreign currency transaction gains
      or (losses) associated with changes in foreign currency exchange rates.
      The Company reported other expense of $0.4 million versus other income of $0.7
      million for the three months ended June 30, 2005 and 2004, respectively.
      The change results primarily from foreign currency fluctuations in the
      UK, India, and Denmark.


Income tax provision.
      Despite pretax losses of $1.3 million and $0.1 million for the three months ended June 30, 2005 and 2004, respectively, the Company
recorded provisions for taxes of $23,000 and $226,000, for the three
months ended June 30, 2005 and 2004, respectively, due to taxable income in certain
jurisdictions combined with a valuation allowance offsetting other loss benefits
in
other jurisdictions.


|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 United States 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 Company
subsidiaries, primarily to the US. The Indian headquarters
is
located in Hyderabad, India;                                                                                             

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| | • | Europe  includes the operations
          of the Company in Denmark,
Sweden and the United Kingdom. However, the Company
transitioned its operations in Sweden to Denmark as
of
January 1, 2003. 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.                                                                                                                                                    

Each of the geographic segments has a Managing
    Director, or manager with an equivalent position, who reports directly to
    the Chief Executive Officer (CEO). Currently, the CEO is fulfilling the requirements
    of this position in the US. 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.


Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004 The following discussion compares the segment results of operations for the six months ended June 30, 2005 and 2004.


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


|              | Six Months Ended June 30, |       
|------------- | ------------------------- | ------
|              |                           |       
|              | 2005                      |       
|              |                           |       
|              |                           |       
|              |                           | Amount
|              |                           |       
|United States | $                         | 46,436
|India         |                           | 14,144
|Europe        |                           | 3,830 
|Japan         |                           | 1,716 
|              |                           |       
|Total         | $                         | 66,126
|              |                           |       

US revenue decreased by 1.1%, or $0.6
    million, from $47.0 million for the six months ended June 30, 2004 to $46.4
    million for the six months ended June 30, 2005.


India revenue increased by 50.0%, or $4.7
    million, from $9.4 million for the six months ended June 30, 2004, to $14.1
    million for the six months ended June 30, 2005. The increase was  attributable
    primarily to increased demand for offshore services in the United States,
    resulting from new engagements with both existing and new customers. 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. While the Company expects further revenue growth in Indias
operations it does not expect to continue to see increases at similar
rates through the remainder of 2005.


Europe revenue was constant at $3.8 million for the six
months ended June 30, 2005 and 2004.


Japan revenue decreased by 29.2% or $0.7 million, from $2.4 million for the six months ended June 30, 2004, to $1.7
    million for the six months ended June 30, 2005. The decrease was due primarily
    to less demand for the Companys consulting services within the local
    SAP market, as customers delayed SAP upgrade projects pending a new release
    of the software.


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


|              |   | Six Months Ended June 30, |  
|------------- | - | ------------------------- | -
|              |   |                          
|              |   | 2005                      |  
|              |   |                           |  
|United States | $ | (3,328                    | )
|India         |   | 2,300                     |  
|Europe        |   | (193                      | )
|Japan         |   | (301                      | )
|              |   |                           |  
|Total         | $ | (1,522                    | )
|              |   |                           |  

US operating loss increased by $1.5 million,
    from an operating loss of $1.8 million for the six months ended June
    30, 2004, to an operating loss of $3.3
    million for the six months ended June 30, 2005. The increase in operating
    loss was primarily related to increased general and administrative costs
	associated with accounting and legal fees incurred in connection with the restatement
	and reaudit of prior period financials and other legal fees.


India operating income increased by $1.0 million, from $1.3 million for the six months ended June 30, 2004, to $2.3 million for the six months ended June 30, 2005. The increase was
attributable primarily to an increase in demand for offshore services.  While the Company expects growth in Indias
operations, it does not expect to continue to see similar increases through 2005.


Europe operating performance decreased by $0.4 million from operating income of $0.2 million for the six months ended June 30, 2004, to an operating loss of $0.2
    million for the six months ended June 30, 2005. The decrease was attributable
    primarily to increased project related costs.


