SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

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

                                    FORM 10-Q

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

                  For the quarterly period ended March 31, 2000
                           Commission File No. 0-20943

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


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

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


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


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

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

     Indicate  the  number of  shares  outstanding  of each of the  Registrant's
classes of common stock, as of April 28, 2000:

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

  Common Stock, $.01 par value                       16,617,404


<PAGE>

                       INTELLIGROUP, INC. AND SUBSIDIARIES

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

                                                                           Page
                                                                           ----
PART I.  FINANCIAL INFORMATION

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

              Consolidated Balance Sheets
              as of March 31, 2000 (unaudited)
              and December 31, 1999.......................................   2

              Consolidated Statements of Operations and
              Comprehensive Income (Loss) for the
              Three Months Ended March 31, 2000 and 1999 (unaudited)......   3

              Consolidated Statements of Cash Flows
              for the Three Months Ended
              March 31, 2000 and 1999 (unaudited).........................   4

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

     Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results of Operations...............  11

     Item 3.  Quantitative and Qualitative Disclosures about Market Risk..  19

PART II. OTHER INFORMATION

     Item 1.  Legal Proceedings...........................................  20

     Item 2.  Changes in Securities and Use of Proceeds...................  20

     Item 3.  Defaults Upon Senior Securities.............................  21

     Item 5.  Other Information...........................................  22

     Item 6.  Exhibits and Reports on Form 8-K............................  23

SIGNATURES................................................................  24



                                     - i -
<PAGE>



                          PART I. FINANCIAL INFORMATION

                    Item 1. Consolidated Financial Statements





                                      - 1 -
<PAGE>

                       INTELLIGROUP, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                      March 31, 2000 and December 31, 1999
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                 March 31,       December 31,
                                                                                   2000              1999
                                                                                ----------       ------------
                          ASSETS
<S>                                                                            <C>               <C>
Current Assets:
    Cash and cash equivalents................................................  $ 4,827,000       $ 6,121,000
    Accounts receivable, less allowance for doubtful accounts of $3,800,000
      at March 31, 2000 and $3,292,000 at December 31, 1999..................   31,302,000        35,063,000
    Unbilled services........................................................   12,828,000        11,372,000
    Income taxes receivable..................................................    3,612,000         3,612,000
    Deferred tax assets......................................................    2,481,000         2,481,000
    Other current assets.....................................................    3,391,000         3,468,000
                                                                               -----------       -----------
           Total current assets..............................................   58,441,000        62,117,000

Property and equipment, net .................................................   13,812,000        11,420,000
Intangible assets, net.......................................................    8,364,000         8,681,000
Deferred tax assets..........................................................      641,000                --
Other assets.................................................................    1,457,000           844,000
                                                                               -----------       -----------
                                                                               $82,715,000       $83,062,000
                                                                               ===========       ===========

           LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
    Accounts payable.........................................................  $ 5,212,000        $4,672,000
    Accrued payroll and related taxes........................................   10,703,000         7,078,000
    Accrued expenses and other liabilities...................................    5,677,000         5,599,000
    Accrued acquisition costs................................................      710,000           810,000
    Income taxes payable.....................................................    2,111,000         4,120,000
    Current portion of long-term debt and obligations under capital leases...      127,000        10,705,000
                                                                               -----------       -----------
           Total current liabilities.........................................   24,540,000        32,984,000
                                                                               -----------       -----------

Long-term debt and obligations under capital leases, less current portion....      639,000           618,000
                                                                               -----------       -----------
Deferred tax liability ......................................................           --           806,000
                                                                               -----------       -----------

Minority interest............................................................      742,000                --
                                                                               -----------       -----------

Commitments and contingencies

Shareholders' Equity:
    Preferred stock, $.01 par value, 5,000,000 shares authorized, none
      issued or outstanding..................................................           --                --
    Common stock, $.01 par value, 25,000,000 shares authorized; 16,427,000
      and 15,949,000 shares issued and outstanding at March 31, 2000
      and December 31, 1999, respectively....................................      164,000           160,000
    Additional paid-in capital...............................................   56,550,000        43,356,000
    Retained earnings .......................................................    1,238,000         6,317,000
    Currency translation adjustment..........................................   (1,158,000)       (1,179,000)
                                                                               -----------       -----------
         Total shareholders' equity .........................................   56,794,000        48,654,000
                                                                               -----------       -----------
                                                                               $82,715,000       $83,062,000
                                                                               ===========       ===========
</TABLE>

           The accompanying notes to consolidated financial statements
                  are an integral part of these balance sheets.

                                      - 2 -
<PAGE>

                       INTELLIGROUP, INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
               For the Three Months Ended March 31, 2000 and 1999
                                   (unaudited)
<TABLE>
<CAPTION>
                                                              Three Months Ended March 31,
                                                              ----------------------------
                                                                  2000            1999
                                                               -----------     -------

<S>                                                            <C>             <C>
Revenue....................................................    $45,228,000     $46,795,000
Cost of sales..............................................     27,573,000      31,175,000
                                                               -----------     -----------

        Gross profit.......................................     17,655,000      15,620,000
                                                               -----------     -----------


Selling, general and administrative expenses...............     23,217,000      12,158,000
Depreciation and amortization..............................      1,319,000         773,000
Acquisition expenses.......................................             --       2,115,000
Spin-off costs.............................................        192,000              --
                                                               -----------     -----------
    Total operating expenses...............................     24,728,000      15,046,000
                                                               -----------     -----------

    Operating (loss) income................................     (7,073,000)        574,000

Other expense, net.........................................        (31,000)        (61,000)
Interest expense, net......................................       (183,000)        (60,000)
                                                               -----------     -----------

(Loss) income before provision for income taxes............     (7,287,000)        453,000

Income tax (benefit) provision ............................     (2,100,000)        544,000
                                                               -----------     -----------

Net loss...................................................    $(5,187,000)    $   (91,000)
                                                               ===========     ===========

Earnings (loss) per share:
    Basic earnings per share:
        Net loss per share.................................    $     (0.32)    $     (0.01)
                                                               ===========     ===========

        Weighted average number of common shares - Basic...     16,162,000      15,548,000
                                                               ===========     ===========

    Diluted earnings per share:
        Net loss per share.................................    $     (0.32)    $     (0.01)
                                                               ===========     ===========

        Weighted average number of common shares -
        Diluted                                                 16,162,000      15,548,000
                                                               ===========     ===========


Comprehensive Income (Loss)
---------------------------
Net loss...................................................    $(5,187,000)    $   (91,000)
Other comprehensive income (loss) -
        Currency translation adjustments...................         21,000        (329,000)
                                                               -----------     -----------
Comprehensive loss.........................................    $(5,166,000)    $  (420,000)
                                                               ===========     ===========
</TABLE>


                The accompanying notes to consolidated financial
              statements are an integral part of these statements.

