<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                     THE SECURITIES EXCHANGE ACT OF 1934 For
                    the quarterly period ended March 31, 1997
                           Commission File No. 0-20943
                               Intelligroup, Inc.
        -----------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)


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

517 Route One South, Iselin, New Jersey                     08830
(Address of Principal Executive Offices)                  (Zip Code)


                                 (908) 750-1600
                           ---------------------------
                           (Issuer's Telephone Number,
                              Including Area Code)

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


                  Yes: X                                No:
                      ---                                  ---

         Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of April 30, 1997:

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

Common Stock, $.01 par value                              10,750,267


                 Transitional Small Business Disclosure Format:

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


                                  
<PAGE>   2
                       INTELLIGROUP, INC. and SUBSIDIARIES

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                       Page
<S>                                                                                    <C>
PART I.  FINANCIAL INFORMATION
           Item 1.  Consolidated Financial Statements...............................     1
                    Consolidated Balance Sheets
                    as of March 31, 1997 (unaudited)
                    and December 31, 1996 ..........................................     2
                    Consolidated Statements of Income
                    for the Three Months Ended
                    March 31, 1997 and 1996 (unaudited).............................     3
                    Consolidated Statements of Cash Flows
                    for the Three Months Ended
                    March 31, 1997 and 1996 (unaudited).............................     4
                    Notes to Consolidated Financial Statements (unaudited)..........     5
           Item 2.  Management's Discussion and Analysis of
                    Financial Condition and Results of Operations...................     7
PART II.  OTHER INFORMATION
           Item 1.  Legal Proceedings...............................................     13
           Item 5.  Other Information...............................................     13
           Item 6.  Exhibits and Reports on Form 8-K................................     14
SIGNATURES..........................................................................     15
</TABLE>



                                      -i-
<PAGE>   3
                          PART I. FINANCIAL INFORMATION

                    ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS



                                     - 1 -
<PAGE>   4
                       INTELLIGROUP, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                      MARCH 31, 1997 AND DECEMBER 31, 1996

<TABLE>
<CAPTION>
                                                                                          March 31,       December 31,
                                                                                            1997              1996
                                                                                        ------------      ------------
                                                                                        (unaudited)
<S>                                                                                     <C>               <C>
                                 ASSETS
Current Assets:
     Cash and cash equivalents                                                          $  5,330,000      $  7,479,000
     Accounts receivable, less allowance for doubtful accounts of  $523,000
         at March 31, 1997 and $546,000 at December 31, 1996                               6,891,000         8,538,000
     Unbilled services                                                                     6,029,000         2,916,000
     Deferred income taxes                                                                   331,000           331,000
     Other current assets                                                                    629,000           492,000
                                                                                        ------------      ------------

         Total current assets                                                             19,210,000        19,756,000

Property and equipment, less accumulated depreciation of $299,000
     at March 31, 1997 and $243,000 at December 31, 1996                                   2,272,000         1,281,000
Other assets                                                                                 374,000           225,000
                                                                                        ------------      ------------
                                                                                        $ 21,856,000      $ 21,262,000
                                                                                        ============      ============

                  LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
     Accounts payable                                                                   $    653,000      $    406,000
     Accrued payroll and related taxes                                                     2,079,000         1,814,000
     Accrued expenses and other liabilities                                                  548,000         1,268,000
     Income taxes payable                                                                    504,000           535,000
     Current portion of obligations under capital leases                                      20,000            20,000
                                                                                        ------------      ------------
         Total current liabilities                                                         3,804,000         4,043,000
                                                                                        ------------      ------------

Obligations under capital leases, less current portion                                        53,000            57,000
                                                                                        ------------      ------------

Commitments and contingencies

Shareholders' Equity
     Preferred stock, $.01 par value, 5,000,000 shares authorized, none outstanding               --                --
     Common stock, $.01 par value, 25,000,000 shares authorized;
         10,735,600 shares issued and outstanding at March 31, 1997
         and December 31, 1996                                                               107,000           107,000
     Additional paid-in capital                                                           19,201,000        19,201,000
     Accumulated deficit                                                                  (1,309,000)       (2,146,000)
                                                                                        ------------      ------------
         Total shareholders' equity                                                       17,999,000        17,162,000
                                                                                        ------------      ------------
                                                                                        $ 21,856,000      $ 21,262,000
                                                                                        ============      ============
</TABLE>


          See accompanying notes to consolidated financial statements.