Japan operating performance decreased by $0.8 million, from operating income of $0.5 million for the six months ended June 30, 2004, to an operating loss of $0.3
    million for the six months ended June 30, 2005. The decrease was attributable
    primarily to a reduction in revenue and increased headcount and compensation
    costs.


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Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004 The following discussion compares the segment results of operations for the three months ended June 30, 2005 and 2004.


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


|              | Three Months Ended June 30, |       
|------------- | --------------------------- | ------
|              |                             |       
|              | 2005                        |       
|              |                             |       
|              |                             |       
|              |                             | Amount
|              |                             |       
|United States | $                           | 23,542
|India         |                             | 7,353 
|Europe        |                             | 1,881 
|Japan         |                             | 914   
|              |                             |       
|Total         | $                           | 33,690
|              |                             |       

US revenue was stable at $23.5 million for
  the three months ended June 30, 2005 and 2004.


India revenue increased by 40.4%, or $2.1
    million, from $5.2 million for the three months ended June 30, 2004,
    to $7.3 million for the three months ended June 30, 2005. The increase
    was  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. While the Company expects further
revenue growth in Indias
operations it does not expect to continue to see increases at similar
rates through 2005.


Europe revenue increased by 9.6%, or $0.2 million, from $1.7 million for the three months ended June 30, 2004, to $1.9 million for the three months ended June 30, 2005. The increase was
due primarily to slightly increased demand for the Companys consulting
services within the local SAP market.


Japan revenue decreased by 40.6% or $0.6 million, from $1.5 million for the three months ended June 30, 2004, to $0.9 million for the three months ended June 30, 2005. The decrease was due
primarily to less demand for the Companys consulting services within the
local SAP market.


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




|              |   | Three Months Ended June 30, |  
|------------- | - | --------------------------- | -
|              |   |                            
|              |   | 2005                        |  
|              |   |                             |  
|United States | $ | (1,736                      | )
|India         |   | 1,095                       |  
|Europe        |   | (45                         | )
|Japan         |   | (114                        | )
|              |   |                             |  
|Total         | $ | (800                        | )
|              |   |                             |  

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US operating performance improved slightly
    from an operating loss of $1.8 million for the three months ended June
    30, 2004 to an operating loss of $1.7 million for the three months ended
    June 30, 2005. The improvement in operating performance was primarily related
    to a reduction in sales personnel and related sales and marketing activities,
    offset significantly by increased general
    and
    administrative costs associated with accounting and legal fees incurred in
    connection with restating and re-auditing prior period financials and other
    legal
fees.


India operating income increased by $0.4 million, from $0.7 million for the three months ended June 30, 2004, to $1.1 million for the three months ended June 30, 2005. The increase was
attributable primarily to an increase in demand for offshore services.


Europe operating performance decreased by $17,000 from an operating loss of $27,000 for the three months ended June 30, 2004, to an operating loss of $45,000 for the three months ended
June 30, 2005. The decrease was attributable primarily to increased project related costs.


Japan operating performance decreased by $0.6 million, from operating income of $0.5 million for the three months ended June 30, 2004, to an operating loss of $0.1 million for the three
months ended June 30, 2005. The decrease was attributable primarily to a decrease in revenues and an increase in payroll costs.


Liquidity and Capital Resources

Cash Flows

The Company had cash and cash equivalents of $5.7 million at June 30, 2005 and $6.2 million at December 31, 2004. The Company had working capital of $19.2 million at June 30, 2005 and
$20.0 million at December 31, 2004.


Cash used in operating activities of operations was $1.8 million for the six months ended June 30, 2005, resulting primarily from the net loss of $2.0
  million.


The Company invested $0.2 million and $1.5 million
    in computer equipment, internal-use computer software and office furniture
    and fixtures during the six months ended June 30, 2005 and 2004, respectively.
    The increase results primarily from the replacement of computer equipment
  and the development of certain internal-use software.


