INTELLIGROUP INC
SB-2/A, 1996-08-30
COMPUTER INTEGRATED SYSTEMS DESIGN
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<PAGE>   1
 
   
    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 30, 1996
    
                                                       REGISTRATION NO. 333-5981
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------
   
                                AMENDMENT NO. 3
    
                                       TO
 
                                   FORM SB-2
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

                            ------------------------
 
                               INTELLIGROUP, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
 
<TABLE>
   <S>                          <C>                                 <C>
          NEW JERSEY                        7373                        11-2880025
   (STATE OF INCORPORATION)     (PRIMARY STANDARD INDUSTRIAL         (I.R.S. EMPLOYER
                                 CLASSIFICATION CODE NUMBER)        IDENTIFICATION NO.)
</TABLE>
 
                              517 ROUTE ONE SOUTH
                            ISELIN, NEW JERSEY 08830
                                 (908) 750-1600
                         (ADDRESS AND TELEPHONE NUMBER
                  OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
 
                                  ASHOK PANDEY
                     PRESIDENT AND CHIEF EXECUTIVE OFFICER
                               INTELLIGROUP, INC.
                              517 ROUTE ONE SOUTH
                            ISELIN, NEW JERSEY 08830
                                 (908) 750-1600
                      (NAME, ADDRESS, AND TELEPHONE NUMBER
                             OF AGENT FOR SERVICE)
 
                            ------------------------
 
                                   COPIES TO:
 
<TABLE>
         <S>                                             <C>
             DAVID J. SORIN, ESQ.                          WILLIAM N. DYE, ESQ.
              BUCHANAN INGERSOLL                         WILLKIE FARR & GALLAGHER
                COLLEGE CENTRE                             ONE CITICORP CENTER
            500 COLLEGE ROAD EAST                          153 EAST 53RD STREET
         PRINCETON, NEW JERSEY 08540                     NEW YORK, NEW YORK 10022
                (609) 987-6800                                (212) 821-8000
</TABLE>
 
                            ------------------------
 
     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>   2
 
     INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
     REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
     SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
     MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
     BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
     THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
     SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
     UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
     OF ANY SUCH STATE.
 
PROSPECTUS (Subject to Completion)
 
   
Dated August 30, 1996
    
                                2,475,000 Shares
 
                                      LOGO

                                  Common Stock

                         ------------------------------
 
     Of the 2,475,000 shares of Common Stock offered hereby, 2,050,000 shares
are being issued and sold by Intelligroup, Inc. ("Intelligroup" or the
"Company") and 425,000 shares are being sold by certain selling shareholders of
the Company (the "Selling Shareholders"). See "Principal and Selling
Shareholders." The Company will not receive any of the proceeds from the sale of
shares by the Selling Shareholders.
 
     Prior to this offering, there has been no public market for the Common
Stock. It is currently anticipated that the initial public offering price will
be between $8.00 and $10.00 per share. See "Underwriting" for information
relating to the determination of the initial public offering price. Upon
completion of this offering, certain of the Company's current officers,
directors and affiliated entities will together beneficially own approximately
77% of the Company's outstanding Common Stock. See "Risk Factors" and "Principal
and Selling Shareholders."
 
     The Company's Common Stock has been approved for quotation, subject to
notice of effectiveness, on the Nasdaq National Market under the symbol "ITIG."

                         ------------------------------
 
                 THIS OFFERING INVOLVES A HIGH DEGREE OF RISK.
                 SEE "RISK FACTORS" BEGINNING ON PAGE 6 HEREOF.

                         ------------------------------
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
     SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
        COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
            PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
================================================================================
                                 Underwriting                       Proceeds to
                    Price to     Discounts and     Proceeds to       Selling
                     Public     Commissions(1)     Company(2)      Stockholders
- --------------------------------------------------------------------------------
<S>                    <C>             <C>              <C>              <C>
Per Share.........     $               $                $                $
Total(3)..........  $               $                $                $
================================================================================
</TABLE>
 
(1) The Company and the Selling Shareholders have agreed to indemnify the
    Underwriters against certain liabilities, including liabilities under the
    Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses, estimated to be $658,500, payable by the Company.
(3) The Selling Shareholders have granted the Underwriters an option,
    exercisable within 30 days of the date hereof, to purchase up to an
    aggregate of 371,250 additional shares at the Price to Public less the
    Underwriting Discounts and Commissions to cover over-allotments, if any. If
    all such additional shares are purchased, the total Price to Public,
    Underwriting Discounts and Commissions, Proceeds to Company and Proceeds to
    Selling Shareholders will be $          , $          , $          and
    $          , respectively. See "Underwriting."

                         ------------------------------
 
     The Common Stock is offered by the several Underwriters named herein when,
as and if received and accepted by them, subject to their right to reject orders
in whole or in part and subject to certain other conditions. It is expected that
delivery of certificates for such shares will be made at the offices of Cowen &
Company, New York, New York on or about             , 1996.

                         ------------------------------
 
COWEN & COMPANY                                            MONTGOMERY SECURITIES
 
            , 1996
<PAGE>   3
 
                                    PICTURE
 
The picture consists of two three-dimensional columns which form an inverted "V"
shape and which join together at the top with the Company's logo. Each column
includes statements which summarize the Company's services (column 1:
enterprise-wide business process solutions, including strategic planning,
business process redesign, technology implementation, on-site and offshore
software development, change management and training and support;column 2:
system integration and custom software development, including system
integration, system analysis, system design, on-site and offshore software
development, implementation and training and support). The columns are joined by
three lines which include statements which summarize services of the Company
applicable to the services included on each column (value-oriented
implementation, Advanced Development Center and logo of the Company's
proprietary implementation methodology, "4 SIGHT").
 
     The Company intends to furnish its shareholders with annual reports
containing financial statements certified by its independent public accountants
and quarterly reports containing unaudited financial information for the first
three quarters of each year.
 
     IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
 
     "Intelligroup," " "4 SIGHT"" and the Company's logo are service marks and
OPMS is a trademark of the Company. All other trade names, trademarks or service
marks appearing in this Prospectus are the property of their respective owners
and are not the property of the Company.
 
                                        2
<PAGE>   4
 
                               PROSPECTUS SUMMARY
 
     The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the consolidated
financial statements, including the notes thereto, appearing elsewhere in this
Prospectus. Except as otherwise noted herein, all information in this
Prospectus: (i) assumes no exercise of the Underwriters' over-allotment option;
(ii) reflects a 81,351.1111-for-1 stock split of the Common Stock effected July
12, 1996; and (iii) includes 1,478,400 shares of Common Stock issuable upon the
exercise, for nominal consideration (less than $0.25 in the aggregate), of
outstanding warrants, which warrants will be exercised upon the effectiveness of
this offering. The maximum number of shares underlying the warrants is 1,922,845
shares of Common Stock, which number of shares is subject to downward adjustment
based upon the initial public offering price. At an assumed initial public
offering price of $9.00 per share, there are 1,478,400 shares of Common Stock
underlying the warrants. See "Capitalization," "Description of Capital Stock,"
"Principal and Selling Shareholders" and "Underwriting."
 
                                  THE COMPANY
 
     Intelligroup 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. The Company's custom software development services are enhanced by
its exclusive access to qualified and experienced programmers at its affiliated
Advanced Development Center located in India and connected to the Company's
headquarters in the United States and to certain customer sites by dedicated,
high speed satellite links. The Company provides its services directly to
end-user organizations or as a member of consulting teams assembled by other
information technology consulting firms. The number of customers billed by the
Company has grown substantially from three customers in 1993 to 75 customers for
the year ended December 31, 1995. The Company's customers are Fortune 1000 and
other large and mid-sized companies, as well as other information technology
consulting firms, and include AT&T, American Cyanamid, Citibank, Ernst & Young
LLP, IBM, ICS Deloitte & Touche LLP and Price Waterhouse LLP.
 
     Many large and mid-sized businesses face a rapidly changing business
environment, intense global competition and accelerating technological change.
To remain competitive, businesses are implementing and utilizing advanced
information technology solutions that enable them to redesign their business
processes in such areas as product development, service delivery, manufacturing,
sales and human resources. Concurrently, businesses are migrating from legacy
systems running proprietary software to open systems and client/server systems.
Such client/server systems, when developed and implemented appropriately, enable
the creation and utilization of more functional and flexible applications which
are critical to the competitive needs of businesses. Organizations often acquire
packaged enterprise-wide business software applications for client/ server
systems, including those offered by leading vendors, such as SAP, Oracle,
PeopleSoft or Baan, and implement or customize these applications to match their
needs. Organizations also may develop customized software applications designed
for their specific business needs. Since organizations often lack sufficient
technical resources necessary to design, develop and implement emerging
information technology solutions on a timely basis, many businesses increasingly
engage experienced outside specialists to develop and implement solutions, in
shorter timeframes and at lower costs, while reducing implementation risks. As a
result, demand for information technology services has grown significantly.
According to industry sources, the global demand for SAP-related consulting
services alone was estimated to be $3.0 billion in 1995.
 
     Intelligroup provides information technology services to develop and
implement cost-effective client/ server business solutions on a timely basis by
combining its expertise in a wide range of technologies and business processes
with its proprietary implementation methodology and development tools. The
Company's consultants have expertise with SAP and Oracle products and with a
wide variety of leading computing technologies. The Company recently has
developed a proprietary implementation methodology, "4 SIGHT",
 
                                        3
<PAGE>   5
 
which is designed to minimize the time required to develop and implement SAP
solutions for its customers. "4 SIGHT" is designed to be technology independent
and modular so that it may be utilized by the Company's consultants and project
managers in other packaged applications development or software customization
projects.
 
     The Company's objective is to be a leading provider of a wide range of
information technology services. The Company's strategy to achieve this
objective is to: (i) accelerate a shift from implementation assignments to
turnkey project management engagements; (ii) maintain and expand long-term
customer relationships; (iii) leverage and expand strategic relationships,
including existing relationships with SAP and Oracle; (iv) maintain
technological leadership and enhance its proprietary implementation methodology
and development tools; (v) continue to attract and retain skilled, motivated
technical employees; and (vi) expand its global sales and marketing efforts.
 
     The Company was incorporated in New Jersey in October 1987 under the name
Intellicorp, Inc. The Company's name was changed to Intelligroup, Inc. in July
1992. The Company's executive offices are located at 517 Route One South,
Iselin, New Jersey 08830, and its telephone number is (908) 750-1600.
 
                                  RISK FACTORS
 
   
     THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING
ON PAGE 6 HEREOF.
    
 
                                  THE OFFERING
 
   
<TABLE>
<S>                                            <C>
Common Stock offered by the Company..........  2,050,000 shares
Common Stock offered by the
  Selling Shareholders.......................  425,000 shares
Common Stock to be outstanding
  after the offering.........................  10,850,000 shares(1)
Use of proceeds..............................  For prepayment of subordinated debt;
                                               repayment of obligations under accounts
                                               receivable financing; purchase of capital
                                               equipment; and other general corporate
                                               purposes, including working capital.
Proposed Nasdaq National Market Symbol.......  ITIG
</TABLE>
    
 
- ---------------
   
(1) The number of shares of Common Stock to be outstanding after the offering
    has been calculated based upon an assumed initial public offering price of
    $9.00 per share. At an initial public offering price of $10.00 per share,
    the number of shares of Common Stock underlying warrants of the Company
    would be reduced from 1,478,400 shares to 1,364,000 shares and, accordingly,
    the number of shares of Common Stock to be outstanding after the offering
    would be reduced from 10,850,000 shares to 10,735,600 shares. At an initial
    public offering price of $8.00 per share, the number of shares of Common
    Stock underlying the warrants of the Company would be increased from
    1,478,400 shares to 1,578,720 shares and, accordingly, the number of shares
    of Common Stock to be outstanding after this offering would be increased
    from 10,850,000 shares to 10,950,320 shares. See "Capitalization." Excludes
    500,000 shares of Common Stock issuable upon the exercise of stock options
    outstanding as of the date of this Prospectus at an exercise price of $8.00
    per share, none of which are currently exercisable. See "Management -- 1996
    Stock Plan."
    
 
                                        4
<PAGE>   6
 
                             SUMMARY FINANCIAL DATA
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                                    SIX MONTHS ENDED
                                              YEAR ENDED DECEMBER 31,                   JUNE 30,
                                  -----------------------------------------------   -----------------
                                   1991      1992      1993      1994      1995      1995      1996
                                  -------   -------   -------   -------   -------   -------   -------
<S>                               <C>       <C>       <C>       <C>       <C>       <C>       <C>
STATEMENT OF OPERATIONS DATA:
  Revenue.......................  $   167   $   481   $   933   $ 6,800   $24,589   $ 9,473   $19,626
  Gross profit..................       78       129       305       958     4,568     1,162     5,480
  Operating income (loss).......       --         1         6       (28)      116      (375)    1,415
  Net income (loss).............       --         2         7      (437)   (1,059)   (1,012)      495
  Net income (loss) per share...  $    --   $    --   $    --   $ (0.03)  $ (0.08)  $ (0.07)  $  0.04
  Shares used in per share
     calculation(1).............   13,737    13,737    13,737    13,737    13,737    13,737    11,913
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                 JUNE 30, 1996
                                                           DECEMBER 31,   ----------------------------
                                                               1995       ACTUAL(2)     AS ADJUSTED(3)
                                                           ------------   ---------     --------------
<S>                                                        <C>            <C>           <C>
BALANCE SHEET DATA:
  Cash and cash equivalents..............................    $     71      $   250         $  8,783
  Working capital (deficit)..............................      (1,597)       2,805           13,200
  Total assets...........................................       6,784       10,292           18,740
  Short-term debt........................................       3,489        1,880               18
  Long-term debt and capital lease obligations,
     less current portion................................          81        4,695               67
  Warrants...............................................          --        1,400               --
  Shareholders' equity (deficit).........................      (1,366)      (2,371)          14,096
</TABLE>
 
- ---------------
(1) In April 1996 4,881,066 shares were repurchased by the Company from its
    current shareholders, Messrs. Pandey, Koneru and Valluripalli, and such
    shares were cancelled by the Company. See "Capitalization."
 
(2) Includes the April 1996 issuance of five-year 9% subordinated debentures in
    the aggregate principal amount of $6.0 million and warrants to purchase
    1,478,400 shares of Common Stock upon the payment of nominal consideration
    (less than $0.25 in the aggregate), and the application of the proceeds
    therefrom to purchase certain of the shares of Common Stock of the Company's
    current shareholders and to repay debt. See "Capitalization."
 
(3) Adjusted to reflect the estimated net proceeds from the sale of 2,050,000
    shares of Common Stock offered by the Company hereby at an assumed initial
    public offering price of $9.00 per share and the application thereof as
    described in "Use of Proceeds" and "Capitalization."
 
     Third Quarter Extraordinary Charge
 
     Upon the consummation of this offering, the Company will pre-pay all
amounts outstanding under its five-year 9% subordinated debentures and, as a
result, will incur an extraordinary, non-cash charge of approximately $1.4
million expected to be recognized in the third quarter of 1996. See
"Capitalization."
 