                                     - 2 -
<PAGE>   5
                       INTELLIGROUP, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                   Three Months Ended March 31,
                                                  -----------------------------
                                                       1997             1996
                                                  ------------      -----------
<S>                                               <C>               <C>
Revenue                                           $ 15,738,000      $ 8,710,000
Cost of sales                                       11,336,000        6,423,000
                                                  ------------      -----------

         Gross profit                                4,402,000        2,287,000

Selling, general and administrative
     expenses                                        3,086,000        1,644,000
                                                  ------------      -----------

         Operating income                            1,316,000          643,000
                                                  ------------      -----------

Other expenses (income):
     Interest expense (income), net                    (79,000)           7,000
     Factor charges                                         --          308,000
                                                  ------------      -----------
                                                       (79,000)         315,000
                                                  ------------      -----------

Income before provision for income taxes             1,395,000          328,000

Provision for income taxes                             558,000          101,000
                                                  ------------      -----------


Net income                                        $    837,000      $   227,000
                                                  ============      ===========


Earnings per share:

         Net income per share                     $       0.08      $      0.02
                                                  ============      ===========


         Shares used in per share calculation       10,889,000       13,737,000
                                                  ============      ===========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                     - 3 -
<PAGE>   6
                       INTELLIGROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND
                                 MARCH 31, 1996
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                        March 31,      March 31,
                                                                          1997           1996
                                                                      -----------      ---------
<S>                                                                   <C>              <C>
Cash flows from operating activities:
     Net income                                                       $   837,000      $ 227,000
     Adjustments to reconcile net income to net cash
         provided by operating activities:
         Depreciation and amortization                                     56,000         24,000
         Provision for doubtful accounts                                       --        205,000
     Changes in assets and liabilities:
         Accounts receivable                                            1,647,000       (436,000)
         Unbilled services                                             (3,113,000)       134,000
         Other current assets                                            (137,000)       (28,000)
         Other assets                                                    (149,000)       (84,000)
         Cash overdraft                                                        --          8,000
         Accounts payable                                                 247,000       (436,000)
         Accrued payroll and related taxes                                265,000        199,000
         Income taxes payable                                             (31,000)       100,000
         Accrued expenses and other liabilities                          (720,000)       219,000
                                                                      -----------      ---------
             Net cash provided by (used in) operating activities       (1,098,000)       132,000
                                                                      -----------      ---------

Cash flows from investing activities:
     Purchase of property and equipment                                (1,047,000)       (27,000)
                                                                      -----------      ---------

Cash flows from financing activities:
     Loans from factors, net                                                   --       (289,000)
     Proceeds from lines of credit, net                                        --        198,000
     Principal payments under capital leases                               (4,000)        (6,000)
                                                                      -----------      ---------
             Net cash used in financing activities                         (4,000)       (97,000)
                                                                      -----------      ---------

             Net increase (decrease) in cash and cash equivalents      (2,149,000)         8,000

Cash and cash equivalents at beginning of period                        7,479,000         71,000
                                                                      -----------      ---------

Cash and cash equivalents at end of period                            $ 5,330,000      $  79,000
                                                                      ===========      =========

Supplemental disclosures of cash flow information:
     Cash paid for interest                                           $        --      $   7,000
                                                                      ===========      =========

     Cash paid for income taxes                                       $   586,000  $          --
                                                                      ===========      =========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                     - 4 -
<PAGE>   7
                       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, 1997 and for the three months ended March 31, 1997
and 1996 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-QSB 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, 1996,
which were included as part of the Company's Form 10-KSB.

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


(2) EARNINGS PER SHARE

         Net income per share is computed using the weighted average number of
common and dilutive common equivalent shares outstanding during the period after
giving retroactive effect to an 81,351.1111-for-1 stock split effected in July
1996. Pursuant to the requirements of the Securities and Exchange Commission,
stock options and warrants issued by the Company during the twelve months
immediately preceding the Company's initial public offering consummated in
October 1996 have been included in computing net income per share as if they
were outstanding for all periods prior to the Initial Public Offering using the
treasury stock method.