                                      - 3 -

<PAGE>

                       INTELLIGROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               For the Three Months Ended March 31, 2000 and 1999
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                         March 31,      March 31,
                                                                           2000            1999
                                                                       ------------   ------------
<S>                                                                    <C>            <C>
Cash flows from operating activities:
    Net loss.......................................................    $ (5,187,000)  $    (91,000)
    Adjustments to reconcile net loss to net cash used in
        operating activities:
        Depreciation and amortization..............................       1,319,000        773,000
        Provision for doubtful accounts............................       1,700,000        344,000
        Deferred income taxes......................................      (1,447,000)       (15,000)
    Changes in operating assets and liabilities:

        Accounts receivable........................................       2,061,000     (1,980,000)
        Unbilled services..........................................      (1,456,000)    (3,543,000)
        Other current assets.......................................          77,000       (175,000)
        Other assets...............................................       ( 613,000)      (128,000)
        Accounts payable...........................................         540,000       (658,000)
        Accrued payroll and related taxes..........................       3,625,000        293,000
        Accrued expenses and other liabilities.....................         (22,000)     1,175,000
        Income taxes payable.......................................      (2,009,000)      (773,000)
                                                                       ------------   ------------
            Net cash used in operating activities..................      (1,412,000)    (4,778,000)
                                                                       ------------   ------------

Cash flows from investing activities:
    Purchase of equipment..........................................      (3,394,000)      (791,000)
    Acquisition of businesses......................................              --     (1,682,000)
                                                                       ------------   ------------
            Net cash used in investing activities..................      (3,394,000)    (2,473,000)
                                                                       ------------   ------------

Cash flows from financing activities:
    Proceeds from issuance of SeraNova common stock................      10,000,000             --
    Proceeds from the exercise of stock options....................       4,048,000          9,000
    (Repayments) borrowing on line of credit, net..................     (10,585,000)     7,300,000
    Principal payments under capital leases........................          (3,000)        (3,000)
    Proceeds from (repayments of) other loans......................          31,000        (48,000)
                                                                       ------------   ------------
            Net cash provided by financing activities..............       3,491,000      7,258,000
                                                                       ------------   ------------

    Effect of foreign currency exchange rate changes on cash.......          21,000       (329,000)
                                                                       ------------   ------------
            Net decrease in cash and cash equivalents .............      (1,294,000)      (322,000)
                                                                       ------------   ------------
Cash and cash equivalents at beginning of period...................       6,121,000      4,245,000
                                                                       ------------   ------------
Cash and cash equivalents at end of period.........................    $  4,827,000   $  3,923,000
                                                                       ============   ============
Supplemental disclosures of cash flow information:
        Cash paid for income taxes.................................    $  2,009,000   $    650,000
                                                                       ============   ============
        Cash paid for interest.....................................    $    234,000   $     88,000
                                                                       ============   ============
</TABLE>


                The accompanying notes to consolidated financial
              statements are an integral part of these statements.

                                      - 4 -

<PAGE>

                       INTELLIGROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

(1) BASIS OF PRESENTATION

     The   consolidated   financial   statements  and   accompanying   financial
information  as of March 31, 2000 and for the three  months ended March 31, 2000
and  1999  are  unaudited  and,  in  the  opinion  of  management,  include  all
adjustments  (consisting only of normal recurring adjustments) which the Company
considers  necessary for a fair  presentation  of the financial  position of the
Company  at such  dates  and the  operating  results  and cash  flows  for those
periods.  The  financial  statements  included  herein  have  been  prepared  in
accordance with generally accepted accounting principles and the instructions of
Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with generally accepted accounting  principles have been condensed or
omitted.  These  financial  statements  should be read in  conjunction  with the
Company's  audited  financial  statements  for the year ended December 31, 1999,
which were included as part of the Company's Form 10-K.

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

(2) EARNINGS PER SHARE

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

     A reconciliation of weighted average number of common shares outstanding to
weighted average common shares outstanding assuming dilution is as follows as of
March 31:

                                                          2000          1999
                                                          ----          ----

Weighted average number of common shares               16,182,000    15,548,000

Common share equivalents of outstanding
stock options                                                  --            --
                                                       ----------    ----------
Weighted average number of common
shares assuming dilution                               16,182,000    15,548,000
                                                      ============   ==========

     Stock options, which would be antidilutive (3,492,834 as of March 31, 2000)
have been excluded  from the  calculations  of diluted  shares  outstanding  and
diluted earnings per share.



                                     - 5 -
<PAGE>

(3) ACQUISITIONS

     On January 8, 1999, the Company acquired Network Publishing, Inc., based in
Provo,  Utah.  The  purchase  price  included  an  initial  cash  payment in the
aggregate of  $1,800,000  together with a cash payment of $200,000 to be held in
escrow.  In addition,  the purchase price included an earn-out  payment of up to
$2,212,650  in  restricted  shares of the  Company's  Common Stock payable on or
before April 15, 2000 and a potential lump sum cash payment of $354,024  payable
not later than March 31, 2000.  The value of the earn-out was  determined  to be
$2,430,000  which was payable by the issuance of an additional  99,558 shares of
the Company's  Common Stock and $340,000 in cash. The Company issued such shares
on January 11, 2000.  This  acquisition  has been  accounted  for  utilizing the
purchase  method of  accounting.  The excess of the purchase price over the fair
value of the net assets acquired was attributed to intangible  assets  amounting
to $4,061,471.  Pro-forma  financial  information has not been presented as this
acquisition was immaterial to the Company's operations.

(4) LINES OF CREDIT

     On January 29, 1999, the Company entered into a three-year revolving credit
facility  agreement with PNC Bank, N.A. (the "Bank").  The credit agreement with
the Bank was  comprised  of a  revolving  line of credit  pursuant  to which the
Company could borrow up to $30,000,000 either at the Bank's prime rate per annum
or the EuroRate plus 2% (at the Company's option).