                                        5
<PAGE>   7
 
                                  RISK FACTORS
 
     In addition to the other information in this Prospectus, prospective
investors should consider carefully the following risk factors in evaluating an
investment in the Company before purchasing any shares of the Common Stock
offered hereby. This Prospectus contains forward-looking statements that involve
risks and uncertainties. The Company's actual results may differ materially from
the results discussed in such forward-looking statements. Factors that may cause
such a difference are those discussed below.
 
SUBSTANTIAL VARIABILITY OF QUARTERLY OPERATING RESULTS
 
     The Company's historical operating results have varied substantially from
quarter to quarter, and the Company expects that they will continue to do so.
Due to the relatively fixed nature of certain of the Company's costs, including
personnel and facilities costs, a decline in revenue in any fiscal quarter would
result in lower profitability in that quarter. A variety of factors, many of
which are not within the Company's control, influence the Company's quarterly
operating results, including seasonal patterns of hardware and software capital
spending by customers, information technology outsourcing trends, the timing,
size and stage of projects, new service introductions by the Company or its
competitors, levels of market acceptance for the Company's services or the
hiring of additional staff. Operating results also may be impacted by changes in
the Company's billing and employee utilization rates. The Company believes,
therefore, that past operating results and period-to-period comparisons should
not be relied upon as an indication of future performance. Demand for the
Company's services generally is lower in the fourth quarter due to reduced
activity during the holiday season and fewer working days for those customers
which curtail operations during such period. The Company anticipates that its
business will continue to be subject to such seasonal variations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Selected Quarterly Results of Operations."
 
MANAGEMENT OF GROWTH
 
     The Company's growth has placed significant demands on its management,
administrative and operational resources. The Company's revenue increased 262%
in 1995, from $6.8 million in 1994 to $24.6 million in 1995. From January 1,
1995 through June 30, 1996, the Company's staff increased 117% from 113 to 245
full-time employees. The Company's ability to manage its growth effectively will
require the Company to continue developing and improving its operational,
financial and other internal systems, as well as its business development
capabilities, and to attract, train, retain, motivate and manage its employees.
In addition, the Company's future success will depend in large part on its
ability to continue to maintain high rates of employee utilization at profitable
billing rates and maintain project quality, particularly if the size and scope
of the Company's projects increases. In addition, other than the Company's Chief
Financial Officer, none of the Company's senior management previously has
managed a business of the Company's scale or scope or has any experience
managing a public company. If the Company is unable to manage its growth and
projects effectively, such inability could have a material adverse effect on the
quality of the Company's services and products, its ability to retain key
personnel and its ability to report financial results in an accurate and timely
manner which could have a material adverse effect on the Company's business,
financial condition and results of operations.
 
WEAKNESSES IN INTERNAL CONTROLS
 
     Following the audit of the Company's consolidated financial statements for
the year ended December 31, 1995, the Company received a management letter from
its independent public accountants, Arthur Andersen LLP, which set forth
significant deficiencies and material weaknesses in the Company's internal
control structure. The Company's independent public accountants noted that,
during 1995, the Company's internal control structure had two material
weaknesses: (i) the Company did not reconcile its supporting records to the
general ledger or perform meaningful account analysis; and (ii) the Company did
not maintain, summarize or reconcile any books or records for its foreign
operations. The Company's independent public accountants have not conducted any
further reviews of the Company's internal control structure. The Company first
hired a Chief Financial Officer in January 1996, only recently implemented an
accounting system capable of
 
                                        6
<PAGE>   8
 
generating information and reports necessary to appropriately manage the
Company, and currently is developing and implementing a system of internal
controls and otherwise developing an appropriate administrative infrastructure.
The failure to develop and maintain an effective internal control structure
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business -- Legal
Proceedings" and " -- Employees."
 
LIMITED OPERATING HISTORY; HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE
FINANCIAL RESULTS
 
     The Company's strategic decision in 1994 to diversify its customer base and
to utilize SAP software as a primary tool to implement enterprise-wide business
process solutions resulted in significant growth and a major change of the
Company's business. As a result, the Company has a limited operating history
within its current line of business. Despite the fact that the Company has
recognized substantially increased revenue during the years ended December 31,
1994 and 1995, respectively, the Company incurred net losses of $437,000 and
$1.1 million for such periods. Furthermore, the Company was profitable in only
six of the last ten quarters. Although the Company had net income of $495,000
for the six months ended June 30, 1996, there can be no assurance that the
Company will continue to achieve profitable levels of operations in the future,
thus management could not determine that it was more likely than not that a
future tax benefit would be realized. The Company has offset its deferred tax
asset of $526,000 at June 30, 1996 with a valuation allowance. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Results of Operations."
 
DEPENDENCE ON SAP
 
     During the years ended December 31, 1994 and 1995 and the first six months
of 1996, 33%, 69% and 73% of the Company's total revenue was derived from
projects in which the Company implemented software developed by SAP, a major
international German-based software company and the leading vendor of
client/server application software for business applications. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations." The
Company's future success in its SAP-related consulting services depends largely
on its continued relationship with SAP America, SAP's United States affiliate,
and on its continued status as a SAP National Implementation Partner, which was
first obtained in 1995. Such status is awarded by SAP on an annual basis
pursuant to contract. The Company's 1996 contract expires on December 31, 1996.
While the Company has no reason to believe that its contract with SAP will not
be renewed or that the scope of such contract will be modified or limited in a
manner adverse to the Company, there can be no assurance that such contract will
be renewed on terms acceptable to the Company, if at all. In addition, in the
event that SAP is unable to maintain its leadership position within the business
applications software market, if the Company's relationship with SAP
deteriorates, or if SAP elects to compete directly with the Company, the
Company's business, financial condition and results of operations could be
materially adversely affected. See "Business."
 
SUBSTANTIAL RELIANCE ON KEY CUSTOMERS AND LARGE PROJECTS
 
     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 years ended December 31, 1994 and 1995 and for the six months
ended June 30, 1996, the Company's ten largest customers accounted for in the
aggregate approximately 61%, 56% and 63% of its revenue, respectively. During
1994, AT&T accounted for more than 10% of revenue, while in 1995 and the six
months ended June 30, 1996, Ernst & Young LLP and Price Waterhouse LLP each
accounted for more than 10% of revenue. For the years ended December 31, 1994
and 1995 and for the six months ended June 30, 1996, 64%, 50% and 50%,
respectively, of the Company's revenue was generated by serving as a member of
consulting teams assembled by other information technology consulting firms,
which also may be competitors of the Company. Such firms included Andersen
Consulting, Ernst & Young LLP, ICS Deloitte & Touche LLP, KPMG Peat Marwick LLP,
Price Waterhouse LLP and other information technology consulting firms. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Customers." There can be no assurance that such
information technology consulting firms will continue to engage the Company in
the future, if at all, and all of
 
                                        7
<PAGE>   9
 
such customer relationships are terminable at will. In addition, the volume of
work performed for specific customers is likely to vary from year to year, and a
major customer in one year or quarter may not continue to use the Company's
services. The loss of any large customer or project could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Customers."
 
     Most of the Company's project-based contracts are terminable by the
customer 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 cancellation or
significant reduction in the scope of a large project could have a material
adverse effect on the Company's business, financial condition, and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business -- Customers."
 
     Many of the Company's engagements involve projects that are critical to the
operations of its customers' businesses and provide benefits that may be
difficult to quantify. The Company's failure or inability to meet a customer's
expectations in the performance of its services could result in a material
adverse change to the customer's operations giving rise to claims for damages
against the Company or causing damage to the Company's reputation, adversely
affecting its business, financial condition and results of operations. In
addition, certain of the Company's agreements with its customers require the
Company to indemnify the customer for damages arising from services provided to,
or on behalf of, such customer. Such indemnification, if required, could have a
material adverse effect on the Company's financial condition and results of
operations. See "Business -- Customers."
 
HIGHLY COMPETITIVE INFORMATION TECHNOLOGY SERVICES INDUSTRY
 
     The markets for the Company's services are highly competitive. The Company
believes that its principal competitors include the internal information systems
groups of its prospective customers, as well as technology consulting and
systems integration firms, including the "Big Six" accounting firms, the ISSC
division of IBM, Cambridge Technology Partners, SHL Systemhouse (a subsidiary of
MCI), and Computer Sciences Corporation, and with the consulting divisions of
software applications vendors, some of which also are customers of the Company.
The consulting divisions of five of the "Big Six" accounting firms also are
customers of the Company and comprised 6%, 34% and 36% of the Company's revenue
for the years ended December 31, 1994 and 1995, and for the six months ended
June 30, 1996, respectively. Many of the Company's competitors have longer
operating histories, possess greater industry and name recognition and have
significantly greater financial, technical and marketing resources than the
Company. In addition, there are relatively low barriers to entry into the
Company's markets and the Company has faced, and expects to continue to face,
additional competition from new entrants into its markets.
 
     The Company believes that the principal competitive factors in its markets
include quality of service and deliverables, speed of development and
implementation, price, project management capability and technical and business
expertise. The Company believes that it addresses these principal competitive
factors with competitive pricing, by utilizing experienced project managers and
consultants, through the use of its proprietary implementation methodology
designed to minimize time required to develop and implement SAP solutions and
its ability to provide other services, including systems integration and custom
software development, including access to the Advanced Development Center. See
"Business -- The Intelligroup Solution." The Company believes that its ability
to compete also depends in part on a number of competitive factors outside its
control, including the ability of its competitors to hire, retain and motivate
project managers and other senior technical staff, the development by others of
services that are competitive with the Company's services and the extent of its
competitors' responsiveness to customer needs. There can be no assurance that
the Company will be able to compete successfully with its competitors. See
"Business -- Competition."
 
RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW SOLUTIONS
 
     The Company's success will depend in part on its ability to develop
solutions that keep pace with continuing changes in information technology,
evolving industry standards and changing customer objectives
 
                                        8
<PAGE>   10
 
and preferences. There can be no assurance that the Company will be successful
in adequately addressing these developments on a timely basis or that, if these
developments are addressed, the Company will be successful in the marketplace.
In addition, there can be no assurance that products or technologies developed
by others will not render the Company's services non-competitive or obsolete.
The Company's failure to address these developments could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Strategy."
 
DEPENDENCE ON KEY PERSONNEL
 
     The success of the Company for the foreseeable future will depend largely
on the continued services of its key executive officers and leading technical
personnel. Each executive officer and key employee has entered into an
employment agreement with the Company which contains non-competition,
non-disclosure and non-solicitation covenants that extends for a period of two
years following termination of employment. See "Management -- Employment
Agreements, Indemnification Agreements and Non-Competition, Non-Disclosure and
Non-Solicitation Agreements." Each of the leading technical personnel has
entered into an agreement with the Company which contains non-competition,
non-disclosure and non-solicitation provisions. See "Business -- Employees." The
Company maintains, and is the beneficiary of, life insurance policies on the
lives of Ashok Pandey, Rajkumar Koneru and Nagarjun Valluripalli. The face
amount of each such policy is $1.0 million. See "Management -- Key Man
Insurance." The Company does not maintain key man life insurance on any of its
other executive officers or employees. There can be no assurance that the
departure of one or more of such key personnel would not have a material adverse
effect on the Company's financial condition and results of operations.
 
COMPETITIVE MARKET FOR TECHNICAL PERSONNEL
 
     The Company's business is labor intensive and, therefore, the Company's
success will depend in large part upon its ability to attract, retain, train and
motivate highly-skilled employees, particularly project managers and other
senior technical personnel. There is significant competition for employees with
the skills required to perform the services the Company offers. Qualified
project managers and senior technical staff, including in particular, personnel
with development experience, are in great demand and are likely to remain a
limited resource for the foreseeable future. There can be no assurance that the
Company will be successful in attracting a sufficient number of highly skilled
employees in the future, or that it will be successful in retaining, training
and motivating the employees it is able to attract, and any inability to do so
could impair the Company's ability to adequately manage and complete its
existing projects and to bid for or obtain new projects. If the Company's
employees are unable to achieve expected performance levels, the Company's
business, financial condition and results of operations could be adversely
affected. See "Business -- Employees."
 
UNCERTAINTIES RESULTING FROM PENDING LITIGATION MATTERS AND ADMINISTRATIVE
PROCEEDINGS
 
   
     The Company is involved in disputes with third parties, including certain
former employees and other information technology consulting firms. Such
disputes have resulted in litigation with such parties and, although the Company
is a plaintiff in one of such matters, the Company is subject to claims and
counterclaims for damages and has incurred, and likely will continue to incur,
legal expenses in connection with such matters. There can be no assurance that
such litigation will result in favorable outcomes for the Company. The Company
also is aware of certain pending and potential administrative and regulatory
immigration and tax law matters which may result in significant costs to the
Company, as well as fines and penalties. These matters also may result in
diversion of management time and effort from the operations of the business.
There can be no assurance that damages, fines and penalties, if any, and related
legal expenses and management diversion from operations will not have a material
adverse effect on the Company's business, reputation, financial condition or
results of operations. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition -- Liquidity and Capital Resources" and
"Business -- Legal Proceedings."
    
 
                                        9
<PAGE>   11
 
RELIANCE ON INTELLECTUAL PROPERTY RIGHTS
 
     The Company relies upon a combination of trade secrets, nondisclosure and
other contractual arrangements, and copyright and trademark laws to protect its
proprietary rights. The Company's future success is dependent, in part, upon its
proprietary implementation methodology, "4 SIGHT", development tools and other
intellectual property rights. The Company enters into confidentiality agreements
with its employees, generally requires that its consultants and customers enter
into such agreements, and limits access to and distribution of its proprietary
information. There can be no assurance that the steps taken by the Company in
this regard will be adequate to deter misappropriation of its proprietary
information or that the Company will be able to detect unauthorized use of and
take appropriate steps to enforce its intellectual property rights. See
"Business -- Intellectual Property Rights" and " -- Legal Proceedings."
 
     Although the Company believes that its services, methodology and
development tools do not infringe on the intellectual property rights of others,
there can be no assurance that such a claim will not be asserted against the
Company in the future, or that if asserted, any such claim will be successfully
defended. See "Business -- Intellectual Property Rights."
 
INTERNATIONAL OPERATIONS
 
     While international operations accounted for an insignificant portion of
the Company's total revenue in each of 1994 and 1995, the Company anticipates
that in the future a larger percentage of its revenue may be derived from
international operations. To date, the Company has established foreign
operations in New Zealand, South Africa and the United Kingdom. In order to
expand sales on an international basis, the Company may establish additional
foreign operations. In addition, the Company has established operations in India
by forming an affiliation with Intelligroup Asia Private Limited ("Intelligroup
Asia"), an entity which currently is majority owned by Messrs. Koneru and
Valluripalli, two of the Company's principal shareholders. Mr. Pandey has the
right, subject to necessary Indian government approvals, to acquire the
remaining outstanding shares of Intelligroup Asia. The Company and Messrs.
Pandey, Koneru and Valluripalli have entered into an agreement pursuant to which
the Company will acquire, subject to necessary Indian government approvals, all
of the outstanding capital stock of Intelligroup Asia for nominal consideration.
See "Certain Transactions." Increasing foreign operations likely will require
significant management attention and financial resources and could materially
adversely affect the Company's business, financial condition or results of
operations. In addition, there can be no assurance that the Company will be able
to increase international market demand for its services. The risks inherent in
the Company's international business activities include unexpected changes in
regulatory environments, foreign currency fluctuations, tariffs and other trade
barriers, longer accounts receivable payment cycles, difficulties in managing
international operations and potential foreign tax consequences, including
restrictions on the repatriation of earnings, and the burdens of complying with
a wide variety of foreign laws and regulations. There can be no assurance that
such factors will not have a material adverse effect on the Company's future
international sales, if any, and, consequently, on the Company's business,
financial condition or results of operations. See "Business -- Sales and
Marketing."
 