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Compliance with Loan Agreement

On May 31, 2000, the Company and the Bank entered
    into a three-year revolving credit facility (the credit facility).
    In July 2003, the credit facility was extended until May 31, 2006. The  credit
    facility is currently comprised of a revolving line of credit pursuant to
    which the Company could borrow up to $15.0
million at the Banks prime rate per annum. The credit facility is collateralized
by substantially all of the assets of the Company’s United States based operations.
The maximum borrowing availability under the line of credit is based upon a percentage
of eligible billed and unbilled accounts receivable, as defined.


As of June 30, 2005, the Company was in default under its
    credit facility as a result of the Companys failure to timely deliver to the Bank certain monthly reporting schedules, monthly
financial statements, quarterly financial statements, and annual statements during 2004 and 2005. In addition as of April 4, 2005, the Company was also in default under its credit facility as a result of the Companys removal of Arjun Valluri
as Chief Executive Officer and President. The Company secured waivers of such defaults under terms of the Sixth Amendment to the Loan Document and Waiver Agreement (the Sixth Amendment). The terms of the Sixth Amendment amend the Loan
Documents currently as follows: (i) to prevent the Company from electing to borrow, convert to or continue a Eurodollar Rate Loan and to provide that all Advances bear an interest rate per annum equal to the Base Rate (as such term is defined in the
Credit Agreement); (ii) to define Change in Management as any change in the Companys Chief Executive Officer or Chief Financial Officer, which is not acceptable to the Bank; (iii) to define Revolving Interest Rate as
interest rate per annum equal to the Base Rate; (iv) to define Undrawn Availability to
include the redemption value of a specified bank account in the calculation of
Undrawn Availability; and (v) to add an early termination fee in an amount equal
to one-half of one percent (.50%) of the maximum revolving advance amount. Under
the terms of the Sixth Amendment, among other things, the Company was required
to deliver draft, unaudited financial statements to the Bank on or before
September 30, 2005 and to deliver audited annual financial statements to the
Bank on or before October 15, 2005. The Company has satisfied each of these two
requirements.


The Company also agreed to resume timely filing of the
    periodic reports due to the listing exchange upon which the Companys shares are traded and to any governmental agency beginning with the
filing of the Companys annual report on Form 10-K for the year ending December 31, 2005. The Bank agreed to waive any events of default arising from the Companys failure to timely deliver to the Bank the monthly reporting schedules,
monthly financial statements, quarterly financial statements and annual financial statements and the Companys
removal of Arjun Valluri from his position as Chief Executive Officer and President.


Cash to Fund Operating Activities

The
    Company relies on the cash generated by operating activities and the financing
    available under its credit facility to fund ongoing operations. The
    Company’s credit facility with the Bank represents the 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 its 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. In addition,
    there can be no assurances that the Company will be able to secure alternate
    sources of financing to fund its operations or that such financing will be
    available on terms that are advantageous to the Company. Furthermore,
    the Company’s credit facility is scheduled to expire on May 31, 2006. There
    can be no assurance that the Company will be able to secure an extension
    of its existing credit facility beyond May 31, 2006 or to secure an alternate
    credit facility to fund its operations or that such extension or alternate
    credit facility will be available on terms that are advantageous to the Company.


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The Companys 2005 operating plan contains
    assumptions regarding revenue and expenses. The Companys significant
    cash requirements for 2005 include operating expenses, capital investments
    in infrastructure
    for its Indian operations amounting to approximately $2 million, and
    legal and professional fees including but not limited to, the costs incurred
    as part of the restatement and re-audit process, costs incurred in complying
    with  Section 404 of the Sarbanes Oxley Act of 2002 and legal fees incurred
    in connection with the Shareholder Class Actions and SEC investigation. 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 additional cost reductions or seeking additional financing.
    In addition, the Company may seek additional financing from time to time
    for general  corporate purposes, provided however that the availability of
    financing may be limited because the Company is not currently listed on a
    national stock exchange. Considering the cash on hand, the availability
    under the credit facility, and assuming the extension of the existing credit
    facility or securing
    alternate financing prior to the expiration of the existing credit facility
    in May 2006, the achievement of the operating plan and managements
    actions taken to date, management believes that it has the ability to continue
    to
    generate sufficient cash to satisfy its operating requirements in the normal
    course of business, and that its available credit arrangements and the cash
    flow expected to be generated from operations will be adequate to satisfy
    its current and planned operations through at least the next twelve months.