     As a result of the  restructuring and other special charges incurred during
the quarter  ended June 30,  1999,  the Company was not in  compliance  with the
consolidated  cash flow  leverage  ratio and  consolidated  net worth  financial
covenants at June 30, 1999.  On August 12, 1999,  the Bank  notified the Company
that such  non-compliance  constituted  an event of  default  under  the  credit
agreement.  At September 30, 1999,  while the Company was in compliance with the
consolidated  net worth  financial  covenant,  it was not in compliance with the
consolidated  cash flow leverage  ratio and minimum fixed charge  coverage ratio
financial  covenants.  On January 26, 2000, the Company  finalized with the Bank
the terms of a waiver and amendment to the credit  agreement to remedy  defaults
which existed under the credit agreement.  The terms of the waiver and amendment
included,  among other things, (i) a $15,000,000 reduction in availability under
the credit agreement,  (ii) a first priority  perfected security interest on all
assets of the Company and its domestic  subsidiaries  and (iii)  modification of
certain financial  covenants and a waiver of prior covenant defaults.  Under the
Company's credit agreement,  it must maintain the following  financial covenants
among  others.  The Company must  maintain a minimum  consolidated  net worth of
$45.4  million  at March 31,  2000,  $47.8  million  at June 30,  2000 and $50.2
million  at  September  30,  2000.  Additionally,   the  Company  must  maintain
consolidated cash flow leverage ratios equal to or less than 2.50 to 1.0 for the
period of four  consecutive  fiscal quarters  immediately  preceding the date of
determination taken together as one accounting period. The Company also must not
cause or permit a fixed  charge  coverage  ratio,  calculated  on the basis of a
rolling four  quarters of (a)  consolidated  earnings  before  interest,  taxes,
depreciation  and  amortization  ("EBITDA")  to (b) the sum of cash  income  tax
expense plus  interest  expense  (including,  without  limitation,  the interest
component of capitalized lease  obligations),  plus scheduled principal payments
under any indebtedness (including, without limitation, the

                                     - 6 -
<PAGE>

(4) LINES OF CREDIT (CONTINUED)

principal  component of capitalized  lease  obligations but excluding  principal
payments, if any, due under the loan agreement), plus dividends or distributions
paid or  declared  to be  less  than  1.4 to 1.0 as at the  end of  each  fiscal
quarter.  Further the Company must have  consolidated  EBITDA of $0 at March 31,
2000,  $4.5  million  at  June  30,  2000  and  each  quarter  thereafter.   The
requirements  for the  consolidated  cash flow  leverage  ratio and fixed charge
coverage ratio have been waived by the Bank through and including  September 30,
2000. There were no borrowings under this line of credit as of March 31, 2000.

     As a result of the current quarter operating losses, the Company was not in
compliance  with the minimum  consolidated  net worth  covenant  and the minimum
consolidated EBITDA financial covenant as of March 31, 2000. On May 9, 2000, the
Bank  issued to the Company a waiver of the  defaults  which  existed  under the
credit  agreement for the quarter ended March 31, 2000.  The terms of the waiver
included,  among other  things,  (i) the waiver of events of default noted above
for the quarter  ending March 31, 2000,  and (ii) the agreement that the Company
must maintain a minimum consolidated EBITDA of $3.0 million as of May 31, 2000.

     The  Company  is in the  process  of  negotiating  a  credit  facility  for
Intelligroup  relating  to  Intelligroup  on  a  post-SeraNova  spin-off  basis.
SeraNova is also in the process of negotiating a credit facility relating to its
business on a  post-SeraNova  spin-off  basis.  There can be no  assurance  that
either  Intelligroup  or  SeraNova  will  be able to  consummate  such a  credit
facility.

(5) PROPOSED SPIN-OFF OF SERANOVA, INC.

     On January 1, 2000,  the  Company  transferred  its  Internet  applications
services and management consulting businesses to SeraNova,  Inc., a wholly-owned
subsidiary  of the  Company on such  date.  SeraNova's  revenues  and net income
(loss)  totaled $16.2 million and $(3.1) million for the quarter ended March 31,
2000,  respectively,  and $8.0  million and $0.3  million for the quarter  ended
March 31, 1999, respectively.  Total assets of SeraNova were $21.1 million as of
March 31,  2000.  In  connection  with the  spin-off,  the  Company  incurred  a
non-recurring  charge of $0.2 million  related to  professional  fees during the
quarter ended March 31, 2000.

(6) EQUITY INVESTMENT IN SERANOVA, INC.

     On March 14, 2000,  SeraNova,  a  wholly-owned  subsidiary  of the Company,
entered into an agreement with four  institutional  investors  pursuant to which
such investors purchased an aggregate of 50 shares of SeraNova's common stock as
a price per share of $200,000,  for an aggregate  purchase price of $10 million.
The  investment  represented  approximately  4.8% of SeraNova's  then issued and
outstanding  shares of common stock.  In connection with such sale of its common
stock, SeraNova granted certain demand and piggyback registration rights to such
investors. In addition, at its option, SeraNova may sell an additional 25 shares
of its common stock for an additional $5 million to another investor.


                                     - 7 -
<PAGE>

(7) RESTRUCTURING AND OTHER SPECIAL CHARGES

     In connection  with the Company's  plan to reduce certain costs and improve
operating   efficiencies,   the  Company  incurred  a  non-recurring  charge  of
approximately $5.6 million related to restructuring  initiatives during the year
ended December 31, 1999. The  restructuring  charge  included  settlement of the
former Chief Executive Officer's  employment  agreement and additional severance
payment,  expenses  associated with the termination of certain  employees in the
United States and United Kingdom,  the closing of certain  satellite  offices in
the United States and an additional office in Belgium, and costs to exit certain
contractual obligations.

     Activity  in accrued  costs for  restructuring  and other  special  charges
during the year ended  December 31, 1999,  and the quarter ended March 31, 2000,
is as follows:

<TABLE>
<CAPTION>
                                CHARGES TO      COSTS                        COSTS
                                OPERATIONS      PAID       ACCRUED COSTS      PAID         ACCRUED COSTS
                                  DURING       DURING      DECEMBER 31,      DURING          MARCH 31,
                                   1999         1999          1999            2000             2000
                                ----------    --------     -------------     ------        -------------
<S>                             <C>          <C>             <C>            <C>               <C>
Severance and related
costs.......................    $5,027,000   $4,162,000      $865,000       $169,000          $696,000

Other costs primarily to
exit facilities, contracts
and certain activities .....       601,000      517,000        84,000             --            84,000
                                ----------   ----------      --------       --------          --------
                                $5,628,000   $4,679,000      $949,000       $169,000          $780,000
                                ==========   ==========      ========       ========          ========
</TABLE>


(8) SEGMENT DATA AND GEOGRAPHIC INFORMATION

     The Company operates in one industry,  information technology services. The
Company's service lines share similar customer bases. The Company's identifiable
business segments can be categorized into two groups:

    o      Enterprise  Applications  Services  group  is  the  largest  business
           segment of the Company's operations, and includes the implementation,
           integration,  and  development  of solutions for clients  utilizing a
           class of application  products known as Enterprise  Resource Planning
           software.  This class of products include software  developed by such
           companies as SAP, Oracle, PeopleSoft, and Baan.

    o      Internet  Applications  Services group provides Internet professional
           services to businesses.  Such services  enable clients to communicate
           and conduct commerce  between a company and its customers,  suppliers
           and partners over the Internet.