SHARES ELIGIBLE FOR FUTURE SALE
 
     Future sales of Common Stock in the public market following this offering
could adversely affect the market price of the Common Stock. Upon completion of
this offering, the 2,475,000 shares offered hereby will be freely tradeable by
persons other than "affiliates" of the Company without restriction. The
remaining 8,375,000 shares held by current shareholders of the Company are
subject to "lock-up" agreements under which the holders of such shares have
agreed not to sell or otherwise dispose of any shares of Common Stock without
the prior written consent of the representative of the Underwriters for a period
of 180 days after the date of this Prospectus. Of such shares of Common Stock,
6,940,000 shares will be eligible for resale after the expiration of the lock-up
period, subject to the provisions of Rule 144 under the Securities Act of 1933,
as amended (the "Securities Act"). The remaining 1,435,000 shares of Common
Stock will become eligible for sale over a period of less than two years and
could be sold earlier if the holders thereof exercise any available registration
rights. See "Description of Capital Stock -- Registration Rights." Of the shares
of Common Stock issuable upon the exercise of outstanding options, in December
1996, 166,667 shares will become
 
                                       10
<PAGE>   12
 
eligible for immediate resale in the public market, subject to compliance with
Rules 144 and 701 under the Securities Act. Sales of substantial amounts of the
Common Stock in the public market, whether by purchasers in the offering or
other shareholders of the Company, or the perception that such sales could
occur, may adversely affect the market price of the Common Stock. See "Shares
Eligible for Future Sale."
 
CONTROL BY MANAGEMENT AND EXISTING SHAREHOLDERS
 
     Upon completion of this offering, certain of the Company's current officers
(Messrs. Pandey, Koneru and Valluripalli), directors and affiliated entities
together will beneficially own approximately 77% of the outstanding shares of
Common Stock (74% if the Underwriters' over-allotment option is exercised in
full). As a result, these shareholders, acting together, will be able to control
matters requiring approval by the shareholders of the Company, including the
election of directors. Such a concentration of ownership may have the effect of
delaying or preventing a change in control of the Company, including
transactions in which shareholders might otherwise receive a premium for their
shares over then current market prices. See "Principal and Selling
Shareholders."
 
ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER AND BY-LAW PROVISIONS AND NEW JERSEY LAW
 
     The Company's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") authorizes the Board of Directors to issue,
without shareholder approval, 5,000,000 shares of Preferred Stock with voting,
conversion and other rights and preferences that could adversely affect the
voting power or other rights of the holders of Common Stock. The issuance of
Preferred Stock or of rights to purchase Preferred Stock could be used to
discourage an unsolicited acquisition proposal. In addition, the possible
issuance of Preferred Stock could discourage a proxy contest, make more
difficult the acquisition of a substantial block of the Company's Common Stock
or limit the price that investors might be willing to pay in the future for
shares of the Company's Common Stock. The Certificate of Incorporation also
provides that: (i) the affirmative vote of the holders of at least 80% of the
voting power of all outstanding shares of the capital stock of the Company shall
be required to adopt, amend or repeal any provision of the By-laws of the
Company; (ii) shareholders of the Company may not take any action by written
consent; (iii) special meetings of shareholders may be called only by the
President, the Chairman of the Board or a majority of the Board of Directors and
business transacted at any such special meeting shall be limited to matters
relating to the purposes set forth in the notice of such special meeting; (iv)
the Board of Directors, when evaluating an offer related to a tender or exchange
offer or other business combination, is authorized to give due consideration to
any relevant factors, including the social, legal and economic effects upon
employees, suppliers, customers, creditors, the community in which the Company
conducts its business, and the economy of the state, region and nation; and (v)
the affirmative vote of the holders of at least 80% of the voting power of all
outstanding shares of the capital stock of the Company shall be required to
amend the above provisions or the limitation on director liability. The
foregoing provisions of the Certificate of Incorporation could have the effect
of delaying, deterring or preventing a change in control of the Company. In
addition, certain "anti-takeover" provisions of the New Jersey Business
Corporation Act, among other things, restrict the ability of certain
shareholders to effect a merger or business combination or obtain control of the
Company. These provisions may have the effect of delaying or preventing a change
of control of the Company without action by the shareholders and, therefore,
could adversely affect the price of the Company's Common Stock. In the event of
a merger or consolidation of the Company with or into another corporation or the
sale of all or substantially all of the Company's assets in which the successor
corporation does not assume outstanding options or issue equivalent options, the
Board of Directors of the Company is required to provide accelerated vesting of
outstanding options. See "Description of Capital Stock -- Preferred Stock,"
"-- Anti-takeover Provisions" and "-- Limitation of Director Liability."
 
ABSENCE OF PRIOR TRADING MARKET; POTENTIAL VOLATILITY OF STOCK PRICE
 
     Prior to this offering, there has been no public market for the Common
Stock and there can be no assurance that following this offering an active
trading market will develop or be maintained. The initial public offering price
of the Common Stock has been determined by negotiations between the Company and
the
 
                                       11
<PAGE>   13
 
Representatives of the Underwriters and may not be indicative of the market
price of the Common Stock in the future. For a description of the factors
considered in determining the initial public offering price, see "Underwriting."
The market price of the shares of Common Stock may be highly volatile. Factors
such as fluctuation in the Company's operating results, announcements of
technological innovations or new commercial products or services by the Company
or its competitors, market conditions in the computer software and hardware
industries generally and quarterly fluctuations in financial results may have a
significant effect on the market price of the Common Stock. Furthermore, the
stock market historically has experienced volatility which has particularly
affected the market prices of securities of many technology companies and which
sometimes has been unrelated to the operating performances of such companies.
See "Underwriting."
 
IMMEDIATE AND SUBSTANTIAL DILUTION
 
     Purchasers of the shares of Common Stock offered hereby will experience
immediate and substantial dilution in the net tangible book value of their
investment from the initial public offering price. The number of shares
underlying the warrants is subject to adjustment based upon the initial public
offering price and, therefore, could result in additional dilution to existing
shareholders and to purchasers of the shares of Common Stock offered hereby. See
"Capitalization," "Dilution," "Description of Capital Stock" and "Shares
Eligible for Future Sale."
 
SIGNIFICANT UNALLOCATED NET PROCEEDS
 
     A substantial portion of the anticipated net proceeds of this offering has
not been designated for specific uses. Therefore, the Board of Directors of the
Company will have broad discretion with respect to the use of the net proceeds
of this offering. See "Use of Proceeds."
 
ABSENCE OF DIVIDENDS
 
     The Company does not anticipate paying any dividends on its Common Stock in
the foreseeable future. See "Dividend Policy."
 
                                       12
<PAGE>   14
 
                                USE OF PROCEEDS
 
     The net proceeds to the Company from the sale of the 2,050,000 shares of
Common Stock offered by the Company hereby are estimated to be approximately
$16.5 million, after deducting the Underwriters' discounts and commissions and
estimated offering expenses payable by the Company, at an assumed initial public
offering price of $9.00 per share. The Company will not receive any proceeds
from the sale of shares of Common Stock by the Selling Shareholders. See
"Principal and Selling Shareholders."
 
     The Company intends to use approximately $6.3 million of the net proceeds
from this offering to pre-pay all amounts outstanding under the five-year 9%
subordinated debentures in the aggregate principal amount of $6.0 million issued
and sold in April 1996 to Summit Ventures IV, L.P. and Summit Investors III,
L.P., investment partnerships which are affiliates of the Company. The
subordinated debentures were issued to raise funds for working capital and
general corporate purposes, to repurchase from current shareholders, Messrs.
Pandey, Koneru and Valluripalli, a total of 4,881,066 shares of Common Stock for
an aggregate of $1.5 million and to repay approximately $300,000 outstanding
under a revolving credit facility, which facility carried interest at the
federal funds rate plus 1%. Such credit facility was terminated upon such
repayment. The Company also intends to use a portion of the net proceeds to
repay all amounts outstanding under its existing factoring relationship, of
which approximately $2.8 million was outstanding as of July 31, 1996. Pursuant
to such factoring arrangement, the Company is obligated to offer all of its
accounts receivable to the factor for financing. The factor is not, however,
obligated to accept such accounts receivable. The factor charges an
administrative fee of 0.75% on each invoice, plus an additional 0.75% for each
15-day increment of time during which the invoice remains unpaid, to a maximum
of 120 days, or 6.5%. The Company also intends to use approximately $400,000 of
the net proceeds from this offering to purchase or lease capital equipment.
 
     The balance of the net proceeds, $7.0 million, will be used for general
corporate purposes, including working capital and possible acquisitions of
businesses or services complementary to the Company's business. Although the
Company reviews and considers possible acquisitions on an on-going basis, no
specific acquisitions are being negotiated or planned as of the date of this
Prospectus. Pending such uses, the net proceeds to the Company from this
offering will be invested in short-term, investment-grade, interest-bearing
instruments.
 
                                DIVIDEND POLICY
 
     The Company has never declared or paid any dividends on its capital stock.
The Company intends to retain any earnings to fund future growth and the
operation of its business and, therefore, does not anticipate paying any cash
dividends in the foreseeable future.
 
                                       13
<PAGE>   15
 
                                 CAPITALIZATION
 
     The following table sets forth the capitalization of the Company: (i) as of
June 30, 1996; and (ii) on an as-adjusted basis to give effect to the issuance
and sale by the Company of 2,050,000 shares of Common Stock offered hereby, at
an assumed initial public offering price of $9.00 per share, after deducting the
underwriting discounts and commissions and estimated offering expenses payable
by the Company and the application of the estimated net proceeds therefrom by
the Company.
 
<TABLE>
<CAPTION>
                                                                               AS OF JUNE 30, 1996
                                                                             -----------------------
                                                                             ACTUAL      AS ADJUSTED
                                                                             -------     -----------
                                                                                 (IN THOUSANDS)
<S>                                                                          <C>         <C>
Short-term debt............................................................  $ 1,880       $    18
                                                                             =======       =======
Long-term debt and capital lease obligations, less current portion(1)......  $    67       $    67
Subordinated debt(3)(5)....................................................    4,628            --
                                                                             -------       -------
  Total long-term debt.....................................................    4,695            67
                                                                             -------       -------
Warrants(3)(5).............................................................    1,400            --
                                                                             -------       -------
Shareholders' equity (deficit):
  Preferred Stock, $0.01 par value, 5,000,000 shares authorized;
     none issued...........................................................       --            --
  Common Stock, $0.01 par value, 25,000,000 shares authorized, 7,321,600
     shares actual (10,850,000 as adjusted) issued and outstanding(2)(4)...       73           109
  Additional paid-in capital...............................................       --        17,864
  Accumulated deficit(4)(5)................................................   (2,444)       (3,877)
                                                                             -------       -------
     Total shareholders' equity (deficit)..................................   (2,371)       14,096
                                                                             -------       -------
          Total capitalization.............................................  $ 3,724       $14,163
                                                                             =======       =======
</TABLE>
 
- ---------------
(1) For information concerning the Company's long-term debt see Note 3 of Notes
    to Consolidated Financial Statements.
(2) Excludes 500,000 shares of Common Stock issuable upon the exercise of stock
    options outstanding as of the date of this Prospectus at an exercise price
    of $8.00 per share, none of which are currently exercisable. See
    "Management -- 1996 Stock Plan."
(3) Proceeds from the issuance of $6.0 million of 9% debentures were allocated
    between the debentures and warrants based on their deemed fair market value.
    The debentures were issued with detachable warrants to purchase a maximum of
    20.8% of the Common Stock of the Company at a nominal exercise price (less
    than $0.25 in the aggregate), decreasing to not less than 11.0% based upon
    the initial public offering price. Using an assumed interest rate of 15%,
    which the Company believes reflects a fair market interest rate for the
    debentures if the detachable warrants were not included, the fair market
    value of the warrants and the resulting discount on the debentures is
    approximately $1.4 million. Other than the extraordinary, non-cash charge
    that will result on the repayment of the debentures (See note (5) below), no
    additional charges to earnings relating to the warrants will occur. The
    maximum number of shares underlying the warrants is 1,922,845 shares of
    Common Stock, which number is subject to downward adjustment based upon the
    initial public offering price. At an assumed initial public offering price
    of $9.00 per share, there are 1,478,400 shares of Common Stock underlying
    the warrants. The warrants will be exercised upon the effectiveness of this
    offering. The following table sets forth the number of shares of Common
    Stock underlying the warrants and the number of shares of Common Stock to be
    outstanding after the offering at certain prices within the anticipated
    initial public offering price range:
 
<TABLE>
<CAPTION>
                                                                                         NUMBER OF SHARES
                                                                                         OF COMMON STOCK
                                                                                              TO BE
                                                                    NUMBER OF SHARES       OUTSTANDING
                             ASSUMED INITIAL                         OF COMMON STOCK        AFTER THE
                          PUBLIC OFFERING PRICE                    UNDERLYING WARRANTS       OFFERING
                         ----------------------                    -------------------   ----------------
        <S>                                                        <C>                   <C>
            $ 8.00...............................................       1,578,720           10,950,320
              9.00...............................................       1,478,400           10,850,000
             10.00...............................................       1,364,000           10,735,600
</TABLE>
 
(4) Reflects the repurchase and cancellation by the Company of 4,881,066 shares
    from the Company's current shareholders, Messrs. Pandey, Koneru and
    Valluripalli, for an aggregate of $1.5 million. Such shares were repurchased
    to allow Messrs. Pandey, Koneru and Valluripalli to diversify their
    portfolios and achieve a degree of liquidity.
(5) The "As Adjusted" column reflects the repayment of the debentures and the
    exercise of the warrants. Based on an assumed initial public offering price
    of $9.00 per share, there are 1,478,400 shares of Common Stock underlying
    the warrants. The repayment of the debentures results in an extraordinary
    charge of approximately $1.4 million.
 