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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,
    currency fluctuations or interest rate changes have historically had a material
    effect on its revenues or results of operations. Any significant effects
    of inflation, currency fluctuations and changes in interest rates on the
    economies of the United States, Asia and Europe could adversely impact the
    Companys revenues and results of operations in the future. If there
    is a material adverse change in the relationship between European currencies
    and/or Asian currencies and the United States Dollar, such change would adversely
    affect the result of the Companys European and/or Asian operations
    as reflected in the Companys condensed consolidated financial statements.
    The Company has not hedged its exposure with respect to this currency risk
    as of June 30, 2005, but intends to review its exposure on a quarterly basis,
    and using a cost-benefit analysis, determine whether it should enter into
  arrangements to mitigate this risk.


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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.


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.


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. Based upon this
    evaluation, the Companys Chief Executive Officer and Chief Financial
    Officer concluded that the Companys disclosure controls and procedures
    were not effective to ensure that information required to be disclosed in
    the reports the Company files or submits under the Exchange Act is recorded,
    processed, summarized, and reported, within the time periods specified in
    the SECs rules and regulations, due to the material weaknesses disclosed
    in our 2004 annual report on Form 10-K for the year ended December 31, 2004,
    filed on October 24, 2005, which are discussed below under the heading material
  weaknesses.


Material Weaknesses:

A material weakness is a significant deficiency
    (as defined in Auditing Standard No. 2), or a combination of significant
    deficiencies, that results in there being more than a remote likelihood that
    a material misstatement of the annual or interim financial statements will
    not be prevented or detected.
    As part of its assessment of internal control over financial reporting that
    was included in its annual report on Form 10-K for the year ended December
    31, 2004, filed on October 24, 2005, management has identified the following
    material weaknesses in its internal control over financial reporting as of
    December 31, 2004. Although the Company believes that it made substantial
    progress in remediating these material weaknesses, it cannot determine which,
    if any, had been remediated as of June 30, 2005, and it will not be able
    to determine whether such weaknesses have been completely remediated until
    it completes its year-end testing and assessment of internal control over
    financial reporting for 2005 and its independent registered public accounting
  firm has audited such assessment.