         On March 31, 1997, the Financial Accounting Standards Board issued SFAS
No. 128, "Earnings Per Share" ("Statement 128"). Statement 128 is effective for
fiscal years ending after December 15, 1997, and, when adopted, it will require
restatement of prior years' earnings per share. If the Company had adopted
Statement 128 for the period ending March 31, 1997, there would have been no
effect on earnings per share, on either the basic or diluted basis.


                                     - 5 -
<PAGE>   8
(3) LEGAL PROCEEDINGS

         The Company was being investigated by the Immigration and
Naturalization Service (the "INS") and on April 2, 1997, the Company received
two Notices of Intent to Fine from the INS in relation to violations by the
Company of the Immigration Reform and Control Act of 1990. Specifically, the INS
investigated whether the Company improperly employed certain foreign national
individuals prior to their obtaining appropriate work authorization and failed
to complete proper employment eligibility verification forms for all employees.
The Company cooperated fully with the INS. Pursuant to settlement agreements
signed April 28, 1997, fines totaling approximately $42,000 were assessed and
paid by the Company. Such amounts were accrued as of December 31, 1996. The
Company employs many foreign national individuals and has implemented procedures
and controls which it believes will ensure full compliance with the Immigration
Reform and Control Act of 1990 and related regulations. The Company now employs
in-house counsel to oversee this function.



                                     - 6 -
<PAGE>   9
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, systems integration and
custom software development based on leading technologies. The Company has grown
rapidly since 1994 when it made a strategic decision to diversify its customer
base by expanding the scope of its integration and development services and to
utilize SAP software as a primary tool to implement enterprise-wide business
process solutions. In 1995, the Company became a SAP National Implementation
Partner and also began to utilize Oracle products to diversify its service
offerings. To achieve SAP National Implementation Partner status, the Company
was required to demonstrate: (1) customer satisfaction with the Company's
SAP-related services; (2) its capabilities and expertise with SAP software; and
(3) that its employee base included an appropriate number of SAP-experienced
consultants. SAP National Implementation Partner status is awarded by SAP on an
annual basis pursuant to contract. The Company's current contract expires on
December 31, 1997. Contract renewal is within SAP's discretion and is expected
to be based on, among other things, the following subjective criteria set forth
in the Company's contract: (1) customer satisfaction with the Company's
performance and ability to deliver services in a timely and cost-effective
manner; (2) the quality of the Company's personnel performing SAP-related
services; (3) the number and scope, without assigning any dollar amounts in the
contract, of SAP R/3 projects; (4) the thoroughness of the Company's training
programs for its employees; (5) achievement of mutually agreed upon goals; and
(6) the level of effective communication between the Company and SAP. The
contract may be terminated at any time, upon a determination by SAP that the
Company is offering potential customers of SAP R/3 products other products that
are in competition with such SAP R/3 products. Such termination provision,
however, does not preclude the Company from implementing competing or
potentially competing products that have been purchased by the Company's
customers from other suppliers. The contract contains no minimum revenue
requirements or cost sharing arrangements and does not provide for commissions
or royalties to either party. In February 1997, the Company achieved a National
Logo Partner relationship with SAP, SAP's highest consulting alliance
partnership status, and will begin operating under the terms of such partnership
agreement pending partnership agreement negotiations.

         The Company generates revenue from professional services rendered to
customers and 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.


                                     - 7 -
<PAGE>   10
         The Company provides 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. Recently, however, the Company has bid on
certain projects in which it, at the request of the potential clients, offered a
fixed price for its services. The Company believes that as turnkey project
management becomes a larger portion of its business, it will likely be required
to offer fixed price projects to a greater degree. The Company has had limited
prior experience in pricing and performing under fixed price arrangements and
believes that there are certain risks related thereto. There can be no assurance
that the Company will be able to complete such projects within fixed price
timeframes. The failure to perform within such fixed price contracts, if entered
into, could have a material adverse effect on the Company's business, financial
condition and results of operations.