                                      - 8 -
<PAGE>

(8) SEGMENT DATA AND GEOGRAPHIC INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
                                           Enterprise           Internet
                                          Applications        Applications
Quarter ended March 31, 2000                Services            Services             Total
----------------------------              ------------        ------------        -----------
<S>                                        <C>                <C>                 <C>
Revenue...........................         $29,052,000        $16,176,000         $45,228,000

Depreciation and amortization.....             847,000            472,000           1,319,000

Operating loss....................          (3,069,000)        (4,004,000)         (7,073,000)

Capital expenditures..............           1,160,000          2,234,000           3,394,000

Total assets......................          61,654,000         21,061,000          82,715,000


Quarter ended March 31, 1999
----------------------------

Revenue...........................         $38,807,000         $7,988,000         $46,795,000

Depreciation and amortization.....             638,000            135,000             773,000

Operating income..................              96,000            478,000             574,000

Capital expenditures..............             165,000            626,000             791,000

Total assets......................          65,780,000         12,193,000          77,973,000
</TABLE>


     Included in the Enterprise  Applications  Services  segment are application
maintenance  and support  revenues of $3.5 million and $0 for the quarters ended
March  31,  2000  and  1999,  respectively.  Other  information  related  to the
application  maintenance  and support  business is not available and the Company
determined that it would be impractical to calculate such data.


                                     - 9 -
<PAGE>

(8) SEGMENT DATA AND GEOGRAPHIC INFORMATION (CONTINUED)

     The following table presents financial information based upon the Company's
geographic segments for the quarters ended March 31, 2000 and 1999.

<TABLE>
<CAPTION>
                            UNITED STATES   ASIA-PACIFIC      EUROPE        INDIA          TOTAL

2000
<S>                           <C>            <C>            <C>           <C>            <C>
Revenue.................      $32,523,000    $4,624,000     $4,884,000    $3,197,000     $45,228,000

Depreciation and
amortization............          941,000        50,000        174,000       154,000       1,319,000

Operating income (loss).       (6,180,000)   (1,196,000)      (812,000)    1,115,000      (7,073,000)

Total assets............       61,896,000     6,972,000      6,011,000     7,836,000      82,715,000

1999

Revenue.................      $34,960,000    $4,687,000     $5,867,000    $1,281,000     $46,795,000

Depreciation and
amortization............          619,000        39,000         50,000        65,000         773,000

Operating income (loss).         (294,000)      497,000       (264,000)      635,000         574,000

Total assets............       60,750,000     7,827,000      6,732,000     2,664,000      77,973,000
</TABLE>



                                     - 10 -
<PAGE>

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

OVERVIEW

     The  Company  provides a wide  range of  information  technology  services,
including  enterprise-wide  business process solutions,  IT training  solutions,
systems   integration   and  custom  software   development   based  on  leading
technologies.   Such  services  include  the  implementation,   integration  and
development of solutions for clients  utilizing a class of application  products
known as Enterprise  Resource Planning software.  This class of products include
software developed by such companies as SAP, Oracle,  PeopleSoft,  and Baan. The
Company has also recently dedicated resources to developing  application service
provider  offerings,  including  web hosting  services.  In November  1999,  the
Company announced its intentions to spin off its Internet  applications services
business  ("SeraNova"),  subject to certain  conditions.  Through SeraNova,  the
Company  provides  Internet  professional  services  to  businesses.  SeraNova's
services  enable its  clients to  communicate  and  conduct  commerce  between a
company  and  its  customers,   suppliers  and  partners.   SeraNova   offers  a
comprehensive set of services, including strategic consulting,  creative design,
technology implementation and management of Internet applications.

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

     The Company has provided  services on certain  projects in which it, at the
request of the  clients,  offers a fixed  price for its  services.  For the year
ended  December  31, 1999,  revenues  derived  from  projects  under fixed price
contracts  represented  approximately  9% of the Company's total revenue.  Fixed
price  contracts,  in the  aggregate,  represented  11% of the  Company's  total
revenue  during the quarter  ended March 31, 2000. No single fixed price project
was material to the Company's  business  during 1999 or during the quarter ended
March 31, 2000. The Company  believes that, as it pursues its strategy of making
turnkey project management a larger portion of its business, it will continue to
offer fixed price  projects.  The Company has had limited  prior  experience  in
pricing and performing  under fixed price  arrangements  and believes that there
are certain risks related  thereto and thus prices such  arrangements to reflect
the associated  risk. There 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.


                                     - 11 -
<PAGE>

     The  Company has derived  and  believes  that it will  continue to derive a
significant  portion  of its  revenue  from a limited  number of  customers  and
projects.  For the three months ended March 31, 2000 and the year ended December
31, 1999,  the  Company's ten largest  customers  accounted for in the aggregate
approximately  44% and 38% of its  revenue,  respectively.  For the three months
ended March 31, 2000, one customer  accounted for approximately 14% of revenues.
For the year ended December 31, 1999,  another customer  accounted for more than
10% of revenue.  During the three months ended March 31, 2000 and the year ended
December 31, 1999,  approximately  35% and 42%,  respectively,  of the Company's
total  revenue  was  derived  from  projects  in which the  Company  implemented
software  developed by SAP. During the three months ended March 31, 2000 and the
year ended  December 31, 1999,  approximately  5% and 7% of the Company's  total
revenue was derived  from  projects  in which the Company  implemented  software
developed  by Oracle.  During the three months ended March 31, 2000 and the year
ended  December  31,  1999,  approximately  24% and  26%,  respectively,  of the
Company's  total  revenue  was  derived  from  projects  in  which  the  Company
implemented software developed by PeopleSoft.