                                       14
<PAGE>   16
 
                                    DILUTION
 
     The net tangible book value of the Company as of June 30, 1996 was
approximately $(1,311,000) or $(0.18) per share of Common Stock. Net tangible
book value per share is determined by dividing the net tangible book value of
the Company (tangible assets less total liabilities) by the number of shares of
Common Stock outstanding. Dilution per share represents the difference between
the amount per share paid by purchasers of shares of Common Stock in the
offering made hereby and the net tangible book value per share of Common Stock
immediately after completion of the offering. Without taking into account any
changes in such net tangible book value after June 30, 1996, other than to give
effect to the (i) sale of 2,050,000 shares of Common Stock by the Company in
this offering (at an assumed initial public offering price of $9.00 per share
and after deducting the underwriting discounts and commissions and estimated
offering expenses); (ii) application of the estimated net proceeds therefrom;
and (iii) effect of the extraordinary charge of approximately $1.4 million that
would result from the early extinguishment of debt to be repaid from the net
proceeds of the offering if the offering had been consummated on June 30, 1996,
the pro forma net tangible book value of the Company as of June 30, 1996 would
have been $13,817,000 or $1.27 per share. This represents an immediate increase
in net tangible book value of $1.45 per share to existing shareholders and an
immediate dilution in net tangible book value of $7.73 per share to new
investors. The following table illustrates this dilution on a per share basis:
 
<TABLE>
        <S>                                                          <C>        <C>
        Assumed initial public offering price per share(1).........             $ 9.00
          Pro forma tangible book value per share before the
             offering..............................................  $(0.18)
          Increase per share attributable to new investors.........    1.45
                                                                     ------
        Pro forma net tangible book value per share after the
          offering.................................................               1.27
                                                                                ------
        Dilution per share to new investors........................             $ 7.73
                                                                                ======
</TABLE>
 
- ---------------
(1) Before deducting the estimated underwriting discounts and commissions and
    expenses of the offering.
 
     The following table summarizes, on a pro forma basis as of June 30, 1996,
the number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price per share paid by existing shareholders
and by investors purchasing shares offered by the Company hereby:
 
<TABLE>
<CAPTION>
                                                                            TOTAL
                                           SHARES PURCHASED             CONSIDERATION           AVERAGE
                                        ----------------------     -----------------------     PRICE PER
                                          NUMBER       PERCENT       AMOUNT        PERCENT       SHARE
                                        ----------     -------     -----------     -------     ---------
<S>                                     <C>            <C>         <C>             <C>         <C>
Existing shareholders(1)..............   8,800,000       81.1%     $     6,000       0.03%      $  0.001
New investors.........................   2,050,000       18.9       18,450,000      99.97           9.00
                                        ----------      -----       ----------       ----
          Total(1)....................  10,850,000      100.0%     $18,456,000      100.0%
                                        ==========      =====       ==========       ====
</TABLE>
 
- ---------------
(1) Excludes options to purchase 500,000 shares of Common Stock issuable under
    the 1996 Stock Plan (the "1996 Stock Plan") upon the exercise of stock
    options outstanding as of the date of this Prospectus at an exercise price
    of $8.00 per share, none of which are currently exercisable. Additional
    dilution will occur upon the exercise of outstanding options. In addition,
    an aggregate of 1,090,000 shares of Common Stock are available for issuance
    pursuant to the 1996 Stock Plan and the 1996 Non-Employee Director Stock
    Option Plan (the "Non-Employee Director Plan"). See "Management -- 1996
    Non-Employee Director Stock Option Plan" and "-- 1996 Stock Plan."
 
     The sale of Common Stock by the Selling Shareholders in this offering will
reduce the number of shares held by existing shareholders to 8,375,000 shares,
or 77.2% of the total number of shares of Common Stock outstanding after the
offering, and will increase the number of shares held by new investors to
2,475,000 shares, or 22.8% of the total number of shares of Common Stock
outstanding after the offering.
 
                                       15
<PAGE>   17
 
                      SELECTED CONSOLIDATED FINANCIAL DATA
 
     The selected consolidated financial data set forth below as of December 31,
1995 and for the two years then ended are derived from and are qualified by
reference to the audited consolidated financial statements and the related notes
thereto included elsewhere in this Prospectus. The selected consolidated
financial data as of December 31, 1991, 1992, 1993, 1994 and June 30, 1996, and
for the three years ended December 31, 1993 and for the six months ended June
30, 1995 and 1996 have been derived from the unaudited consolidated financial
statements of the Company. The unaudited financial data include all adjustments
consisting only of normal, recurring adjustments that the Company considers
necessary for fair presentation of the financial position and results of
operations for these periods. The results of operations for the six months ended
June 30, 1996 are not necessarily indicative of the results for any future
period or for the full year ending December 31, 1996. The following should be
read in conjunction with the consolidated financial statements and notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this Prospectus:
 
<TABLE>
<CAPTION>
                                                                                                    SIX MONTHS ENDED
                                                   YEAR ENDED DECEMBER 31,                              JUNE 30,
                                --------------------------------------------------------------   -----------------------
                                   1991         1992         1993         1994         1995         1995         1996
                                ----------   ----------   ----------   ----------   ----------   ----------   ----------
                                                         (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                             <C>          <C>          <C>          <C>          <C>          <C>          <C>
STATEMENT OF OPERATIONS DATA:
  Revenue.....................  $      166   $      481   $      933   $    6,800   $   24,589   $    9,473   $   19,626
  Cost of sales...............          88          352          628        5,842       20,021        8,311       14,146
                                      ----         ----         ----       ------      -------      -------       ------
    Gross profit..............          78          129          305          958        4,568        1,162        5,480
  Selling, general and
    administrative
    expenses..................          78          128          299          986        4,452        1,537        4,065
                                      ----         ----         ----       ------      -------      -------       ------
    Operating income (loss)...          --            1            6          (28)         116         (375)       1,415
  Factor charges/Interest
    expense...................          --           --           --          409        1,175          637          702
                                      ----         ----         ----       ------      -------      -------       ------
  Income (loss) before
    provision for income
    taxes.....................          --            1            6         (437)      (1,059)      (1,012)         713
  Provision for income
    taxes.....................          --           --           --           --           --           --          218
                                      ----         ----         ----       ------      -------      -------       ------
  Net income (loss)...........  $       --   $        1   $        6   $     (437)  $   (1,059)  $   (1,012)  $      495
                                      ====         ====         ====       ======      =======      =======       ======
  Net income (loss) per
    share.....................  $       --   $       --   $       --   $    (0.03)  $    (0.08)  $    (0.07)  $     0.04
                                      ====         ====         ====       ======      =======      =======       ======
  Shares used in per share
    calculation...............      13,737       13,737       13,737       13,737       13,737       13,737       11,913
                                      ====         ====         ====       ======      =======      =======       ======
</TABLE>
 
<TABLE>
<CAPTION>
                                                      AS OF DECEMBER 31,                                  AS OF
                                --------------------------------------------------------------          JUNE 30,
                                   1991         1992         1993         1994         1995               1996
                                ----------   ----------   ----------   ----------   ----------   -----------------------
                                                        (IN THOUSANDS)
<S>                             <C>          <C>          <C>          <C>          <C>          <C>          <C>
BALANCE SHEET DATA:
  Cash and cash equivalents...         $ 6          $ 3         $ 34        $ 209       $   71                    $  250
  Working capital (deficit)...           4           (2)         146         (426)      (1,597)                    2,805
  Total assets................           9           14          257        2,313        6,784                    10,292
  Short-term debt.............          --           --            5        1,032        3,489                     1,880
  Long-term debt and capital
    lease obligations, less
    current portion...........           7            5           52           --           81                     4,695
  Warrants....................          --           --           --           --           --                     1,400
  Shareholders' equity
    (deficit).................           1            3          130         (307)      (1,366)                  (2,371)
</TABLE>
 
                                       16
<PAGE>   18
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
OVERVIEW
 
     The Company was formed in 1987 to provide systems integration and custom
software development. In March 1994, the Company acquired Oxford Systems Inc.
("Oxford") in a pooling-of-interests transaction, in exchange for an aggregate
two-thirds equity interest in the Company. The Company currently 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, 1996. 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) 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) level of effective
communication between the Company and SAP. The Agreement contains no minimum
revenue requirements or cost sharing arrangements and does not provide for
commissions or royalties to either party.
 
     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.
 
     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 years ended December 31, 1994 and 1995 and for the six months
ended June 30, 1996, the Company's ten largest customers accounted for
approximately 61%, 56% and 63% of its revenue, respectively. During 1994, AT&T
accounted for more than 10% of revenue. In 1995 and the six months ended June
30, 1996, Ernst & Young LLP and Price Waterhouse LLP each accounted for more
than 10% of revenue. For the years ended December 31, 1994 and 1995 and for the
six months ended June 30, 1996, 64%, 50% and 50%, 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 years ended
December 31, 1994 and 1995 and the six months ended June 30, 1996, 33%, 69% and
73%, 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
 
                                       17
<PAGE>   19
 
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 Advanced
Development Center, and established a sales office in California. In addition,
from 1994 to date, the Company has incurred significant expenses to develop
proprietary development tools and "4 SIGHT", 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 41 such personnel as of June 30, 1996, as compared to eight
such personnel as of January 1, 1995.
 
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
                                                              -----------------------------------
                                                                YEAR ENDED          SIX MONTHS
                                                               DECEMBER 31,       ENDED JUNE 30,
                                                              ---------------     ---------------
                                                              1994      1995      1995      1996
                                                              -----     -----     -----     -----
<S>                                                           <C>       <C>       <C>       <C>
Revenue.....................................................  100.0%    100.0%    100.0%    100.0%
Cost of sales...............................................   85.9      81.4      87.7      72.1
                                                              -----     -----     -----     -----
  Gross profit..............................................   14.1      18.6      12.3      27.9
Selling, general and administrative expenses................   14.5      18.1      16.2      20.7
                                                              -----     -----     -----     -----
  Operating income (loss)...................................   (0.4)      0.5      (3.9)      7.2
Factor fees/Interest expense................................    6.0       4.8       6.8       3.6
                                                              -----     -----     -----     -----
Income (loss) before provision for income taxes.............   (6.4)     (4.3)    (10.7)      3.6
Provision for income taxes..................................     --        --        --       1.1
                                                              -----     -----     -----     -----
Net income (loss)...........................................   (6.4)%    (4.3)%   (10.7)%     2.5%
                                                              =====     =====     =====     =====
</TABLE>
 
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995
 
     Revenue.  Revenue increased by 107.2%, or $10.1 million, from $9.5 million
in the first six months of 1995 to $19.6 million in the first six months of
1996. 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 70.2%, or $5.8 million, from $8.3 million
in the first six months of 1995 to $14.1 million in the first six months of
1996. The increase was due to increased personnel costs resulting from the
hiring of additional consultants to support the significant increase in demand
for the Company's services. The Company's gross profit increased by $4.3
million, from $1.2 million in the first six months of 1995 to $5.5 million in
the first six months of 1996. Gross profit margin increased from 12.3% of
revenue in the first six months of 1995 to 27.9% of revenue in the first six
months of 1996. 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.
 
                                       18
<PAGE>   20
 
     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
Advanced Development Center and related development costs and professional fees.
Selling, general and administrative expenses increased by 164.5%, or $2.6
million, from $1.5 million in the first six months of 1995 to $4.1 million in
the first six months of 1996, and increased as a percentage of revenue from
16.2% to 20.7%, respectively. The increases in such expenses were due primarily
to the expansion of the Company's sales and marketing force later in 1995, the
additional accounting and financial personnel added in the first six months of
1996, increased travel and entertainment expenses due to the growth of the
business and the employee base and an increase in the allowance for doubtful
accounts.
 
     Factor fees/Interest expense.  Factor fees are the charges incurred by the
Company to finance its accounts receivable. The rapid increase in the Company's
business and revenue resulted in increased working capital requirements and the
Company utilized its increasing accounts receivable base as a source of security
to obtain financing because the Company was unable to attain more traditional
financing. See "-- Liquidity and Capital Resources." The Company also incurred
interest expense for bank borrowings and capital lease transactions and,
beginning in April 1996, for the subordinated debentures. Such expenses
increased by 10.2%, or $65,000, from $637,000 in the first six months of 1995 to
$702,000 in the first six months of 1996, but decreased as a percentage of
revenue from 6.8% to 3.6%, respectively. The Company changed factors in October
1995. The Company's previous factor charged significantly higher fees than the
current factor. The effect of the decrease in factor rates in conjunction with a
partial replacement of the factor debt with a portion of the proceeds from the
issuance of subordinated debentures was offset by an increase in the volume of
accounts receivable financed. The Company expects to utilize a portion of the
net proceeds from this offering to repay all amounts outstanding under its
existing factoring relationship.
 
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
 
     Revenue.  Revenue increased by 261.6%, or $17.8 million, from $6.8 million
in 1994 to $24.6 million in 1995. 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 increased by 242.7%, or $14.2
million, from $5.8 million in 1994 to $20.0 million in 1995. The increase was
due to increased personnel costs resulting from the hiring of additional
consultants to support the Company's significant increase in demand for the
Company's services. The Company's gross profit increased by 376.8%, or $3.6
million, from $958,000 in 1994 to $4.6 million in 1995. Gross profit margin
increased from 14.1% of revenue in 1994 to 18.6% of revenue in 1995. 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 increased by 351.5%, or $3.5 million, from $986,000 in
1994 to $4.5 million in 1995, and increased as a percentage of revenue from
14.5% to 18.1% of revenue, respectively. The increases in such expenses in
absolute dollars and as percentage of revenue were due primarily to the
expansion of the Company's sales and marketing activities to support the
Company's growth. In 1995, selling, general and administrative expenses included
operations in India and California which were established in late 1994.
 
     Factor fees/Interest expense.  Factors fees and interest expense increased
by 187.3%, or $766,000, from $409,000 in 1994 to $1.2 million in 1995 as a
result of increased volume of accounts receivable financed resulting from
revenue increases. The Company did not establish a collections department until
the first quarter of 1996. Slow accounts receivable turnover in 1995 contributed
to increased factor fees. Factor fees and interest expense decreased as a
percentage of revenue from 6.0% to 4.8% of revenue in 1994 and 1995,
respectively, as a result of increased revenue.
 
                                       19
<PAGE>   21
 
SELECTED QUARTERLY RESULTS OF OPERATIONS
 
     The following table presents certain condensed unaudited quarterly
financial information for each of the ten quarters through June 30, 1996. This
information is derived from unaudited consolidated financial statements of the
Company that include, in the opinion of the Company, all adjustments (consisting
only of normal recurring adjustments) necessary for a fair presentation of
results of operations for such periods, when read in conjunction with the
audited Consolidated Financial Statements of the Company and notes thereto
appearing elsewhere in this Prospectus.
 