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| | • | Accounting and Finance
            Personnel Weaknesses The Company
            had insufficient resources to perform the
            accounting and financial reporting functions and such resources lacked
            the appropriate level of accounting knowledge, experience and training
            in the application of generally accepted
            accounting principles and were inadequately supervised. The lack of sufficient and adequately trained
            accounting and finance personnel resulted in an ineffective segregation
            of duties relative to key financial reporting functions. These in
            turn caused a lack of senior level review and oversight over key
            accounting decisions and resulted in errors in both the entry of
            financial information and in the preparation of consolidated financial
            statements. Furthermore the Company experienced significant turnover
            in finance and accounting personnel during 2004 and the Company lacked
            adequate transition and knowledge transfer processes which resulted
            in the loss of a significant amount of historical knowledge related
            to the Companys business and its prior accounting practices,
    processes and policies.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | • | Accounting Policies and Procedures
            WeaknessesThe Company had inadequate documentation
            regarding the appropriate application of generally accepted accounting principles,
            as well inadequate documentation regarding the Companys accounting policies
    and procedures and the application of those policies and procedures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | • | Weaknesses Related to Implementation
            of ERP System The Company failed
            to adapt its accounting and business processes
            to conform to the requirements of the
Companys new ERP system and provided insufficient
training of its finance and accounting personnel on the
functionalities of the ERP system prior to the Companys April 1, 2004 go-live date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | • | Weaknesses Related to Record RetentionInadequate record retention polices and procedures
          caused a failure to obtain, retain and safeguard key documents and
          narratives necessary to provide supporting
    documentation for how the Company recorded transactions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | • | Closing and Consolidation ProceduresManagement identified deficiencies in the analysis
          and reconciliation of certain general ledger accounts. Specifically,
          accounting personnel did not perform timely
          reconciliations and did not properly resolve reconciling items
          for the inter-company accounts, foreign currency translation adjustment
          account, unbilled revenues, deferred revenues,
          payroll accounting, vacation accrual and fixed assets.
          Unreconciled differences in the Companys inter-company accounts
          were improperly recorded as changes to the
          currency translation account, which resulted in misstatements
          of revenue, foreign currency translation adjustments and retained earnings. In
          addition, there were deficiencies in the analysis and reconciliation
of intercompany accounts in connection with the charges
reported as a result of the divestiture of the Companys Asia-Pacific operations, which resulted in misstatements
of the charges in connection with the loss recorded
for the divestiture of the Companys Asia-Pacific operations. Finally, there were inadequate controls over the consolidation
process for the Companys international subsidiaries.              
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | • | Inadequate Controls Over Income
            Tax Accounting The
            Company had ineffective controls
            over the determination and reporting of the provision for income
            taxes and related prepaid income taxes,
            income taxes payable and deferred income tax asset and liability
            balances. As a result, prepaid income taxes, income taxes payable,
            deferred income tax assets and liabilities
            and retained earnings were not properly recorded in accordance
            with accounting principles generally accepted in the United States
    of America.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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| | • | Lack of an Effective Internal Audit SystemThe
        Company had an inadequately staffed,inadequately
        trained and inexperienced internal audit department, which was
ineffective in preventing and detecting control lapses
and errors in the accounting of certain key areas like
revenue recognition, inter-company reconciliations, fixed assets, currency translation adjustments, vacation accrual and income taxes, which
resulted in misstatements in prior period consolidated
financial statements.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Remediation Plan regarding the Material Weaknesses

Management is actively
      engaged in remediation efforts to address the material weaknesses identified
      in the Companys internal control over financial reporting as of December
      31, 2004. These on-going remediation efforts, outlined below, are specifically
      designed to address the material weaknesses identified by management and
      to improve and strengthen the Companys overall control environment.


| | • | During the fourth quarter of 2004,
          the Company appointed a new Chief Financial Officer and
          began to centralize and reorganize its finance organization to create
          a unified global finance team with responsibility for the accounting and financial
          reporting functions for the Company and each
    of its subsidiaries worldwide.                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | • | During the fourth quarter of 2004,
          the Company began to redesign and more fully document
          its business processes, policies, and procedures related to record
          retention, closing and consolidation procedures,
          income tax accounting, internal audit and other key financial
    reporting functions.                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | • | In connection with redesigning its
          business process, policies and procedures the Company
          strengthened senior level oversight related to key financial reporting
          functions by designating an approval process
          which required approvals from senior finance management
    personnel.                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | • | The Company has reallocated resources
          and added personnel to the Companys finance and
          accounting staff to strengthen the accounting function and reorganized
          the accounting function to provide for increased
    segregation of duties.                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | • | The Company trained and cross-trained
          its finance and accounting personnel in multiple functions
          and processes related to financial reporting. The Company is implementing
          a series of training programs to educate its finance and accounting
          personnel regarding the Companys internal
          control standards, with a particular emphasis on the Companys accounting policies and procedures, record retention, closing and
    consolidation procedures and income tax accounting.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | • | In 2005, the Company strengthened its
          internal audit function by re-establishing, and allocating
          additional resources to, its Internal Assurance Department redefining
    its scope, and reinforcing its mandate.                                                                                                                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | • | The Company confirmed and communicated
          its revenue recognition polices to its global accounting
    teams.                                                                                                                                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | • | The Company implemented the Asset
          Accounting module, and is in the process of implementing Materials
          Management module and SEM BCS (Strategic Enterprise Management Business Consolidation) module, within its ERP
          system, to strengthen the control environment
    surrounding financial reporting.                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | • | In addition to further strengthen and
          improve senior level oversight and review over key financial
          reporting decisions, the Company also implemented a process whereby
          each team
members work is reviewed by a collective group of senior level finance
personnel as at the end of each accounting period.                                                                                                                                                                                           