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

     The Company currently maintains its headquarters in Edison, New Jersey, and
branch offices in Houston,  Fayetteville (Georgia),  Rosemont (Illinois), Auburn
Hills (Michigan),  Foster City (California),  Atlanta, Phoenix, Washington, D.C.
and Provo (Utah).  The Company also currently  maintains  offices in Europe (the
United Kingdom, Denmark and Sweden), and Asia Pacific (Australia,  India, Japan,
New Zealand,  the Philippines,  Singapore and Thailand).  The Company leases its
headquarters in Edison, New Jersey,  totaling  approximately 48,475 square feet.
Such lease has an initial term of ten (10) years,  which  commenced in September
1998.

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 to
higher margin turnkey  management  assignments and more complex  projects and to
utilize its proprietary  implementation  methodology in an increasing  number of
projects.  In addition,  statements regarding the Company's intent to expand its
service  offerings  through  internal growth and  acquisitions and the Company's
intent  to spin off its  Internet  services  business  are also  forward-looking
statements.  Such  forward-looking



                                     - 12 -
<PAGE>

statements include risks and uncertainties, including, but not limited to:

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

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

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

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

    o     the Company's  limited  operating  history  within its current line of
          business;

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

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

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

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

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

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

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

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



                                     - 13 -
<PAGE>

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

    o     the Company's  ability to successfully  spin off its Internet services
          business.  The risks  relating  to such  spin-off  are set forth  more
          specifically  in the  Registration  Statement  filed  by  SeraNova  in
          connection  with  the  proposed  spin-off.  See  also  Item  5.  Other
          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.

RESULTS OF OPERATIONS

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

                                                      PERCENTAGE OF REVENUE
                                                        THREE MONTHS ENDED
                                                             MARCH 31,
                                                     -----------------------
                                                       2000           1999
                                                       ----           ----
Revenue........................................       100.0%           100.0%

Cost of sales..................................        61.0             66.6
                                                     ------           ------
   Gross profit................................        39.0             33.4

Selling, general and administrative expenses...        51.3             27.6

Depreciation and amortization expenses.........         2.9               --

Acquisition expenses...........................          --              4.5

Spin-Off costs.................................         0.4               --
                                                     ------           ------
   Operating (loss) income.....................       (15.6)             1.3

Interest and other expense, net................        (0.4)            (0.3)
                                                     ------           ------
(Loss) income before provision for income
   taxes.......................................       (16.0)             1.0

Income tax (benefit) provision.................        (4.6)             1.2
                                                     ------           ------
Net loss.......................................       (11.4)%           (0.2)%
                                                     ------           ------


THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999

     Revenue.  Total  revenue  decreased by 3.3%,  or $1.6  million,  from $46.8
million  during the three months ended March 31, 1999, to $45.2  million  during
the three months ended March 31, 2000. Enterprise  applications services ("EAS")
revenue declined by 25.1%, or $9.8 million,  from $38.8 million during the three
months ended March 31, 1999 to $29.0 million during the three months ended March
31, 2000. This decrease was primarily  attributable the strategic  refocusing of
our  core  enterprise  resource  planning  implementation  operations  into  the
emerging  application service provider market.  Internet  applications  services
("IAS") revenue increased by 102.5%,  or $8.2 million,  from $8.0 million during
the three months ended March 31, 1999 to $16.2  million  during the three months
ended March 31, 2000.  The  increase in revenue is due to



                                     - 14 -
<PAGE>

both increases in the number of clients and increases in the size of engagements
from  expansion of U.S.  operations  plus the  continued  development  of Indian
operations  which  began in the fourth  quarter of 1999.  Total  revenue for the
three months ended March 31, 2000 included a fixed price project which accounted
for approximately 6% of revenue.

     Gross profit.  The Company's cost of sales  includes  primarily the cost of
salaries to consultants  and related  employee  benefits and payroll taxes.  The
Company's cost of sales decreased by 11.6%, or $3.6 million,  from $31.2 million
during the three months ended March 31, 1999 to $27.6  million  during the three
months  ended March 31, 2000.  The overall  decrease in cost of sales was due to
the increase in IAS revenues,  which generally have carried higher margins.  The
Company's gross profit  increased by 13.1%, or $2.1 million,  from $15.6 million
during the three months ended March 31, 1999 to $17.7  million  during the three
months ended March 31, 2000. Gross profit margin increased from 33.4% of revenue
during the three  months  ended  March 31,  1999 to 39.0% of revenue  during the
three months ended March 31, 2000.  The EAS cost of sales  decreased  27.7%,  or
$7.3 million, from $26.5 million during the three months ended March 31, 1999 to
$19.2 million during the three months ended March 31, 2000. The EAS gross profit
margin  increased  from 31.6%  during the three  months  ended March 31, 1999 to
34.0% during the three months ended March 31, 2000. The increase in gross profit
margin was primarily attributable to higher consultant utilization.  IAS cost of
sales  increased by 80.4%,  or $3.8  million from $4.7 million  during the three
months ended March 31, 1999 to $8.4 million  during the three months ended March
31, 2000. The increase was due to additional  personnel costs resulting from the
hiring of  consultants  to support  the  increase  in demand for IAS.  IAS gross
profit margins increased from 41.8% during the three months ended March 31, 1999
to 48.1% during the three months ended March 31, 2000, primarily attributable to
the impact of higher margins from Indian operations and higher utilization rates
for U.S. personnel.

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative  expenses  consist  primarily  of  administrative  salaries,  and
related benefits costs,  occupancy costs, sales person compensation,  travel and
entertainment,  costs  associated with the Advanced  Development  Center and the
Internet Development Center and related development costs and professional fees.
Selling,  general  and  administrative  expenses  increased  by 91.0%,  or $11.0
million,  from $12.2  million  during the three  months  ended March 31, 1999 to
$23.2 million  during the three months ended March 31, 2000,  and increased as a
percentage of revenue from 26.0% to 51.3%,  respectively.  EAS selling,  general
and  administrative  expenses  increased by 28.2%,  or $2.7  million,  from $9.4
million during the three months ended March 31, 1999 to $12.1 million during the
three months ended March 31, 2000.  IAS  selling,  general,  and  administrative
expenses  increased by 308.2%,  or $8.4  million,  from $2.7 million  during the
three months ended March 31, 1999 to $11.1 million during the three months ended
March 31, 2000.  The increases in such expenses is primarily due to  substantial
investments  in marketing  and in the  development  of sales and  administrative
infrastructures  for the U.S.  and  overseas  operations.  The  Company has also
entered into an agreement with a strategic marketing  consulting company,  which
is intended to generate  sales leads,  support  sales  force,  and build a sales
systems  infrastructure,  for  both  the  EAS and IAS  businesses.  The  Company
anticipates continued increases in selling,  general and administrative expenses
during the second quarter of 2000 relative to its Internet Services business.