<TABLE>
<CAPTION>
                                                                    QUARTER ENDED
                    -------------------------------------------------------------------------------------------------------------
                    MAR. 31,   JUNE 30,   SEPT. 30,   DEC. 31,   MAR. 31,   JUNE 30,   SEPT. 30,   DEC. 31,   MAR. 31,   JUNE 30,
                      1994       1994       1994        1994       1995       1995       1995        1995       1996       1996
                    --------   --------   ---------   --------   --------   --------   ---------   --------   --------   --------
                    (IN THOUSANDS EXCEPT PER SHARE DATA)
<S>                 <C>        <C>        <C>         <C>        <C>        <C>        <C>         <C>        <C>        <C>
STATEMENT OF
 OPERATIONS DATA:
Revenue...........   $  644     $1,082     $ 2,481     $2,593    $ 3,850     $5,623     $ 7,272     $7,844     $8,710    $ 10,916
Cost of sales.....      437        707       1,704      2,994      3,857      4,454       5,791      5,919      6,423       7,723
                    --------   --------   ---------   --------   --------   --------   ---------   --------   --------   --------
  Gross profit....      207        375         777       (401)        (7 )    1,169       1,481      1,925      2,287       3,193
Selling, general
  and
  administrative
  expenses........       30        218         372        366        721        816       1,179      1,736      1,644       2,421
                    --------   --------   ---------   --------   --------   --------   ---------   --------   --------   --------
  Operating income
    (loss)........      177        157         405       (767)      (728 )      353         302        189        643         772
Factor
  fees/Interest
  expense.........       28         67         149        165        320        317         344        194        315         387
                    --------   --------   ---------   --------   --------   --------   ---------   --------   --------   --------
Income (loss)
  before provision
  for income
  taxes...........      149         90         256       (932)    (1,048 )       36         (42)        (5)       328         385
Provision for
  income taxes....       --         --          --         --         --         --          --         --        101         117
                    --------   --------   ---------   --------   --------   --------   ---------   --------   --------   --------
Net income
  (loss)..........   $  149     $   90     $   256     $ (932)   $(1,048 )   $   36     $   (42)    $   (5)    $  227    $    268
                    =======    =======     =======     ======    =======    =======     =======     ======    =======     =======
Net income (loss)
  per share.......   $ 0.01     $ 0.01     $  0.02     $(0.07)   $ (0.08 )   $ 0.00     $  0.00     $ 0.00     $ 0.02    $   0.02
                    =======    =======     =======     ======    =======    =======     =======     ======    =======     =======
Shares used in per
  share
  calculation.....   13,737     13,737      13,737     13,737     13,737     13,737      13,737     13,737     13,737      11,913
                    =======    =======     =======     ======    =======    =======     =======     ======    =======     =======
</TABLE>
 
     The Company's historical operating results have varied substantially from
quarter to quarter, and the Company expects that they will continue to do so.
Due to the relatively fixed nature of certain of the Company's costs, including
personnel and facilities costs, a decline in revenue in any fiscal quarter would
result in lower profitability in that quarter. A variety of factors, many of
which are not within the Company's control, influence the Company's quarterly
operating results, including seasonal patterns of hardware and software capital
spending by customers, information technology outsourcing trends, the timing,
size and stage of projects, new service introductions by the Company or its
competitors, levels of market acceptance for the Company's services or the
hiring of additional staff. Operating results also may be impacted by the timing
of billings and changes in the Company's billing and utilization rates. The
Company believes, therefore, that past operating results and period-to-period
comparisons should not be relied upon as an indication of future performance.
Demand for the Company's services generally is lower in the fourth quarter due
to reduced activity during the holiday season and fewer working days for those
customers which curtail operations during such period. The Company anticipates
that its business will continue to be subject to such seasonal variations.
 
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.
 
                                       20
<PAGE>   22
 
LIQUIDITY AND CAPITAL RESOURCES
 
     Since its inception, the Company has funded its operations primarily from
cash generated by operations, factoring of accounts receivable and equipment
leases. Cash used in operating activities was $715,000 and $2.3 million in 1994
and 1995, respectively, and resulted primarily from the growth in accounts
receivable and unbilled services. During the six months ended June 30, 1996,
cash flow used in operating activities was $2,551,000 which resulted primarily
from increases in accounts receivable and unbilled services and a reduction of
accrued payroll and related taxes, partially offset by net income and an
increase in accrued expenses and other liabilities.
 
     The Company's working capital deficit was $1.6 million at December 31,
1995. The Company had working capital of $2.8 million at June 30, 1996.
 
     The Company invested $89,000, $142,000 and $230,000 in capital equipment
and furniture in 1994, 1995 and the first six months of 1996, respectively.
Although there are no other material commitments for capital expenditures
currently outstanding, the Company intends further capital expenditures for
computer equipment in 1996 approximating $400,000. See "Use of Proceeds."
 
     The Company's current factoring agreement with Access Capital, Inc. (the
"Factor") provides that the Company must offer all of its trade accounts
receivable to the Factor for financing; however, the Factor is under no
obligation to accept any or all of such receivables. The Factor charges an
administrative fee of 0.75% on each invoice plus an additional 0.75% for each
15-day period that the invoice remains unpaid, up to a maximum of 120 days or
6.5%. If the amount of a factored receivable is not paid by reason of the
financial inability of the customer, the Company is not liable to reimburse the
Factor. If, however, the Factor, through legal action or otherwise, settles,
compromises or assigns the claim for any receivable, the amount of any reduction
resulting from such settlement, compromise or assignment will reduce the balance
due to the Company. The agreement, which expires on October 19, 1996, is
renewable for a term of one year unless the Company or the Factor gives notice
of cancellation. The Factor has a security interest in all of the assets of the
Company. 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. The Company intends to seek more
traditional financing, such as a bank line of credit, following this offering.
No assurance can be made that such financing will be available on terms
acceptable to the Company, if at all.
 
     In October 1995 and May 1996, the Company deposited $100,000 and $200,000
of cash, respectively, in an escrow account pursuant to an agreement with its
former factor subject to the disposition of certain unresolved differences
between the Company and such factor relating to the factor fees and amounts due
between the parties. These differences were resolved by the parties in June
1996, and approximately $197,000 was returned to the Company and the remaining
balance was released to such former factor.
 
     In March 1996, in anticipation of the debenture financing described below,
the Company obtained a $750,000 line of credit, payable on demand, from a bank.
The line of credit carried interest at the federal funds rate plus 1%.
Borrowings under the line totalled $200,000 at March 31, 1996 and $300,000 in
April 1996, when the Company repaid all amounts outstanding under such line in
connection with the debenture financing described below. The line of credit has
been terminated in accordance with the terms of such debenture financing.
 
     In April 1996, the Company issued and sold five-year 9% subordinated
debentures in the aggregate principal amount of $6.0 million to Summit Ventures
IV, L.P. and Summit Investors III, L.P. The subordinated debentures were issued
to raise funds for working capital and general corporate purposes, to repurchase
from current shareholders, Messrs. Pandey, Koneru and Valluripalli, an aggregate
of 4,881,066 shares of Common Stock for an aggregate of $1.5 million, to repay
approximately $300,000 outstanding under the $750,000 credit facility described
above and to satisfy approximately $358,000 of cash overdrafts. The Company
expects to prepay in full all amounts outstanding under such debentures with a
portion of the net proceeds from this offering. There is no prepayment penalty.
See "Use of Proceeds" and "Certain Transactions."
 
                                       21
<PAGE>   23
 
     Subsequent to December 31, 1995, the Company determined that it had
unrecorded and unpaid federal and state payroll-related taxes for certain
employees. As a result of the Company's voluntary disclosure to the Internal
Revenue Service of certain unpaid tax liabilities, on June 5, 1996, the Company
received an audit assessment from the Internal Revenue Service for unpaid 1994
and 1995 federal income tax withholding, FICA and FUTA taxes in the aggregate
amount of $814,000, of which approximately $793,000 was paid in August 1996. No
interest or penalties were assessed. Reserves, aggregating $1.0 million,
including the amount of the Internal Revenue Service audit assessment, have been
recorded. No assurance may be given, however, that interest, penalties or
additional state or federal taxes will not be assessed in the future. The
Company's principal shareholders, Messrs. Pandey, Koneru and Valluripalli, have
agreed to indemnify the Company for any and all losses which the Company may
sustain, in excess of the $1.0 million reserve, net of any tax benefits realized
by the Company, arising from or relating to federal or state tax, interest or
penalty payment obligations resulting from the above subject matter. See
"Certain Transactions." The Company believes that its failure to record and pay
1994 and 1995 federal and state payroll-related taxes for certain employees
resulted from a combination of factors, including lack of internal controls,
lack of financial expertise and oversight, and the Company's reliance on outside
professional advice. The Company hired a Chief Financial Officer in January 1996
who has implemented accounting and financial controls to ensure the Company's
compliance with payroll tax regulations.
 
     The Company believes that the net proceeds of this offering, together with
available funds, existing factoring arrangements and the cash flow expected to
be generated from operations, will be adequate to satisfy its current and
planned operations for at least the next 24 months.
 
RECENT PRONOUNCEMENTS ON ACCOUNTING FOR STOCK-BASED COMPENSATION
 
     In October 1995, the Financial Accounting Standards Board issued Statement
of Accounting Standards No. 123, "Accounting for Stock-Based Compensation,"
which requires companies to measure employee stock compensation plans based on
the fair value method using an option pricing model or to continue to apply
Accounting Principles Board No. 25, "Accounting for Stock Issued to Employees,"
and provide pro forma footnote disclosures under the fair value method. The
Company continues to apply Accounting Principles Board No. 25 and will provide
pro forma footnote disclosure.
 
                                       22
<PAGE>   24
 
                                    BUSINESS
 
GENERAL
 
     Intelligroup 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. The Company's custom software development services are enhanced by
its exclusive access to qualified and experienced programmers at its affiliated
Advanced Development Center located in India and connected to the Company's
headquarters in the United States and to certain customer sites by dedicated,
high speed satellite links. The Company provides its services directly to
end-user organizations or as a member of consulting teams assembled by other
information technology consulting firms. The number of customers billed by the
Company has grown substantially from three customers in 1993 to 75 customers in
1995. The Company's customers are Fortune 1000 and other large and mid-sized
companies, as well as other information technology consulting firms, and include
AT&T, American Cyanamid, Citibank, Ernst & Young LLP, IBM, ICS Deloitte & Touche
LLP and Price Waterhouse LLP.
 
INDUSTRY BACKGROUND
 
     Many large and mid-sized businesses face a rapidly changing business
environment, intense global competition and accelerating technological change.
To remain competitive, such businesses continually seek to improve the quality
of products and services, lower costs, reduce cycle times and increase value to
customers. Businesses are implementing and utilizing advanced information
technology solutions that enable them to redesign their business processes in
such areas as product development, service delivery, manufacturing, sales and
human resources. The ability of an organization to integrate and deploy
redesigned business processes and related information technologies timely and
cost effectively is critical in the changing business environment.
 
     Concurrently, businesses are migrating from legacy systems running
proprietary software to open systems and client/server architectures based on
personal computers, LANs/WANs, shared databases and packaged software
applications. Such client/server systems, when developed and implemented
appropriately, enable the creation and utilization of more functional and
flexible applications which are critical to the competitive needs of businesses.
Organizations often acquire packaged enterprise-wide business software
applications for client/server systems, including those offered by leading
vendors, such as SAP, Oracle, PeopleSoft or Baan, and implement or customize
these applications to match their needs. Organizations also may develop
customized software applications designed for their specific business needs.
 
     Despite the advantages of client/server systems, the complex task of
developing and implementing enterprise-wide, mission-critical, client/server
solutions presents significant challenges for most organizations and often is a
time consuming and costly undertaking. Implementing client/server solutions
typically requires significant allocation of organizational resources.
Information technology managers must integrate and manage open systems and
distributed computing environments consisting of multiple computing platforms,
operating systems, databases and networking protocols, and implement packaged
enterprise software applications to support business objectives. Companies also
must continually keep pace with new technological developments which can render
internal information technology skills outmoded. Professionals with the
requisite technology skills often are in short supply and many organizations are
reluctant to expand their internal information systems department for particular
projects. At the same time, external economic factors encourage organizations to
focus on their core competencies and trim workforces in the information
technology management area. Accordingly, organizations often lack sufficient
technical resources necessary to design, develop and implement emerging
information technology solutions on a timely basis.
 
                                       23
<PAGE>   25
 
     To support their information technology needs, many businesses increasingly
engage experienced outside specialists to develop and implement solutions, in
shorter timeframes and at lower costs, while reducing implementation risks. As a
result, demand for information technology services has grown significantly.
According to industry sources, the global demand for SAP-related consulting
services alone was estimated to be $3.0 billion in 1995.
 
THE INTELLIGROUP SOLUTION
 
     Intelligroup provides information technology services to develop and
implement cost-effective client/server business solutions on a timely basis by
combining its expertise in a wide range of technologies and business processes
with its proprietary implementation methodology and development tools. The
Company believes it offers the following advantages:
 
     Expertise in a Wide Range of Technologies:  The Company's consultants have
expertise with SAP and Oracle products and with a wide variety of leading
computing technologies, including client/server architectures, object-oriented
technologies, CASE, distributed database management systems, micro-to-mainframe
connectivity, LAN/WAN and telecommunications technologies. Since many of the
Company's customers have invested in a variety of technologies, including legacy
systems, the Company also develops solutions for these environments.
 
     Accelerated Implementation Methodology:  The Company recently has developed
a proprietary implementation methodology, "4 SIGHT", which is designed to
minimize the time required to develop and implement SAP solutions for its
customers. "4 SIGHT" is designed to be technology independent and modular so
that it may be utilized by the Company's consultants and project managers in
other packaged applications development or software customization projects. The
Company only recently began marketing its new implementation capability, which
currently is being utilized in two projects, each of which involves
implementation of a SAP solution for a Fortune 500 company in which the Company
has been retained directly by the end-user organization. See "-- Customers."
 
     Value-Oriented Implementation:  The Company provides experienced project
managers and consultants to its customers. The Company believes that its
personnel are effective because of their industry experience. Currently, a
majority of its consultants have over three years information technology
consulting experience and approximately 25% of its consultants have over five
years of such experience. In addition, the Company has the ability to develop
and implement business solutions through its affiliated offshore Advanced
Development Center in India which gives the Company access to qualified and
experienced programmers at a reduced labor cost.
 
     Customer-Driven Approach:  The Company's project managers and consultants
maintain on-going communication and close interaction with customers to ensure
that they are involved in all facets of a project and that the solutions
designed and implemented by the Company meet the customer's needs. The Company's
goal is to provide training to its customers during a project to achieve high
levels of self-sufficiency among its customers' end users and internal
information technology personnel. The Company believes that its ability to
deliver the requisite knowledge base to its customers is critical to fostering
long-term relationships with, and generating referrals from, existing customers.
 
STRATEGY
 
     The Company's objective is to be a leading provider of 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's strategy includes the following key elements:
 
     Accelerate Shift to Turnkey Project Management:  The Company provides its
services directly to its customers or as a member of consulting teams in which
other information technology consulting firms serve as project managers. To
date, the Company has been retained primarily to implement project
specifications designed by other members of the project team. The Company
believes that turnkey project management assignments typically carry higher
margins. The Company intends to accelerate a shift to such higher-margin
 
                                       24
<PAGE>   26
 
turnkey project management assignments and to more complex projects. The Company
seeks to accomplish such shift 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 project management
assignments and more complex projects may adversely impact the Company's future
growth. The Company is unable to determine the period of time it may take to
accomplish such shift and no assurance may be given that such shift will occur.
Turnkey project management assignments require the Company to allocate resources
to employ qualified project managers and consultants and direct sales personnel.
In addition, such assignments carry long sales cycles, typically ranging from
one to six months. See "-- Sales and Marketing."
 
     Maintain and Expand Long-Term Customer Relationships:  The Company
recognizes the importance of offering superior services to its customers, which
it believes is essential to building long-term customer relationships. The
Company believes that satisfying customer expectations within established
budgets and estimated timeframes is critical to gaining repeat business and
generating new business from referrals. As information technology continues to
evolve, the Company believes that service providers with established customer
relationships and the ability to maintain a high level of expertise in new
technologies will be market leaders.
 