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Furthermore, in the second quarter of 2005, the Company re-engaged a nationally-recognized accounting and consulting firm to assist the Company in documenting, testing and remediating its internal control over financial reporting
in preparation for year-end testing.  While the Company believes that it has made substantial progress in remediating the material weaknesses identified above, the Company cannot determine such weaknesses have been remediated until it completes its
year-end testing and assessment of internal control over financial reporting for 2005 and its independent registered public accounting firm has audited such assessment.


Procedures Adopted

To remediate the aforementioned
      material weaknesses in internal control over financial reporting, management
      adopted new procedures to ensure that the Companys consolidated financial
      statements as of and for the six months ended June 30, 2005 comply with
      accounting principles generally accepted in the United States of America
      and fairly present, in all material respects, the Companys financial
      condition as of June 30, 2005, and results of operations and cash flows
      for the six months ended June 30, 2005.


To remediate these
      material weaknesses impacting revenue recognition and accrual, accounts
      receivable and unbilled revenue, the Company performed the following activities:


| | • | Documented and validated with the respective
          project managers the progress on milestone-based
          contracts and manually reviewed each percentage of completion calculation
          to
validate the appropriate revenue recognition and accruals;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                    
| | • | Manually reviewed and validated the accuracy
    of invoices generated by ERP system;                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                    
| | • | Manually reviewed, validated and approved
    all customer credits; and                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                    
| | • | Collected, reviewed and validated the
          timesheets and performed monthly cut-off procedures
          to ensure that hours worked, and the corresponding revenue recognized,
          were recorded in
the appropriate period.                            

To address the material
      weaknesses related to deficiencies in analyzing and reconciling the general
      ledger accounts related to payroll, the Company performed a manual review,
      validation and reconciliation of the postings to the payroll control account
      to ensure that the accounts balanced at the end of each month.


To address the material
      weaknesses related to deficiencies in analyzing and reconciling intercompany
      account transactions, the Company performed intercompany reconciliations
      for all locations on a monthly basis and ensured that the intercompany
      balances are reflected correctly and eliminate upon consolidation.


In addition to further
      strengthen and improve senior level oversight and review over key financial
      reporting decisions, the Company also implemented a process whereby each
      team members work is reviewed by a collective group of senior level
      finance personnel as at the end of each accounting period.


The Company continues
      its efforts to remediate control weaknesses and further improve and strengthen
      its internal control over financial reporting under the direction of the
      Chief Financial Officer.


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Changes in Internal Controls

During the six months
      ended June 30, 2005, except for the steps taken in the ongoing efforts
      to remediate the material weaknesses discussed above, there was no change
      in the Company's internal control over financial reporting (as defined
      in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially
      affected, or is reasonably likely to materially affect, the Company's internal
      control over financial reporting.


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PART II.   OTHER INFORMATION

Item 1.   Legal Proceedings

India Tax Assessments

The Company's India
      subsidiary has received tax assessments dated February 12, 2002, July 23,
      2002, August 22, 2003, and December 31, 2003 from the India taxing authority
      denying tax exemptions claimed for certain revenue earned and disallowing
      certain expenses claimed during the Indian subsidiarys fiscal years
      ended March 31, 1998 through March 31, 2001. The revised tax assessments
      were for 14.6 million, 9.5 million, 2.8 million, and 5.6 million Indian
      rupees, respectively, or approximately $742,000 in total. An additional
      assessment for tax penalties and interest for the fiscal year ended March
      31, 2001 of 1.7 million Indian rupees, or approximately $39,000, was
      also received. The Company has made payments of approximately $815,000
      (consisting of $682,000 for taxes paid under protest, $39,000 for
      tax penalties and interest and $94,000 for other tax adjustments not
      in dispute) to the India
tax authority. The Companys resulting overpayment of $34,000 has been
refunded.