                                     - 15 -
<PAGE>

     Depreciation  and  amortization.  Depreciation  and  amortization  expenses
increased  70.6% to $1.3  million  during the three months ended March 31, 2000,
compared to $0.8  million  during the three  months  ended March 31,  1999.  The
increase was  primarily  due to  additional  computers,  equipment  and software
placed  in  service  since  March  31,  1999,  as well as  amortization  expense
associated with the January 1999 Network Publishing, Inc. acquisition.

     Interest  income  (expense).  Interest  income has been  earned on interest
bearing cash accounts and short-term investments.  In accordance with investment
guidelines approved by the Company's Board of Directors, cash balances in excess
of those  required to fund  operations  have been  invested in  short-term  U.S.
Treasury  securities  and  commercial  paper with a credit  rating no lower than
A1/P1.  The Company incurred  approximately  $183,000 in interest expense during
the three months ended March 31, 2000, primarily related to borrowings under its
line of credit.  Borrowings under the line of credit were used to fund operating
activities.

     Spin-off  costs.  During the three months ended March 31, 2000, the Company
incurred costs of $192,000 in connection with the proposed  spin-off of SeraNova
from the Company. These costs primarily consisted of professional fees.

     (Benefit)  provision for income taxes. The Company's effective tax rate was
(28.8)%  and  120.1%  for the  three  months  ended  March  31,  2000 and  1999,
respectively.  In 1996, the Company elected a five year tax holiday in India, in
accordance with a local tax incentive  program whereby no income tax will be due
in such period.  Such tax holiday was extended an additional five years in 1999.
For the three months ended March 31, 2000, the tax holiday unfavorably  impacted
the Company's effective tax rate by approximately 5%, while the favorable effect
in the  three  months  ended  March  31,  1999 was 49%.  Based  on  current  and
anticipated  profitability,  management  believes  all recorded net deferred tax
assets are more likely than not to be realized.

BACKLOG

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

LIQUIDITY AND CAPITAL RESOURCES

     The  Company  had cash and cash  equivalents  of $4.8  million at March 31,
2000, and $6.1 million at December 31, 1999. The Company had working  capital of
$33.9 million at March 31, 2000 and $29.1 million at December 31, 1999.



                                     - 16 -
<PAGE>

     Cash used in operating  activities was $1.4 million during the three months
ended  March  31,  2000,  resulting  primarily  from the net loss,  increase  in
unbilled  services and payments of income taxes.  This was  partially  offset by
depreciation  and  amortization  and the  provision  for  doubtful  accounts,  a
decrease in accounts  receivable,  as well as increases in accounts  payable and
accrued  payroll and related  taxes.  Cash used in operating  activities for the
three months ended March 31, 1999 was $4.8 million.

     The Company  invested  $3.4 million and $791,000 in computer  equipment and
office  furniture and fixtures  during the three months ended March 31, 2000 and
1999,  respectively.  The increase  reflects  both the purchases of computer and
telecommunication equipment for consultants and administrative staff, and office
furniture and fixtures.

     On March 14, 2000, SeraNova,  a subsidiary of the Company,  entered into an
agreement  with four  institutional  investors  pursuant to which such investors
purchased an aggregate  of 50 shares of  SeraNova's  common stock as a price per
share  of  $200,000,  for  an  aggregate  purchase  price  of $10  million.  The
investment  represents  approximately  4.8% of SeraNova's issued and outstanding
shares of common  stock.  In  connection  with  such sale of its  common  stock,
SeraNova  granted  certain  demand  and  piggyback  registration  rights to such
investors. In addition, at its option, SeraNova may sell an additional 25 shares
of its common stock for an additional $5 million to another investor.

     On January 29, 1999, the Company entered into a three-year revolving credit
facility  agreement  with  the  Bank.  The  credit  agreement  with the Bank was
comprised  of a revolving  line of credit  pursuant  to which the Company  could
borrow  up to  $30,000,000  either  at the  Bank's  prime  rate per annum or the
EuroRate plus 2% (at the Company's option).

     As a result of the  restructuring and other special charges incurred during
the quarter  ended June 30,  1999,  the Company was not in  compliance  with the
consolidated  cash flow  leverage  ratio and  consolidated  net worth  financial
covenants at June 30, 1999.  On August 12, 1999,  the Bank  notified the Company
that such  non-compliance  constituted  an event of  default  under  the  credit
agreement.  At September 30, 1999,  while the Company was in compliance with the
consolidated  net worth  financial  covenant,  it was not in compliance with the
consolidated  cash flow leverage  ratio and minimum fixed charge  coverage ratio
financial  covenants.  On January 26, 2000, the Company  finalized with the Bank
the terms of a waiver and amendment to the credit  agreement to remedy  defaults
which existed under the credit agreement.  The terms of the waiver and amendment
included,  among other things, (i) a $15,000,000 reduction in availability under
the credit agreement,  (ii) a first priority  perfected security interest on all
assets of the Company and its domestic  subsidiaries  and (iii)  modification of
certain financial  covenants and a waiver of prior covenant defaults.  Under the
Company's credit agreement,  it must maintain the following  financial covenants
among  others.  The Company must  maintain a minimum  consolidated  net worth of
$45.4  million  at March 31,  2000,  $47.8  million  at June 30,  2000 and $50.2
million  at  September  30,  2000.  Additionally,   the  Company  must  maintain
consolidated cash flow leverage ratios equal to or less than 2.50 to 1.0 for the
period of four  consecutive  fiscal quarters  immediately  preceding the date of
determination taken together as one accounting period. The Company also must not
cause or permit a fixed  charge  coverage  ratio,  calculated  on the basis of a
rolling four quarters of (a)  consolidated  EBITDA to (b) the sum of cash income
tax

                                     - 17 -
<PAGE>

expense plus  interest  expense  (including,  without  limitation,  the interest
component of capitalized lease  obligations),  plus scheduled principal payments
under any indebtedness (including,  without limitation,  the principal component
of capitalized lease obligations but excluding principal  payments,  if any, due
under the loan agreement),  plus dividends or distributions  paid or declared to
be less  than  1.4 to 1.0 as at the  end of each  fiscal  quarter.  Further  the
Company must have  consolidated  EBITDA of $0 at March 31, 2000, $4.5 million at
June 30, 2000 and each quarter thereafter. The requirements for the consolidated
cash flow leverage ratio and fixed charge coverage ratio have been waived by the
Bank through and including  September 30, 2000.  There were no borrowings  under
this line of credit as of March 31, 2000.