     Leverage and Expand Strategic Relationships:  The Company currently
maintains strategic relationships with SAP and Oracle, which are leading
enterprise software applications developers. The Company believes that its
designation as a SAP National Implementation Partner and its status as an Oracle
services provider results in direct referrals and in enhanced industry
recognition. The Company also believes that such relationships enable the
Company to broaden its customer base, maintain technological leadership and
increase its competitiveness. The Company intends to continue to cultivate its
relationships with SAP and Oracle to expand its sales opportunities. The Company
also seeks to continue to form alliances with other developers and vendors of
information technologies. In addition, the Company seeks to form strategic
alliances with other business partners, such as management consulting firms, to
pursue joint business opportunities.
 
     Maintain Technological Leadership and Enhance Methodology and Development
Tools:  The Company intends to continue to enhance its proprietary
implementation methodology and development tools as new information technology
challenges and technologies emerge. The Company also intends to leverage "4
SIGHT" by porting it to other leading software applications in addition to SAP.
The Company continually evaluates new and emerging software applications and
technologies and intends to incorporate such technologies into the Company's
service offerings.
 
     Attract and Retain Skilled, Motivated Technical Employees:  The Company
believes that its future success depends upon its ability to continue to
attract, retain and train skilled, motivated technical employees. To this end,
the Company focuses on maintaining its merit-driven employment environment and
incentive systems, including the implementation of its stock incentive plan, to
continue to motivate and reward its employees and to align their goals with
those of the Company. The Company believes that it will continue to benefit from
the recruitment efforts of its existing employee base to attract additional
qualified consultants and programmers in a highly competitive employment
environment.
 
     Expand Global Sales and Marketing Efforts:  The Company intends to expand
its sales and marketing efforts by hiring additional experienced sales
personnel, leveraging existing customers to gain referrals, offering new
services to new and existing customers, and utilizing its relationships with
industry leading information technology providers. In addition, the Company
intends to expand by establishing additional sales offices in the United States
and abroad in areas in which the Company has a base of customers or perceives
significant market opportunities. The Company believes that a strong domestic
and international presence will enhance its competitiveness by providing
additional sales presence at the local level. To date, the Company has
established operations or affiliated operations in New Jersey, California,
India, New Zealand, South Africa and the United Kingdom.
 
                                       25
<PAGE>   27
 
INTELLIGROUP SERVICES
 
     Intelligroup provides a wide range of information technology services,
including (i) enterprise-wide business process solutions utilizing SAP R/3 and
Oracle products, which are leading software applications; and (ii) systems
integration and custom software development solutions in a wide variety of
computing environments utilizing leading technologies, including client/server
architectures, object-oriented technologies, CASE, distributed database
management systems, LAN/WAN and telecommunications technologies. 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 agreements
which are terminable upon relatively short notice. The Company's custom software
development services are enhanced by its exclusive access to qualified and
experienced programmers at the Advanced Development Center located in India and
connected to the Company's headquarters in the United States and to certain
customer sites by dedicated, high speed satellite links.
 
  ENTERPRISE-WIDE BUSINESS PROCESS SOLUTIONS
 
     The Company designs, develops, integrates and implements sophisticated
business process solutions utilizing SAP R/3 and Oracle products and
incorporating best business practices and methods. The Company builds business
solutions for its customers by focusing on each customer's business objectives
and by providing business process re-engineering, information systems strategic
planning, technology implementation, comprehensive training and organizational
change management services. The Company believes that its expertise in a wide
variety of technologies, coupled with its ability to provide comprehensive
business process solutions and timely and cost-effective implementation of new
business systems, enables its customers to achieve substantial improvements in
efficiency and effectiveness in their businesses and fosters long-term customer
relationships.
 
      On-line Project Management System ("OPMS"):  The Company utilizes its OPMS
to monitor enterprise-wide business process solutions development projects. The
Company designed OPMS as a SAP subsystem developed in R/3 and installable on
customers' SAP systems. OPMS provides real-time information relating to: the
current stage of development of each program; the number of man-hours spent at
each stage of development; total man-hours spent on development during any
interval of time; programs developed by each programmer; analysis of time spent
on the development project; and technical information, including source code,
documentation and tables used in the system. The Company believes that OPMS also
shortens the turn-around time for program development as it streamlines the
information flow between the Company's offices and customer sites.
 
                                       26
<PAGE>   28
 
      Accelerated Implementation Methodology:  As a result of its experience in
implementing SAP software, the Company has developed a proprietary methodology,
"4 SIGHT", for implementing enterprise business software applications. "4
SIGHT", used by the Company to date solely in projects implementing SAP R/3, is
designed to be portable to other packaged software applications, including those
offered by Oracle, PeopleSoft and Baan, and to be adaptable to the scope of a
particular project. The following chart outlines the framework of the Company's
methodology:
- --------------------------------------------------------------------------------
 
                                   "4 SIGHT"
- --------------------------------------------------------------------------------
 
[CAPTION]
 
<TABLE>
<S>    <C>               <C>                              <C>                                  <C>
            PHASE                 DESCRIPTION                      SELECTED ACTIVITIES
       ----------------  -----------------------------    -------------------------------------
       Requirements      Develop a detailed project       - Project goals definition
       Analysis          plan.                            - Project scoping and planning
                                                          - Process identification
                                                          - Cost/benefit analysis
                                                          - Data requirement analysis
                                                          - Detailed implementation plan
                                                          development
- ---------------------------------------------------------------------------------------------------
       Prototyping       Convert the customer's           - Business process prototyping
                         business requirements to a       - Report prototyping
                         basic systems solution.          - Design data conversion
                                                              implementation and enhancements
                                                          - Transaction testing
- ---------------------------------------------------------------------------------------------------
       Development       Implement end user input to      - Software customization
                         customize the solution,          - New reports and layouts development
                         integrate with other systems     - Data interfaces completion
                         and prepare for the "go-live"    - Data conversion
                         point.                           - Technical implementation
                                                          - System testing
                                                          - Training preparation
- ---------------------------------------------------------------------------------------------------
       Implementation    Determine the most               - Data conversion
                         appropriate implementation       - Acceptance testing
                         approach, including "big         - Maintenance handover
                         bang," functionally phased       - Benefits tracking
                         and location phased              - Implementation review
                         approaches.
</TABLE>
 
- --------------------------------------------------------------------------------
 
     The Company believes that the use of "4 SIGHT" throughout an implementation
project may enable its customers to realize significant savings in time and
resources.
 
  SYSTEMS INTEGRATION AND CUSTOM SOFTWARE DEVELOPMENT
 
     The Company provides a broad range of systems integration and customized
application solutions to customers in a wide variety of industries. The Company
is engaged by customers to undertake feasibility studies, systems engineering,
custom software development and tailoring, migration strategies, systems design,
development, testing, integration, implementation, training and support in a
wide variety of computing environments. The Company, in providing such services,
utilizes leading technologies, including client/server architectures,
object-oriented technologies, CASE, distributed database management systems,
LAN/WAN and telecommunications technologies.
 
  ADVANCED DEVELOPMENT CENTER
 
     The Company provides cost-effective, timely custom software development and
tailoring in the United States, at customer sites and through its affiliated
Advanced Development Center ("ADC") located in Hyderabad, India. The ADC is
connected to the Company's headquarters in the United States and to certain
 
                                       27
<PAGE>   29
 
customer sites by dedicated, high speed satellite links. The ADC is owned by
Intelligroup Asia, a corporation organized pursuant to the laws of India and
majority owned by Messrs. Koneru and Valluripalli, two of the principal
shareholders of the Company. The ADC is operated for the sole and exclusive use
and benefit of the Company. See "Certain Transactions." The ADC is staffed with
qualified and experienced programmers, including those with SAP configuration
expertise and SAP's ABAP/4 programming capability. The Company utilizes the
programmers at the ADC, in conjunction with its consultants in the United States
who are on site at customer locations, to provide its customers with savings in
development and implementation costs and time to project completion. All
development projects undertaken by the ADC are monitored by the Company's OPMS.
OPMS also minimizes the turn-around time for program development as it
streamlines the information flow between customer sites and the ADC. The Company
intends to utilize the ADC to provide similar development services to customers
that utilize software applications other than SAP software.
 
SALES AND MARKETING
 
     The Company historically has generated new sales leads from referrals from
existing customers, and from introductions to potential customers by SAP or
Oracle, which often need to recommend qualified systems integrators to implement
their software products. In addition, the Company has been introduced to
customers by certain of its competitors, such as "Big Six" accounting firms,
which at times require the Company's expertise and ability to deliver qualified
personnel for complex projects. To date, the Company has been able to grow its
customer base without allocating significant resources to its sales and
marketing effort. The Company believes, however, that in order to continue its
growth, it must dedicate an increased level of resources to more focused sales
and marketing efforts. The Company will continue to market to potential
customers with demonstrated needs for the Company's expertise in core
information technologies and solutions such as SAP. To implement this plan, the
Company intends to expand its dedicated sales and marketing force by hiring
several individuals with experience in the industry sectors in which the Company
has prior experience.
 
     Among its sales and marketing efforts, the Company's sales force has
presented the Company's expertise at SAPPHIRE, the annual SAP America conference
for SAP service providers and end-users, and uses direct marketing techniques.
The Company intends to increase its participation in industry-recognized
programs and trade shows. Most importantly, however, the Company believes that
satisfying customer expectations within budgets and time schedules is critical
to gaining repeat business and obtaining new business from referrals. The
Company believes that it has consistently met customer expectations with respect
to budgets and time schedules.
 
     As of June 30, 1996, the Company's sales and marketing group consisted of
13 employees in the United States. The Company markets and delivers its services
to customers on an international basis through its network of offices. The
Company's headquarters in New Jersey and its branch office in San Jose,
California serve the United States market. Intelligroup Asia serves as the
Company's sales agent in Asia and the Middle East. In addition, the Company also
has established operations in New Zealand and currently has information
technology consultants on-site at a customer location. The Company intends to
add sales and marketing capabilities in New Zealand. In February 1996, the
Company established a sales office in South Africa. The Company also established
operations in the United Kingdom in June 1996. The Company also intends to
increase its local presence in the United States by opening additional sales
offices and by expanding its sales and marketing staff in New Jersey and
California.
 
     The Company's services require a substantial financial commitment by
customers and, therefore, typically involve a long sales cycle. Once a lead is
generated, the Company endeavors to understand quickly the potential customer's
business needs and objectives in order to develop the appropriate solution and
bid accordingly. The Company's project managers are involved throughout the
sales cycle to ensure mutual understanding of customer goals, including time to
completion, and technological requirements. Sales cycles for complex business
solutions projects typically range from one to six months from the time the
Company initially meets with a prospective customer until the customer decides
whether to authorize commencement of an engagement.
 
                                       28
<PAGE>   30
 
CUSTOMERS
 
     The Company provides its services directly to Fortune 1000 and other large
and mid-sized companies, many of which have information-intensive, multinational
operations, or as a member of a consulting team assembled by other information
technology consultants, such as "Big Six" accounting firms. The number of
customers billed by the Company has grown substantially from three customers in
1993 to 75 customers for the year ended December 31, 1995. For the six months
ended June 30, 1996, the Company billed 80 customers.
 
     Since January 1, 1994, the Company has served customers in a broad range of
industries. The following list includes representative customers which have
engaged the Company to perform services for which the Company has generated a
minimum of $250,000 in revenue from January 1, 1994 through June 30, 1996.
 
                                 IT CONSULTING
                         ------------------------------
                              Andersen Consulting
                               Ernst & Young LLP
                           ICS Deloitte & Touche LLP
                             KPMG Peat Marwick LLP
                              Price Waterhouse LLP
 
                                BASIC INDUSTRIES
                         ------------------------------
                               American Cyanamid
                                 Coors Brewing
                                Hoechst Celanese
                                Hoffman LaRoche
                                National Starch
                                  Schlumberger
                           Wisconsin Electric & Power
 
                                  TECHNOLOGIES
                             ---------------------
                                      AT&T
                                 Analog Devices
                               Brother Industries
                                     GTech
                                      IBM
                               Informix Software
                               Landmark Graphics
                                    Merisel
                                      NCR
                                     Oracle
                                  SAP America
 
                                   FINANCIAL
                             ---------------------
                                    Citibank
                                  PaineWebber
 
     The Company's ten largest customers accounted for, in the aggregate,
approximately 61%, 56% and 63% of its revenue in 1994, 1995 and the six months
ended June 30, 1996, respectively. During 1994, AT&T accounted for more than 10%
of revenue, while in 1995 and the six months ended June 30, 1996, Ernst & Young
LLP and Price Waterhouse LLP each accounted for more than 10% of revenue.
Currently, the Company is engaged in five separate projects for each of Ernst &
Young LLP and Price Waterhouse LLP. In 1994, 1995 and the six months ended June
30, 1996, 64%, 50% and 50%, respectively, of the Company's revenue was generated
by serving as a member of consulting teams assembled by leading information
technology consulting firms retained by organizations to manage projects to
provide enterprise-wide business process solutions.
 
     Although the Company has contracts with many of its large customers to
provide its services, in general, such contracts are terminable upon relatively
short notice, typically not more than 30 days. There can be no assurance that
the Company's customers will continue to enter into contracts with the Company
or that existing contracts will not be terminated.
 
     While each customer project is different, the following case studies
illustrate some of the types of business needs addressed by the Company and the
range of information technology solutions the Company has provided to its
customers.
 
  ENTERPRISE-WIDE IMPLEMENTATION OF SAP'S R/3 SOFTWARE:
 
     MERISEL:  Merisel, a leading national master distributor of micro-computer
products, engaged the Company to provide assistance in implementation of its SAP
business system in the United States and Canada.
 
          Problem:  Merisel, in its migration from a legacy system to a
     UNIX-based SAP system, required substantial development of customized
     reports in SAP to meet organizational requirements in the areas
 
                                       29
<PAGE>   31
 
     of sales and distribution, finance, costing, and profitability and
     logistics. This project required experienced SAP consultants, including
     analysts and ABAP/4 programmers. Merisel initially believed that it
     required approximately 500 reports to be developed in a six-month period.
 
          Solution:  SAP recommended to Merisel that it engage the Company to
     provide assistance in its SAP implementation project. The Company was able
     rapidly to form a team of experienced ABAP/4 programmers and analysts. The
     Company's on-site analyst team performed requirements analysis to identify
     reports needed in each functional area. The Company's analysts ensured that
     the user requirements were accurately transformed into a practical
     technical design and its programming staff at the ADC provided timely and
     cost-effective software development. The Company utilized its OPMS to
     manage effectively the development effort by providing the appropriate
     communications system, document and software management system, and
     progress tracking and management system. The Company's analysts also
     provided end-user training and documentation.
 
          Result:  The Company achieved the project goals on time and within
     Merisel's budget, while reducing the number of reports required by
     approximately 65%.
 
     GATX CAPITAL:  GATX, a diversified financial services company, has selected
the Company to manage its current SAP R/3 implementation project which includes
project management, business process re-engineering, SAP configuration and
prototyping, on-site and off-shore development, training, data conversion and
implementation. The GATX project is one of the first major implementations of
the new SAP R/3 Treasury Management module.
 