On March 29, 2005,
      the Companys India subsidiary received an additional revised assessment
      for 15.0 million Indian rupees, or approximately $345,000, for the
      fiscal year ended March 31, 2002. The assessment disallowed some of the
      export revenue claimed by the Company and also disallowed certain expenses
      claimed by the Company. The Company has paid approximately 6.0 million
      Indian rupees, or approximately $137,000, under protest and has also
      paid an additional 5.1 million Indian rupees, or approximately $118,000,
      for agreed-to adjustments through August 2005. The Company is currently
      challenging the remaining unpaid assessment with the Commissioner of Tax
      Appeals but pending resolution of such appeal, the Company plans to pay
      the remaining $89,000 tax assessment in installments over the next
      12 to 18 months as permitted by the India tax authority.


The Company is currently
      at the Appellant Tribunal stage for the fiscal years ended March 31, 1998
      through March 31, 2001 and at the Commissioner of Income Tax Appeals stage
      for fiscal year ended March 31, 2002. All applicable amounts noted above
      have been paid or accrued.


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 the Companys 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 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.


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|SEC Investigation
|-----------------

On January 28, 2005, the Company received subpoenas in connection with a formal investigation by the Securities and Exchange Commission (the SEC) regarding whether federal securities laws
were violated in connection with the issuance of the Companys financial statements for prior periods. The Company is cooperating with the SEC to produce documents in response to the subpoenas.


|Broadview Claim
|---------------

On or about March 23, 2005, Jefferies & Company, Inc. initiated an arbitration proceeding to recover fees in the amount of $750,000 plus interest and reasonable attorneys fees and costs allegedly owed to Broadview
  International, a division of Jefferies & Company (Broadview) as a result of the private placement transaction that the Company closed on September 30, 2004 with SB Asia Infrastructure Fund, L.P. and Venture Tech Assets Pvt. Ltd. The
  arbitration proceeding is in the discovery phase. In the event the Company does not prevail at the arbitration proceeding the Company will be liable for $750,000 plus interest and reimbursement of attorneys fees
  and costs.


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.


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

Nagarjun Valluripalli, the Companys former Chairman of the Board, President, Chief Executive Officer and a former Director of the Company is an owner (the Owner) of real estate
located at 5-9-22, Secretariat Road in Hyderabad, India. On October 2, 2003, Intelligroup Asia Private, Ltd., (IGA) and the Owner executed a memorandum of understanding (the MOA) relating to a proposed lease whereby the Owner
would lease the 5thand 6th floors of the property (Premises) to the Company for certain of the Companys
India operations. As contemplated in the MOA, on June 18, 2004, the Owner and IGA executed leases for the Premises and the amenities, furnishings and fittings.  The leases provide for a minimum lease period of three years with a renewal option for
an additional three years. The leases provide for a three-month notice period for either party to terminate the lease. Under the terms of the lease for the amenities, IGA paid a deposit of 5,820,000 Indian rupees (approximately $133,000) and
advance lease rentals of 11,640,000 Indian rupees (approximately $266,000) upon the handing over of the amenities and shall pay monthly rent of 1,164,000 Indian rupees (approximately $27,000). Under the terms of the lease for the Premises,
IGA paid a deposit of 4,656,000 Indian rupees (approximately $106,000) and advance lease rentals of 9,312,000 Indian rupees (approximately $213,000) upon the handing over of the Premises and shall pay monthly rent of 931,000 Indian rupees
(approximately $21,000). Prior to entering into this transaction, the Companys Board of Directors determined that the terms and conditions were no less favorable to the Company than could be obtained from unrelated third parties. Rent
expense for the six months ended June 30, 2005 towards the said lease was 14,626,000 Indian rupees (approximately $335,000). The value of un-amortized rentals as of June 30, 2005 was 8,381,000 Indian rupees (approximately
$192,000).