         The Company has derived and believes that it will continue to derive a
significant portion of its revenue from a limited number of customers and
projects. For the three months ended March 31, 1997 and the year ended December
31, 1996, the Company's ten largest customers accounted for approximately 67%
and 66% of its revenue, respectively. During the three months ended March 31,
1997, two customers each accounted for more than 10% of revenue. During 1996,
three customers each accounted for more than 10% of revenue. For the three
months ended March 31, 1997 and the year ended December 31, 1996, 38% and 44%
respectively, of the Company's revenue was generated by serving as a member of
consulting teams assembled by other information technology consulting firms.
There can be no assurance that such information technology consulting firms will
continue to engage the Company in the future at current levels of retention, if
at all. During the three months ended March 31, 1997 and the year ended December
31, 1996, 69% and 74%, respectively, of the Company's total revenue was derived
from projects in which the Company implemented software developed by SAP.

         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 intends to accelerate a shift 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 existing customers and to expand its market to new customers.
The Company's inability to accelerate a shift to higher-margin turnkey
management assignments and more complex projects may adversely impact the
Company's future growth. Although the Company expects that it will utilize its
proprietary implementation methodology in an increasing number of projects,
there can be no assurance that the Company will be engaged to do so.

         Since late 1994, the Company has made substantial investments in its
infrastructure in order to support its rapid growth. For example, in 1994, the
Company established and funded an affiliated operation in India, the ADC, and in
1995, established a sales office in California. In addition, from 1994 to date,
the Company has incurred significant expenses to develop 


                                     - 8 -
<PAGE>   11
proprietary development tools and 4SIGHT, its proprietary accelerated
implementation methodology. Commencing in 1995, the Company has been increasing
its sales force and its marketing, finance, accounting and administrative staff.
The Company employed 59 such personnel as of March 31, 1997 as compared to eight
such personnel as of January 1, 1995.

         This Form 10-QSB 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. Such forward-looking statements include risks and uncertainties,
including, but not limited to: (i) 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) seasonal patterns of hardware
and software capital spending by customers, (b) information technology
outsourcing trends, (c) the timing, size and stage of projects, (d) new service
introductions by the Company or its competitors, (e) levels of market acceptance
for the Company's services or (f) the hiring of additional staff; (ii) changes
in the Company's billing and employee utilization rates; (iii) 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 and, (d) to
maintain project quality, particularly if the size and scope of the Company's
projects increase; (iv) the Company's ability to maintain an effective internal
control structure; (v) the Company's limited operating history within its
current line of business; (vi) the Company's reliance on a continued
relationship with SAP America and the Company's present status as a SAP National
Implementation Partner and its status as a SAP National Logo Partner, pending
partnership agreement negotiations; (vii) the Company's substantial reliance on
key customers and large projects; (viii) the highly competitive nature of the
markets for the Company's services; (ix) the Company's ability to successfully
address the continuing changes in information technology, evolving industry
standards and changing customer objectives and preferences; (x) the Company's
reliance on the continued services of its key executive officers and leading
technical personnel; (xi) the Company's ability to attract and retain a
sufficient number of highly skilled employees in the future; (xii) uncertainties
resulting from pending litigation matters and from certain pending and potential
administrative and regulatory immigration and tax law matters; and (xiii) the
Company's ability to protect its intellectual property rights. The Company's
actual results may differ materially from the results disclosed in such
forward-looking statements.


                                     - 9 -
<PAGE>   12
RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                 PERCENTAGE OF REVENUE
                                             -----------------------------
                                              THREE MONTHS ENDED MARCH 31,
                                             -----------------------------
                                                     1997        1996
                                                    -----       -----
<S>                                                 <C>         <C>
Revenue .......................................     100.0%      100.0%
Cost of sales .................................      72.0        73.7
                                                    -----       -----
    Gross profit ..............................      28.0        26.3
Selling, general and administrative expenses ..      19.6        18.9
                                                    -----       -----
    Operating income ..........................       8.4         7.4
Factor fees / Interest expense (income) .......      (0.5)        3.6
                                                    -----       -----
Income before provision for income taxes ......       8.9         3.8
Provision for income taxes ....................       3.6         1.2
                                                    -----       -----
Net income ....................................       5.3%        2.6%
                                                    =====       =====
</TABLE>

THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996

         Revenue. Revenue increased by 80.7%, or $7.0 million, from $8.7 million
during the three months ended March 31, 1996 to $15.7 million during the three
months ended March 31, 1997. This increase was attributable primarily to
increased demand for the Company's SAP-related consulting services and, to a
lesser extent, to increased demand for the Company's systems integration and
custom software development services.