          Problem:  GATX required an implementation partner with SAP-experienced
     personnel for its migration from a heterogeneous collection of software
     applications and computing platforms to a new integrated and flexible
     system utilizing SAP R/3. The project goal is to provide the functionality
     required to administer the financial and physical asset management needs of
     the GATX organization, which includes over 200 subsidiaries or affiliates
     worldwide.
 
          Solution:  The Company is managing the SAP implementation utilizing "4
     SIGHT" in implementing new business processes which incorporate accounting
     and administration, treasury and cash management, invoicing, bookings,
     dispositions, projections, depreciation, asset tracking and portfolio and
     profitability analysis.
 
          Result:  The GATX SAP R/3 implementation project, which commenced in
     January 1996, is proceeding as projected.
 
  INTEGRATION OF INFORMATION TECHNOLOGIES:
 
     AT&T:  AT&T retained the Company to develop a creative software application
to provide instructional training exercises for certain of AT&T's customer
service representatives.
 
          Problem:  AT&T wanted to improve the efficiency and effectiveness of
     its training of entry level representatives by using advanced information
     technologies to enable on-line, on-the-job training.
 
          Solution:  The Company designed and developed training software using
     Sun SparcStations connected via a LAN and utilizing state-of-the-art audio
     and visual effects. The Company developed the software using Open Windows,
     C, Xt, and Xlib in a networked environment and integrated all of these
     technologies with the job functions of AT&T's proprietary customer service
     applications system.
 
          Result:  The development of this software permitted AT&T to
     administer, monitor and manage the performance of its trainees at reduced
     costs. The Company achieved the project goals on time and within AT&T's
     budget.
 
     Many of the Company's engagements involve projects that are critical to the
operations of its customers' businesses and provide benefits that may be
difficult to quantify. The Company's failure or inability to meet a customer's
expectations in the performance of its services could result in a material
adverse change to the customer's operations giving rise to claims for damages
against the Company or causing damage to the
 
                                       30
<PAGE>   32
 
Company's reputation, adversely affecting its business, financial condition and
results of operations. In addition, certain of the Company's agreements with its
customers require the Company to indemnify the customer for damages arising from
services provided to, or on behalf of, such customer. Under certain of the
Company's customer contracts, the Company warrants that it will repair errors or
defects in its deliverables without additional charge to the customer. The
Company has not experienced, to date, any material claims against such
warranties. Subsequent to the consummation of this offering, the Company intends
to purchase and maintain errors and omissions insurance to insure the Company
for damages and expenses incurred in connection with alleged negligent acts,
errors or omissions. There can be no assurance that such insurance will be
available to the Company on acceptable terms, if at all.
 
COMPETITION
 
     The markets for the Company's services are highly competitive. The Company
believes that its principal competitors include the internal information systems
groups of its prospective customers, as well as consulting and software
integration firms, including the "Big Six" accounting firms, the ISSC division
of IBM, Cambridge Technology Partners, SHL Systemhouse (a subsidiary of MCI),
and Computer Sciences Corporation, and with software applications vendors, some
of which are also customers of the Company. Many of the Company's competitors
have longer operating histories, possess greater industry and name recognition
and have significantly greater financial, technical and marketing resources than
the Company. In addition, there are relatively low barriers to entry into the
Company's markets and the Company has faced, and expects to continue to face,
additional competition from new entrants into its markets.
 
     The Company believes that the principal competitive factors in its markets
include quality of service and deliverables, speed of development and
implementation, price, project management capability and technical and business
expertise. The Company believes that its ability to compete also depends in part
on a number of competitive factors outside its control, including the ability of
its competitors to hire, retain and motivate project managers and other senior
technical staff, the development by others of services that are competitive with
the Company's services and the extent of its competitors' responsiveness to
customer needs.
 
     The Company believes that it competes based on its expertise in SAP and
Oracle products and a wide variety of technologies. There can be no assurance
that the Company will be able to continue to compete successfully with existing
and new competitors. See "Risk Factors -- Highly Competitive Information
Technology Services Industry."
 
EMPLOYEES
 
     As of June 30, 1996, the Company employed 245 full-time employees, of whom
204 were engaged as consultants, 13 were engaged in sales and marketing, and 28
were engaged in finance, administration, and management. Of the total number of
employees, 230 were based in the United States, 11 were based in New Zealand and
4 were based in South Africa. In addition, the Company engaged 30 independent
contractors to perform information technology services and has exclusive access
to all of the employees of Intelligroup Asia, which consisted of 49 software
developers and four administrative personnel at June 30, 1996.
 
     None of the Company's employees is covered by a collective bargaining
agreement. Substantially all of the Company's employees have executed a
non-competition, non-disclosure and non-solicitation assignment. In addition,
the Company requires that all new employees execute such agreement as a
condition of employment by the Company. The Company believes that it has been
successful in attracting and retaining skilled and experienced personnel. There
is increasing competition for experienced sales and marketing personnel and
technical professionals. The Company's future success will depend in part on its
ability to continue to attract, retain, train and motivate highly qualified
personnel. See "Risk Factors -- Competitive Market for Technical Personnel." The
Company considers relations with its employees to be good.
 
INTELLECTUAL PROPERTY RIGHTS
 
     The Company's success is dependent, in part, upon its proprietary
accelerated implementation methodology, development tools and other intellectual
property rights. The Company relies upon a combination of trade
 
                                       31
<PAGE>   33
 
secret, nondisclosure and other contractual arrangements, and copyright and
trademark laws, to protect its proprietary rights. The Company generally enters
into confidentiality agreements with its employees, consultants and customers,
and limits access to and distribution of its proprietary information. The
Company also requires that substantially all of its employees and consultants
assign to the Company their rights in intellectual property developed while
employed or engaged by the Company. There can be no assurance that the steps
taken by the Company in this regard will be adequate to deter misappropriation
of its proprietary information or that the Company will be able to detect
unauthorized use of and take appropriate steps to enforce its intellectual
property rights. See "Risk Factors -- Reliance on Intellectual Property Rights."
 
FACILITIES
 
     The Company owns no real property and currently leases all of its office
space. The Company subleases its headquarters in Iselin, New Jersey, totaling
approximately 13,200 square feet. The sublease expires in November 1999. The
Company believes that such headquarters has sufficient space for its current and
anticipated near-term needs. The Company uses such facility for certain
technical and support personnel, sales and marketing, administrative, finance
and management personnel. The Company also leases or subleases offices for its
operations in San Jose, California and Pretoria, South Africa.
 
LEGAL PROCEEDINGS
 
     The Company currently is being investigated by the Immigration and
Naturalization Service (the "INS") concerning possible violations of the
Immigration Reform and Control Act of 1990. Specifically, the INS is
investigating whether the Company improperly employed certain foreign national
individuals prior to their obtaining appropriate work authorization and failed
to complete properly employment eligibility verification forms for all
employees. The Company has and will continue to cooperate fully with the INS. A
notice of intent to fine has not been served upon the Company, and, therefore,
the potential for fines is not known at this time. Upon review of the fines
generally assessed in similar matters, the Company believes, however, that
fines, if any, will not exceed $150,000. The Company anticipates that the INS
investigation may continue for six months or more. There can be no assurance,
however, as to the ultimate amount of fines which may be assessed or the length
of time it may take to conclude the INS investigation. 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. Toward this end, the Company now employs
in-house counsel to oversee this function.
 
     On February 16, 1996, the Company, as plaintiff, filed a complaint in the
Superior Court of New Jersey, Chancery Division, Middlesex County, against a
former consultant to the Company, seven former employees of the Company and
Pegasus Systems, Inc. ("Pegasus"), a corporation which currently employs such
individuals (collectively, the "Defendants"). The complaint, which seeks damages
and injunctive relief against the Defendants, alleges, among other things,
misappropriation of proprietary information, unfair competition, tortious
interference, breach of employment agreements, breach of a consulting agreement
between the Company and Pegasus, and breach of duty of loyalty, good faith and
fair dealing. Upon the filing of its complaint, the Company obtained a temporary
restraining order and in May 1996 obtained a preliminary injunction prohibiting
the Defendants from using or disclosing the Company's proprietary information,
prohibiting the Defendants from contacting or soliciting certain of the
Company's customers and prohibiting the Defendants from recruiting or attempting
to recruit the Company's employees, agents or contractors. The preliminary
injunction remains in effect and the Company intends to pursue vigorously
enforcement of the injunction against the Defendants. The Defendants have filed
an answer and counterclaim. Pegasus has asserted a breach of contract
counterclaim against the Company alleging that the Company owes it $129,000 for
consulting services. Pegasus and two of the individual Defendants also asserted
claims against the Company and two of its officers for tortious interference and
defamation. In addition, one of the individual Defendants has asserted that the
Company owes him $70,000 in commissions. In addition to monetary damages the
Defendants seek injunctive relief. The Defendants unsuccessfully sought a
temporary restraining order against the Company. The Company denies the
allegations made and intends to defend vigorously the
 
                                       32
<PAGE>   34
 
counterclaims. The Company does not believe that the outcome of these claims and
counterclaims will have a material effect upon the Company's business, financial
condition or results of operations.
 
   
     In a related matter, on August 21, 1996, the Company was named as defendant
in a complaint filed in the Delaware Chancery Court, New Castle County, by
plaintiff, Systems America, Inc. ("Systems America"), a computer and technology
consulting firm. Systems America alleges that it subcontracted Pegasus
consultants to perform SAP consulting services for two companies which are also
customers of the Company, and alleges that the Company has interfered with
Systems America's customer relationships, and as a result thereof, Systems
America has sustained damages. The complaint, which seeks unspecified monetary
damages, treble damages, attorney fees and injunctive relief against the
Company, alleges deceptive trade practices, defamation and tortious interference
with prospective business or contractual relations by the Company. This action
is in a very early stage, and accordingly, the Company cannot currently assess
the ultimate outcome. However, the Company denies the allegations made and
intends to defend the claim vigorously.
    
 
     Oxford Systems Inc., a New Jersey corporation and a wholly-owned subsidiary
of the Company ("Oxford"), is named as a defendant in a civil complaint that was
filed on June 8, 1995 by Design Strategy Corp. ("Design Strategy"), in New York
State Supreme Court in the County of New York. Design Strategy alleges that
another named defendant, Citibank, N.A. ("Citibank"), contracted with Design
Strategy for database administration services. Design Strategy claims that
Citibank and Oxford conspired to deprive it of commissions, tortiously
interfered with contract, engaged in unfair competition, damaged its reputation
and misappropriated services. The Company denies the allegations made and
intends to continue to defend vigorously such action. The Company does not
believe that the outcome of the action will have a material effect upon the
Company's business, financial condition or results of operations.
 
     There is no other material litigation pending to which the Company is a
party or to which any of its property is subject.
 
                                       33
<PAGE>   35
 
                                   MANAGEMENT
 
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEE
 
     The executive officers, directors and key employee of the Company are as
follows:
 
<TABLE>
<CAPTION>
                      NAME                         AGE                     POSITION
- -------------------------------------------------  ----    ----------------------------------------
<S>                                                <C>     <C>
Ashok Pandey(1)(2)...............................  38      Chairman of the Board, President, Chief
                                                           Executive Officer and Director
Rajkumar Koneru..................................  26      Vice President -- Business Solutions and
                                                           Director
Nagarjun Valluripalli............................  28      Vice President -- Advanced Technology
                                                           and Director
Robert M. Olanoff................................  40      Chief Financial Officer, Treasurer and
                                                           Secretary
Paul W. Coombs...................................  40      Director of Business Solutions
Kevin P. Mohan(1)(2)(3)..........................  32      Director
Thomas S. Roberts(1)(2)(3).......................  33      Director
</TABLE>
 
- ---------------
(1) Member of Compensation Committee.
 
(2) Member of Audit Committee.
 
(3) Member of Option Committee.
 
     Within 90 days of the consummation of this offering, the Company intends to
identify and elect two additional independent, unaffiliated directors, each of
whom is expected to serve on the Audit Committee.
 
     All executive officers of the Company are elected annually by the Board of
Directors and serve until their successors are duly elected and qualified. All
directors hold office until the next annual meeting of shareholders and until
their successors shall have been duly elected and qualified. There are no family
relationships among any of the executive officers, directors and key employee of
the Company.
 
     Ashok Pandey founded the Company and has served as a director, Chairman of
the Board, President, and Chief Executive Officer of the Company since its
inception in 1987. Prior to founding the Company, Mr. Pandey was a consultant to
AT&T and Bell Laboratories. He has more than twelve years of experience in
developing systems and application software.
 
     Rajkumar Koneru joined the Company in April 1996 and currently serves as
Vice President -- Business Solutions and as a director. In May 1993, Messrs.
Koneru and Valluripalli co-founded Oxford Systems Inc., a systems integration
company ("Oxford"). In March 1994, they sold all of the issued and outstanding
capital stock of Oxford to the Company. See "Certain Transactions." From June
1992 through December 1992, Mr. Koneru was a consultant with Super Solutions
Corporation and, from March 1993 until March 1996 he was a consultant for the
Boston Group, each an information technology consulting firm. Following
consummation of the Company's transaction with Oxford, Mr. Koneru continued to
be employed by the Boston Group, which subcontracted Mr. Koneru's services to
the Company.
 
     Nagarjun Valluripalli joined the Company in March 1994 and currently serves
as Vice President -- Advanced Technology and as a director. In May 1993, Messrs.
Koneru and Valluripalli co-founded Oxford, at which Mr. Valluripalli was
responsible for business development. In March 1994, Messrs. Koneru and
Valluripalli sold all of the issued and outstanding capital stock of Oxford to
the Company. See "Certain Transactions." Prior to founding Oxford, from 1990,
Mr. Valluripalli was marketing manager for VJ Infosystems, a software training
and services company.
 
     Robert M. Olanoff joined the Company in January 1996 and currently serves
as its Chief Financial Officer, Treasurer and Secretary. Prior to joining the
Company, from 1993 through 1995, Mr. Olanoff was Chief Financial Officer and
Vice President of InfoMed Holdings, Inc. From 1990 to 1993, he was Controller of
Execu-Flow Systems, Inc. Each company is a turnkey software provider to the
healthcare industry. Mr. Olanoff is a certified public accountant.
 
                                       34
<PAGE>   36
 
     Paul W. Coombs joined the Company in July 1994 and currently serves as
Director of Business Solutions. From November 1993 through December 1994, he was
a Director of CBC Limited, a computer consulting company, of which he was a
principal shareholder. From July 1986 through November 1993, he was an
Associate -- Strategic Planning with Touche Ross & Co.
 
     Kevin P. Mohan has been a director of the Company since April 1996. Mr.
Mohan currently serves as a Vice President of various venture capital funds
(including Summit Ventures IV, L.P. and Summit Investors III, L.P., shareholders
of the Company) affiliated with Summit Partners, a venture capital firm, at
which he has been employed since 1994. Prior to joining Summit Partners, Mr.
Mohan served as an engagement manager at McKinsey & Company, Inc. Mr. Mohan is
also a director of several privately held companies.
 