     As a result of the current quarter operating losses, the Company was not in
compliance  with the minimum  consolidated  net worth  covenant  and the minimum
consolidated EBITDA financial covenant as of March 31, 2000. On May 9, 2000, the
Bank  issued to the Company a waiver of the  defaults  which  existed  under the
credit  agreement for the quarter ended March 31, 2000.  The terms of the waiver
included,  among other  things,  (i) the waiver of events of default noted above
for the quarter  ending March 31, 2000,  and (ii) the agreement that the Company
must maintain a minimum consolidated EBITDA of $3.0 million as of May 31, 2000.

     The  Company  is in the  process  of  negotiating  a  credit  facility  for
Intelligroup  relating  to  Intelligroup  on  a  post-SeraNova  spin-off  basis.
SeraNova is also in the process of negotiating a credit facility relating to its
business on a  post-SeraNova  spin-off  basis.  There can be no  assurance  that
either  Intelligroup  or  SeraNova  will  be able to  consummate  such a  credit
facility.

YEAR 2000 COMPLIANCE

     The Company did not experience any significant computer or systems problems
relating to the Year 2000.  Upon review of the  Company's  internal and external
systems  during 1999, the Company  determined  that it did not have any material
exposure to such computer problems and that the software and systems required to
operate its  business and provide its services  were Year 2000  compliant.  As a
result,  the Company did not incur,  and does not expect to incur,  any material
expenditures relating to Year 2000 systems issues.

EUROPEAN MONETARY UNION (EMU)

     The euro was  introduced  on  January  1,  1999,  at which  time the eleven
participating  EMU member countries  established  fixed conversion rates between
their  existing   currencies  (legacy  currencies)  and  the  euro.  The  legacy
currencies  will  continue to be used as legal tender  through  January 1, 2002;
thereafter, the legacy currencies will be canceled and euro bills and coins will
be used for cash  transactions  in the  participating  countries.  The Company's
European  sales and  operations  offices  affected by the euro  conversion  have
established  plans to address the  systems  issues  raised by the euro  currency
conversion  and  are  cognizant  of  the  potential  business   implications  of
converting to a common currency. The Company is unable to determine the ultimate
financial  impact of the  conversion on its  operations,  if any, given that the
impact will be  dependent  upon the  competitive  situations  which exist in the
various regional markets in which


                                     - 18 -
<PAGE>

the Company participates and the potential actions which may or may not be taken
by the Company's competitors and suppliers.

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,
sales 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, sales 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 results of the
Company's  European  and/or  Asian  operations  as  reflected  in the  Company's
financial  statements.  The Company has not hedged its exposure  with respect to
this currency  risk,  and does not expect to do so in the future,  since it does
not believe that it is practicable for it to do so at a reasonable cost.



                                     - 19 -
<PAGE>

PART II.     OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

     On January 20, 1999, Tony Knight, a former employee of the Company, filed a
complaint in the Superior  Court of the State of  California,  San Mateo County,
naming the Company,  among others,  as a defendant.  The complaint,  which seeks
damages,  alleges,  among other things, that the Company  discriminated  against
plaintiff because of his race, ancestry, religious creed and national origin and
thereafter  wrongfully  terminated the plaintiff's  employment with the Company.
The  Company,  through  its  counsel,  acknowledged  receipt of the  summons and
complaint on April 20, 1999.  On May 19,  1999,  the Company  removed the action
from the California  Superior Court to the United States  District Court for the
Northern District of California. A discovery scheduling order was entered at the
case  management  conference  held on December 2, 1999.  On April 12, 2000,  the
Company's  motion for summary  judgment,  dismissing  the complaint  against all
defendants, was granted.

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

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

     The following  information relates to all securities of the Company sold by
the Company  within the quarter  ended March 31, 2000 which were not  registered
under the Securities Act of 1933, as amended (the "Securities Act"), at the time
of grant, issuance and/or sale:

              On January 8, 1999, the Company  consummated the acquisition
         (the  "NPI  Acquisition")  of all of the  shares  of  outstanding
         capital  stock  of  Network  Publishing,  Inc.  ("NPI"),  a  Utah
         corporation  located  in  Provo,  Utah.  As a  result  of the NPI
         Acquisition, NPI became a wholly-owned subsidiary of the Company.
         The principal activities of NPI are web site design and front-end
         application solutions services.

              In connection with the NPI Acquisition, on January 11, 2000,
         the Company  issued an aggregate of 99,558  restricted  shares of
         its  Common  Stock,  $0.01 par value per share,  to Richard  Maw,
         Richard Farr and Michael  Donahue  relating to the  provisions of
         the  earn-out  provision  of the  Stock  Purchase  Agreement.  On
         January  28,  2000,   the  Company  filed  an  amendment  to  its
         Registration  Statement on Form S-3 to register such shares.  The
         Company  did not and will not receive  any of the  proceeds  from
         sales of the shares by Messrs. Maw, Farr and Donahue.

              On  March  14,  2000,   SeraNova  entered  into  a  purchase
         agreement  with four  institutional  investors  pursuant to which
         such investors  purchased an aggregate of 50 shares of SeraNova's
         common stock at a price per share of  $200,000,  for an aggregate
         purchase   price  of  $10  million.   Such   investors   included
         Evansville,   Ltd.,   Ampal-American   Israel  Corporation,   NSA
         Investments,  Inc.  and  SSB,  Ltd.  The  investment  represented
         approximately 4.8% of SeraNova's issued and outstanding



                                     - 20 -
<PAGE>

         shares  of  common  stock.  In  connection  with such sale of its
         common  stock,  SeraNova  granted  certain  demand and  piggyback
         registration  rights  to  such  investors.  In  addition,  at its
         option,  SeraNova may sell an  additional 25 shares of its common
         stock for an additional $5 million to another investor.  SeraNova
         utilized   $6.9  million  of  such   proceeds  to  repay  amounts
         outstanding  under  the  PNC  Bank  credit  facility  which  were
         attributable to SeraNova and intends to use the remainder of such
         proceeds for working capital and general corporate purposes.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

     On January 29, 1999, the Company entered into a three-year revolving credit
facility  agreement  with  the  Bank.  The  credit  agreement  with the Bank was
comprised  of a revolving  line of credit  pursuant  to which the Company  could
borrow  up to  $30,000,000  either  at the  Bank's  prime  rate per annum or the
EuroRate plus 2% (at the Company's option).