         Gross profit. The Company's cost of sales includes primarily the cost
of salaries to consultants and related employee benefits and payroll taxes. The
Company's cost of sales increased by 76.5%, or $4.9 million, from $6.4 million
during the three months ended March 31, 1996 to $11.3 million during the three
months ended March 31, 1997. The increase was due to increased personnel costs
resulting from the hiring of additional consultants to support the increase in
demand for the Company's services. The Company's gross profit increased by
92.5%, or $2.1 million, from $2.3 million during the three months ended March
31, 1996 to $4.4 million during the three months ended March 31, 1997. Gross
profit margin increased from 26.3% of revenue during the three months ended
March 31, 1996 to 28.0% of revenue during the three months ended March 31, 1997.
The increase in such gross profit margin was attributable primarily to the fact
that revenue increased at a faster rate than cost of sales which resulted from a
combination of improved billing margins and greater consultant utilization.

         Selling, general and administrative expenses. Selling, general and
administrative expenses consist primarily of administrative salaries, sales
person compensation, travel and entertainment, the costs associated with the ADC
and related development costs and professional fees. Selling, general and
administrative expenses increased by 87.7%, or $1.4 million, from $1.7 million
during the three months ended March 31, 1996 to $3.1 million during the three
months ended March 31, 1997, and increased as a percentage of revenue from 18.9%
to 19.6% of revenue. The increase in such expenses in absolute dollars and as a
percentage of revenue was due primarily to the expansion of the Company's sales
and marketing activities, and increased 


                                     - 10 -
<PAGE>   13
travel and entertainment expenses due to the growth of the business and the
employee base. These expenses were incurred to support the continued revenue
growth of the Company.

         Factor fees/Interest expense. Factor fees in the 1996 period were the
charges incurred by the Company to finance its accounts receivable. On October
10, 1996, the Company repaid the factor with a portion of the proceeds from the
Company's initial public offering, approximately $4.4 million, consisting of all
amounts outstanding under the agreement with its factor and terminated its
factor agreement.

BACKLOG

         The Company generally 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 funds its operations primarily from cash flow generated
from such operations, and to a lesser extent, from cash balances generated from
the Company's initial public offering. In October 1996, the Company consummated
its initial public offering of its common stock resulting in net proceeds to the
Company of approximately $17.8 million. Cash used in operating activities was
$1.1 million during the three months ended March 31, 1997, resulting primarily
from the growth in unbilled services and the payment during the period of
accrued expenses and other liabilities, offset in part by a decline in accounts
receivable. Cash provided by operating activities for the three months ended 
March 31, 1996 was $132,000.

         The Company had working capital of $15.4 million at March 31, 1997 and
$15.7 million at December 31, 1996.

         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 invested $1.0 million and $27,000 in computer equipment and
furniture during the three months ended March 31, 1997 and 1996, respectively.
There are no material commitments for capital expenditures currently
outstanding.

         The Company's factoring agreement with Access Capital, Inc. (the
"Factor") required that the Company offer all of its trade accounts receivable
to the Factor for financing; however, the Factor was under no obligation to
accept any or all of such receivables. Due to a combination of factors,
including the rapid growth of the Company, the lack of available tangible
security to utilize as collateral and the absence of historical operating
profits prior to 1996, the Company was unable to obtain more traditional
financing. On October 10, 1996, the Company repaid 


                                     - 11 -
<PAGE>   14
approximately $4.4 million, consisting of all amounts outstanding under the
agreement with the Factor and terminated the Factor agreement.