Effective August 1, 2005, 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 related party. The terms of the lease agreement provide for, among other things: (i) a minimum lease period of five years with an option for two three-year renewal periods; (ii) payment of a security deposit in the amount of
15,282,000 Indian rupees (approximately $352,000); (iii) payment of monthly lease fees in the amount of 1,698,000 Indian rupees (approximately $40,000), subject to yearly five percent (5%) escalation; and (iv) monthly operations and
maintenance fees of 283,000 Indian rupees (approximately $6,500).


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

|(a) |  | 31.1 | Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.
|--- |  | ---- | ----------------------------------------------------------------------------
|   
|    |  | 31.2 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.    
|   
|    |  | 32.1 | Certification pursuant to 18 U.S.C. Section 1350                            
|   
|    |  | 32.2 | Certification pursuant to 18 U.S.C. Section 1350                            
|    |  |      |                                                                             

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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 9th day of November 2005.

|                       | INTELLIGROUP, INC.
|---------------------- | ------------------
|                       |                   
|Date: November 9, 2005 | By:               
|                       |                   
|                       |                   
|                       |                   
|                       |                   
|Date:
November 9, 2005 | By:               
|                       |                   
|                       |                   
|                       |                   

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EXHIBIT INDEX


|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 Registration Statement on Form SB-2 (Registration Statement No. 333-5981) declared effective on September 26, 1996.)                                                                                                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|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.                                                                                                                                                                                                                                                     

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|Exhibit No. |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                           
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                                                                                                                                                                                                  
|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.                                                                                      
|           
|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.                                                                                                                                                                                 
|           

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|Exhibit No. |  | Description of Exhibit                                                                                                                                                                                                                                                                            
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                                                                                                                                                   
|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.
|            |  |                                                                                                                                                                                                                                                                                                   
|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.                                                           
|            |  |                                                                                                                                                                                                                                                                                                   

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|Exhibit No. |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                             
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                                                                                                                                                                                                                    
|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.)                                                                   
|            |  |                                                                                                                                                                                                                                                                                                                                                                    

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|Exhibit No. |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                              
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                                                                                                                                                                                                     
|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.)                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                     
|10.37*      |  | 2004 Equity Incentive Award Plan.                                                                                                                                                                                                                                                                                                                   
|            |  |                                                                                                                                                                                                                                                                                                                                                     
|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.)                                                             
|            |  |                                                                                                                                                                                                                                                                                                                                                     

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|Exhibit No. |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                              
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                                                                                                                                                                                                     
|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.)                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                     
|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.)
|            |  |                                                                                                                                                                                                                                                                                                                                                     
|14          |  | Code of Business Conduct
      and Ethics. (Incorporated by reference to the Companys Annual Report
    on Form 10-K for the year ended December 31, 2003.)                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                                                                     

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|Exhibit No. |  | Description of Exhibit                                                                                                                                                                                                                                                                      
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                                                                                                                                             
|21          |  | Subsidiaries of the Registrant.                                                                                                                                                                                                                                                             
|            |  |                                                                                                                                                                                                                                                                                             
|16.1        |  | Letter dated August 11, 2004 to the Securities
      and Exchange Commission from Deloitte & Touche LLP. (Incorporated by
      reference to the Companys Current Report on Form 8-K dated August
      5, 2004, filed with the Securities and Exchange Commission on August 11,
    2004.)
|            |  |                                                                                                                                                                                                                                                                                             
|16.2        |  | Letter dated November 1, 2004 to the Securities and Exchange Commission
from Deloitte & Touche LLP. (Incorporated by reference to the Companys

Current Report on Form 8-K dated October 26, 2004, filed with the Securities and Exchange Commission
      on November 1, 2004.)           
|            |  |                                                                                                                                                                                                                                                                                             
|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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