     As a result of the  restructuring and other special charges incurred during
the quarter  ended June 30,  1999,  the Company was not in  compliance  with the
consolidated  cash flow  leverage  ratio and  consolidated  net worth  financial
covenants at June 30, 1999.  On August 12, 1999,  the Bank  notified the Company
that such  non-compliance  constituted  an event of  default  under  the  credit
agreement.  At September 30, 1999,  while the Company was in compliance with the
consolidated  net worth  financial  covenant,  it was not in compliance with the
consolidated  cash flow leverage  ratio and minimum fixed charge  coverage ratio
financial  covenants.  On January 26, 2000, the Company  finalized with the Bank
the terms of a waiver and amendment to the credit  agreement to remedy  defaults
which existed under the credit agreement.  The terms of the waiver and amendment
included,  among other things, (i) a $15,000,000 reduction in availability under
the credit agreement,  (ii) a first priority  perfected security interest on all
assets of the Company and its domestic  subsidiaries  and (iii)  modification of
certain financial  covenants and a waiver of prior covenant defaults.  Under the
Company's credit agreement,  it must maintain the following  financial covenants
among  others.  The Company must  maintain a minimum  consolidated  net worth of
$45.4  million  at March 31,  2000,  $47.8  million  at June 30,  2000 and $50.2
million  at  September  30,  2000.  Additionally,   the  Company  must  maintain
consolidated cash flow leverage ratios equal to or less than 2.50 to 1.0 for the
period of four  consecutive  fiscal quarters  immediately  preceding the date of
determination taken together as one accounting period. The Company also must not
cause or permit a fixed  charge  coverage  ratio,  calculated  on the basis of a
rolling four quarters of (a)  consolidated  EBITDA to (b) the sum of cash income
tax expense plus interest expense (including,  without limitation,  the interest
component of capitalized lease  obligations),  plus scheduled principal payments
under any indebtedness (including,  without limitation,  the principal component
of capitalized lease obligations but excluding principal  payments,  if any, due
under the loan agreement),  plus dividends or distributions  paid or declared to
be less  than  1.4 to 1.0 as at the  end of each  fiscal  quarter.  Further  the
Company must have  consolidated  EBITDA of $0 at March 31, 2000, $4.5 million at
June 30, 2000 and each quarter thereafter. The requirements for the consolidated
cash flow leverage ratio and fixed charge coverage ratio have been waived by the
Bank through and including  September 30, 2000.  There were no borrowings  under
this line of credit as of March 31, 2000.



                                     - 21 -
<PAGE>

     As a result of the current quarter operating losses, the Company was not in
compliance  with the minimum  consolidated  net worth  covenant  and the minimum
consolidated EBITDA financial covenant as of March 31, 2000. On May 9, 2000, the
Bank  issued to the Company a waiver of the  defaults  which  existed  under the
credit  agreement for the quarter ended March 31, 2000.  The terms of the waiver
included,  among other  things,  (i) the waiver of events of default noted above
for the quarter  ending March 31, 2000,  and (ii) the agreement that the Company
must maintain a minimum consolidated EBITDA of $3.0 million as of May 31, 2000.

     The  Company  is in the  process  of  negotiating  a  credit  facility  for
Intelligroup  relating  to  Intelligroup  on  a  post-SeraNova  spin-off  basis.
SeraNova is also in the process of negotiating a credit facility relating to its
business on a  post-SeraNova  spin-off  basis.  There can be no  assurance  that
either  Intelligroup  or  SeraNova  will  be able to  consummate  such a  credit
facility.

ITEM 5.  OTHER INFORMATION.

     In November  1999,  the Company  announced  its  intention  to spin off its
Internet  services  business  to the  shareholders  of the  Company,  subject to
certain  conditions.  On January 1, 2000, the Company  transferred  its Internet
Services business to SeraNova, Inc., a subsidiary of the Company. On January 27,
2000,  SeraNova filed a Registration  Statement with the Securities and Exchange
Commission  relating to the proposed spin-off of SeraNova from the Company.  The
Company  established  May 12,  2000 as the record  date in  connection  with the
spin-off.  Subject to transfers of the Company's  common stock after such record
date, the Company's  shareholders  of record at the close of business on May 12,
2000,  shall be entitled to one share of SeraNova common stock for each share of
the  Company's  common  stock held by them.  Such  spin-off  is  expected  to be
effective during the second quarter of 2000.

     On March 14, 2000,  SeraNova  entered into a purchase  agreement  with four
institutional  investors pursuant to which such investors purchased an aggregate
of 50 shares of SeraNova's common stock at a price per share of $200,000, for an
aggregate  purchase price of $10 million.  Such investors  included  Evansville,
Ltd., Ampal-American Israel Corporation, NSA Investments, Inc. and SSB, Ltd. The
investment  represented  approximately 4.8% of SeraNova's issued and outstanding
shares of common  stock.  In  connection  with  such sale of its  common  stock,
SeraNova  granted  certain  demand  and  piggyback  registration  rights to such
investors. In addition, at its option, SeraNova may sell an additional 25 shares
of its common stock for an additional $5 million to another  investor.  SeraNova
utilized $6.9 million of such proceeds to repay  amounts  outstanding  under the
PNC Bank credit facility which were  attributable to SeraNova and intends to use
the  remainder  of such  proceeds  for working  capital  and  general  corporate
purposes.



                                     - 22 -
<PAGE>

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

    (a)  Exhibits.

         27    Financial Data Schedule for the period ended March 31, 2000.

    (b)  Reports on Form 8-K.

               On  March  22,  2000,  the  Company  filed a  report  on Form 8-K
               relating  to  the  issuance  and  sale  by  SeraNova,  Inc.,  the
               Company's wholly-owned  subsidiary,  of approximately 4.8% of its
               common  stock to four  institutional  investors  for an aggregate
               purchase price of $10 million.



                                     - 23 -
<PAGE>

                                   SIGNATURES

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

                                     Intelligroup, Inc.


DATE: May 15, 2000                   By: /s/ Ashok Pandey
                                        --------------------------------
                                        Ashok Pandey,
                                        Co-Chief Executive Officer
                                        (Principal Executive Officer)


DATE: May 15, 2000                   By: /s/ Nicholas Visco
                                        --------------------------------
                                        Nicholas Visco,
                                        Vice President-Finance and Chief
                                        Financial Officer (Principal Financial
                                        and Accounting Officer)






                                     - 24 -