         In January 1997, the Company entered into a two-year credit agreement
with PNC Bank, National Association (the "Bank"). The credit facility with the
Bank has two components comprised of (i) a revolving line of credit pursuant to
which the Company may borrow up to $7.5 million (at the Bank's prime rate plus
1/4 of 1% per annum) to finance the working capital needs of the Company and
(ii) equipment term loans pursuant to which the Company may borrow up to an
aggregate of $350,000 (at the Bank's prime rate plus 3/4 of 1% per annum) to
purchase equipment. The credit limit of the revolving line of credit is the
lesser of $7.5 million or the Company's borrowing base. Such borrowing base is
70% of the net face amount of the Company's eligible accounts receivable at the
time of any loan under the revolving line of credit. The credit agreement
contains covenants which require the Company to (i) maintain its working capital
during the year at no less than 90% of the working capital at the end of the
immediately preceding fiscal year and at the end of each fiscal year at no less
than 105% of its working capital at the end of the immediately preceding fiscal
year; and (ii) maintain its tangible net worth during the year at no less than
95% of its tangible net worth at the end of the immediately preceding fiscal
year and at the end of each fiscal year at no less than 108% of tangible net
worth at the end of the immediately preceding fiscal year. The Company's
obligations under the credit agreement are collateralized by substantially all
of the Company's assets, including its accounts receivable and intellectual
property. The Company's obligations under the credit facility are payable at the
expiration of such facility on January 22, 1999. In April 1997, the Company
reached an agreement with the Bank to change several terms of the agreement.
Under the new terms, the borrowing base limitation was eliminated and the
interest rate was reduced to the Bank's prime rate per annum on the revolving
line of credit and to the Bank's prime rate plus 1/4 of 1% per annum on the
equipment line of credit. These terms are subject to the Company maintaining an
unsubordinated debt to tangible net worth ratio of no greater than one to one
and an earnings before interest and taxes to interest expense ratio of no
greater than three to one.

         As of March 31, 1997, there were no amounts outstanding under the
revolving line of credit and no equipment term loans outstanding.

         The Company believes that its available funds, together with current
credit arrangements and the cash flows expected to be generated from operations,
will be adequate to satisfy its current and planned operations through at least
December 31, 1998.


                                     - 12 -
<PAGE>   15
PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

         The Company was being investigated by the Immigration and
Naturalization Service (the "INS") and on April 2, 1997, the Company received
two Notices of Intent to Fine from the INS in relation to violations by the
Company of the Immigration Reform and Control Act of 1990. Specifically, the INS
investigated whether the Company improperly employed certain foreign national
individuals prior to their obtaining appropriate work authorization and failed
to complete proper employment eligibility verification forms for all employees.
The Company cooperated fully with the INS. Pursuant to settlement agreements
signed April 28, 1997, fines totaling approximately $42,000 were assessed and
paid by the Company. Such amounts were accrued as of December 31, 1996. The
Company employs many foreign national individuals and has implemented procedures
and controls which it believes will ensure full compliance with the Immigration
Reform and Control Act of 1990 and related regulations. The Company now employs
in-house counsel to oversee this function.

ITEM 5.  OTHER INFORMATION.

         In February 1997, Paul Coombs was promoted to Vice President - Business
Solutions. Also in February 1997, the Company and Paul Coombs executed an
amendment to Mr. Coombs' employment agreement to create an "at will" employment
relationship.

         In February 1997, Anthony Knight was promoted to Vice President - Sales
and Marketing.

         Concurrently with the signing of the above, the Company and each of Mr.
Coombs and Mr. Knight executed indemnification agreements commensurate to those
of the other officers of the Company.


                                     - 13 -
<PAGE>   16
ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Exhibits.

                           10.1     Employment Agreement dated December 6, 1996
                                    between the Company and Anthony Knight, as
                                    amended on February 18, 1997.

                           11       Statement re: Computation of Per Share
                                    Earnings.

                           27       Financial Data Schedule.


         (b)      Reports on Form 8-K.

                           No reports on Form 8-K were filed during the quarter
                           for which this report on Form 10-QSB is filed.




                                     - 14 -
<PAGE>   17
                                   SIGNATURES


         Pursuant to the requirements of the Securities and 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 13, 1997             By:      /s/ Ashok Pandey
                                     ----------------------
                                  Ashok Pandey,
                                  President and Chief Executive Officer
                                  (Principal Executive Officer)


DATE:    May 13, 1997             By:      /s/ Robert Olanoff
                                     ------------------------
                                  Robert Olanoff,
                                  Chief Financial Officer, Secretary
                                  and Treasurer
                                  (Principal Financial and Accounting Officer)


                                     - 15 -