     Thomas S. Roberts has been a director of the Company since April 1996. Mr.
Roberts currently serves as a General Partner of various venture capital funds
(including Summit Ventures IV, L.P. and Summit Investors III, L.P., shareholders
of the Company) affiliated with Summit Partners, a venture capital firm, at
which he has been employed since 1989. Mr. Roberts is also a director of AMX
Corporation, Catalyst International, Inc., PowerCerv Corporation, and several
privately held companies.
 
     The Board of Directors has a Compensation Committee, which approves
salaries and certain incentive compensation for management and key employees of
the Company; an Audit Committee, which reviews the results and scope of the
audit and other services provided by the Company's independent public
accountants; and an Option Committee, which administers the Company's 1996 Stock
Plan.
 
DIRECTORS' COMPENSATION
 
     Currently, directors do not receive cash compensation for services on the
Board of Directors. The Company provides reimbursement to directors for
reasonable and necessary expenses incurred in connection with attendance at
meetings of the Board of Directors.
 
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
 
     On June 3, 1996 the Board of Directors approved and shareholders adopted
the Company's Non-Employee Director Plan which became effective on July 12,
1996. The Non-Employee Director Plan provides for the grant of options to
purchase a maximum of 140,000 shares of Common Stock of the Company to non-
employee directors of the Company. The Non-Employee Director Plan is
administered by the Board of Directors.
 
   
     Each person who is a director of the Company on the effective date of the
Company's initial public offering or who becomes a director of the Company
thereafter, and who is not also an employee or officer of the Company, shall be
granted, on the effective date or the date on which he or she becomes a
director, whichever is later, an option to purchase 20,000 shares of Common
Stock, at an exercise price per share equal to the then fair market value of the
shares. No subsequent grants are permitted to such individuals under the
Non-Employee Director Plan. All options become exercisable in five equal annual
installments commencing one year after the date of grant provided that the
optionee then remains a director at the time of vesting of the installments. The
right to exercise annual installments of options will be reduced proportionately
based on the optionee's actual attendance at directors' meetings if the optionee
fails to attend at least 80% of the directors' meetings held in any calendar
year. The term of each option will be for a period of ten years from the date of
grant, unless sooner terminated in accordance with the Non-Employee Director
Plan. Options may not be transferred except by will or by the laws of descent
and distribution or pursuant to a domestic relations order and are exercisable
to the extent vested at any time prior to the scheduled expiration date of the
option. The Non-Employee Director Plan terminates on the earlier of May 31, 2006
or at such time as all shares of Common Stock currently or hereafter reserved
for issuance shall have been issued.
    
 
                                       35
<PAGE>   37
 
EXECUTIVE COMPENSATION
 
     The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by or paid to the Company's Chief
Executive Officer and to the only other executive officer of the Company whose
aggregate cash compensation exceeded $100,000 (collectively, the "Named
Executives") during the year ended December 31, 1995.
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                             ANNUAL COMPENSATION
                                                          --------------------------
                                                                        OTHER ANNUAL      ALL OTHER
                                                                        COMPENSATION     COMPENSATION
        NAME AND PRINCIPAL POSITION(1)           YEAR     SALARY($)        (2)($)           (3)($)
- -----------------------------------------------  ----     ---------     ------------     ------------
<S>                                              <C>      <C>           <C>              <C>
Ashok Pandey...................................  1995      145,150         18,367           12,190
     President and Chief
     Executive Officer
Nagarjun Valluripalli..........................  1995      147,968         19,727            3,858
     Vice President -- Advanced Technology
</TABLE>
 
- ---------------
(1) Mr. Koneru joined the Company in April 1996 and currently serves as Vice
    President -- Business Solutions and as a director. Immediately prior to
    becoming an employee of the Company, Mr. Koneru was a consultant with the
    Boston Group, which subcontracted Mr. Koneru's services to the Company from
    March 1994 to April 1996.
 
(2) Represents car allowance and payment by the Company of certain non-recurring
    personal expenses.
 
(3) Represents the value of insurance premiums paid by the Company with respect
    to whole life insurance for the benefit of such Named Executive.
 
1996 STOCK PLAN
 
     The 1996 Stock Plan was adopted by the Board of Directors and approved by
the shareholders of the Company on June 3, 1996 and became effective on July 12,
1996. A total of 1,450,000 shares are reserved for issuance upon the exercise of
options and/or stock purchase rights granted under the 1996 Stock Plan, 500,000
of which have been granted. Those eligible to receive stock option grants or
stock purchase rights under the 1996 Stock Plan include employees, non-employee
directors and consultants. The 1996 Stock Plan is administered by the Option
Committee of the Board of Directors of the Company, which is comprised solely of
outside directors.
 
     Subject to the provisions of the 1996 Stock Plan, the administrator of the
1996 Stock Plan has the discretion to determine the optionees and/or grantees,
the type of options to be granted (incentive stock options ("ISOs") or
nonqualified stock options ("NQSOs")), the vesting provisions, the terms of the
grants and such other related provisions as are consistent with the 1996 Stock
Plan. The exercise price of an ISO may not be less than the fair market value
per share of the Common Stock on the date of grant or, in the case of an
optionee who beneficially owns 10% or more of the outstanding capital stock of
the Company, not less than 110% of the fair market value per share on the date
of grant. The exercise price of a NQSO may not be less than 85% of the fair
market value per share of the Common Stock on the date of grant or, in the case
of an optionee who beneficially owns 10% or more of the outstanding capital
stock of the Company, not less than 110% of the fair market value per share on
the date of grant. The purchase price of shares issued pursuant to stock
purchase rights may not be less than 50% of the fair market value of such shares
as of the offer date of such rights.
 
     The options terminate not more than ten years from the date of grant,
subject to earlier termination on the optionee's death, disability or
termination of employment with the Company, but provide that the term of any
options granted to a holder of more than 10% of the outstanding shares of
capital stock may be no longer than five years. Options are not assignable or
otherwise transferable except by will or the laws of descent and
 
                                       36
<PAGE>   38
 
distribution. In the event of a merger or consolidation of the Company with or
into another corporation or the sale of all or substantially all of the
Company's assets in which the successor corporation does not assume outstanding
options or issue equivalent options, the Board of Directors of the Company is
required to provide accelerated vesting of outstanding options. The 1996 Stock
Plan terminates on June 5, 2006.
 
     In June 1996, the Option Committee granted ISOs effective July 1996, to
acquire an aggregate of 220,000 shares to the following officer and key
employee: Robert M. Olanoff, 88,000 shares; and Paul Coombs, 132,000 shares. All
of these options have an exercise price of $8.00 per share. One-third of the
shares subject to these options shall become exercisable on each of the
sixth-month, eighteenth-month and thirtieth-month anniversary of the date of
grant.
 
EMPLOYMENT AGREEMENTS, INDEMNIFICATION AGREEMENTS AND NON-COMPETITION,
NON-DISCLOSURE AND NON-SOLICITATION AGREEMENTS
 
     Each of the executive officers and key employee of the Company entered into
a two-year employment agreement with the Company commencing June 1, 1996. Under
the terms of their respective agreements, Messrs. Pandey, Koneru, Valluripalli,
Olanoff and Coombs are entitled to annual base salary of $200,000, $200,000,
$200,000, $100,000 and $200,000, respectively, and bonuses, the amounts and
payments of which are within the discretion of the Compensation Committee of the
Board of Directors. In addition, the Company and Mr. Olanoff entered into a
Change in Control Severance Pay Agreement, dated June 1, 1996, pursuant to which
the Company has agreed, subject to certain restrictions, to pay Mr. Olanoff the
equivalent of six months salary in the event that Mr. Olanoff is terminated
without cause if there is a change in control of the Company.
 
     The above described agreements require each individual to maintain the
confidentiality of Company information. In addition, each of such persons has
agreed that during the term of his respective agreement and thereafter for a
period of two years, such person will not compete with the Company in any state
or territory of the United States, or any other country, where the Company does
business by engaging in any capacity in any business which is competitive with
the business of the Company. The employment agreements also provide that for a
period of two years following the termination of employment, each such
individual shall not solicit the Company's customers or employees.
 
     In addition to the foregoing employment contracts, the Company has executed
indemnification agreements with each of its executive officers and directors
pursuant to which the Company has agreed to indemnify such party to the full
extent permitted by law, subject to certain exceptions, if such party becomes
subject to an action because such party is a director, officer, employee, agent
or fiduciary of the Company.
 
     Substantially all of the Company's employees have agreed not to compete
with the Company, not to disclose Company information and not to solicit Company
employees.
 
KEY MAN INSURANCE
 
     Messrs. Pandey, Koneru and Valluripalli are key employees of the Company
and the contribution of each of them to the Company has been and will be a
significant factor in the Company's future success. The loss of any of them
could adversely affect the Company's business and results of operations. The
Company maintains, and is the beneficiary of, a life insurance policy on the
life of each of Messrs. Pandey, Koneru and Valluripalli. The face amount of each
such policy is $1.0 million.
 
                              CERTAIN TRANSACTIONS
 
     In March 1994, the Company acquired all of the issued and outstanding
shares of Oxford Systems Inc., a New Jersey corporation ("Oxford"), from Messrs.
Koneru and Valluripalli, the co-founders of Oxford, in exchange for an aggregate
of a two-thirds equity interest in the Company.
 
     Messrs. Koneru and Valluripalli are the majority shareholders of
Intelligroup Asia and Mr. Pandey has the right, subject to necessary Indian
government approvals, to acquire the remaining outstanding shares of
Intelligroup Asia. Intelligroup Asia operates the Advanced Development Center in
Hyderabad, India for the
 
                                       37
<PAGE>   39
 
sole and exclusive use and benefit of the Company and all contracts and
commercial arrangements of Intelligroup Asia are subject to prior approval by
the Company. The Company and Messrs. Pandey, Koneru and Valluripalli have
entered into an agreement pursuant to which the Company will, subject to
necessary Indian government approvals, acquire the shares of Intelligroup Asia
for nominal consideration when such shares may be transferred in accordance with
the laws of India.
 
     In March 1996, Summit Ventures IV, L.P., guaranteed a $750,000 line of
credit obtained by the Company from a bank. All borrowings under such line of
credit were repaid by the Company in April 1996, upon consummation of the
financing described below.
 
     In April 1996, the Company issued and sold five-year 9% subordinated
debentures in the aggregate principal amount of $6.0 million to Summit Ventures
IV, L.P. and Summit Investors III, L.P. In connection therewith, the Company
also issued warrants to purchase, for nominal consideration (less than $0.25 in
the aggregate), up to a maximum of 1,922,845 shares of Common Stock of the
Company. The number of shares underlying the warrants is subject to downward
adjustment based upon the initial public offering price. At an assumed initial
public offering price of $9.00 per share, there are 1,478,400 shares of Common
Stock underlying the warrants. See "Capitalization," "Description of Capital
Stock -- Warrants" and "Principal and Selling Shareholders." The warrants will
be exercised upon effectiveness of this offering. The holders of the shares of
Common Stock issuable upon the exercise of the warrants are entitled to certain
registration rights. See "Description of Capital Stock -- Registration Rights."
In addition, each of the current shareholders have granted the warrantholders
certain rights of co-sale in the event that such shareholders propose to sell
their shares of Common Stock after this offering. The Company expects to prepay
in full the amounts outstanding under the subordinated debentures with a portion
of the net proceeds of this offering. There is no prepayment penalty. See "Use
of Proceeds" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources."
 
     Following the issuance and sale of the subordinated debentures and in
connection therewith, see "Use of Proceeds," the Company repurchased from
Messrs. Pandey, Koneru and Valluripalli an aggregate of 4,881,066 shares of
Common Stock for an aggregate cash payment of $1.5 million, or $500,000 to each
such shareholder, at a price per share equal to $0.31. The repurchased shares
were canceled upon consummation of such transaction. The debenture transaction
was consummated, in part, to allow Messrs. Pandey, Koneru and Valluripulli to
diversify their portfolios and achieve a degree of liquidity.
 
     Subsequent to December 31, 1995, the Company determined that it had
unrecorded and unpaid federal and state payroll-related taxes for certain
employees. As a result of the Company's voluntary disclosure to the Internal
Revenue Service of certain unpaid tax liabilities, on June 5, 1996, the Company
received an audit assessment from the Internal Revenue Service for unpaid 1994
and 1995 federal income tax withholding, FICA and FUTA taxes in the aggregate
amount of $814,000, of which approximately $793,000 was paid in August 1996. No
interest or penalties were assessed. Reserves, aggregating $1.0 million,
including the amount of the Internal Revenue Service audit assessment, have been
recorded. No assurance may be given, however, that interest, penalties or
additional state or federal taxes will not be assessed in the future. The
Company's principal shareholders, Messrs. Pandey, Koneru and Valluripalli, have
agreed to indemnify the Company for any and all losses which the Company may
sustain, in excess of the $1.0 million reserve, net of any tax benefits realized
by the Company, arising from or relating to federal or state tax, interest or
penalty payment obligations resulting from the above subject matter. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
 
     The Board of Directors of the Company has adopted a policy requiring that
any future transactions between the Company and its officers, directors,
principal shareholders and their affiliates be on terms no less favorable to the
Company than could be obtained from unrelated third parties. In addition, New
Jersey law requires that any such transactions be approved by a majority of the
disinterested members of the Company's Board of Directors.
 
                                       38
<PAGE>   40
 
                       PRINCIPAL AND SELLING SHAREHOLDERS
 
     The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of June 30, 1996, and as adjusted to
reflect the sale of the shares of Common Stock offered hereby, by (i) each
person who is known to the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each of the Company's directors and
Named Executives, (iii) the Selling Shareholders, and (iv) all current directors
and executive officers of the Company as a group.
 
   
<TABLE>
<CAPTION>
                                         NUMBER OF SHARES OF                      NUMBER OF SHARES OF
                                            COMMON STOCK                              COMMON STOCK
                                         BENEFICIALLY OWNED       NUMBER OF        BENEFICIALLY OWNED
              DIRECTORS,                PRIOR TO OFFERING(1)       SHARES          AFTER OFFERING(1)
         NAMED EXECUTIVES AND           ---------------------       BEING       ------------------------
           5% SHAREHOLDERS               NUMBER       PERCENT      OFFERED       NUMBER       PERCENT(2)
- --------------------------------------  ---------     -------     ---------     ---------     ----------
<S>                                     <C>           <C>         <C>           <C>           <C>
Ashok Pandey(3).......................  2,440,534       27.7%      127,200      2,313,334        21.3%
Rajkumar Koneru(3)....................  2,440,533       27.7       127,200      2,313,333        21.3
Nagarjun Valluripalli(3)..............  2,440,533       27.7       127,200      2,313,333        21.3
Summit Ventures IV, L.P. and Summit
  Investors III, L.P.(4)..............  1,478,400       16.8        43,400      1,435,000        13.2
Kevin P. Mohan(5).....................  1,478,400       16.8        43,400      1,435,000        13.2
Thomas S. Roberts(6)..................  1,478,400       16.8        43,400      1,435,000        13.2
All directors and executive officers
  as a group (6 persons)(7)...........  8,800,000      100.0%      425,000      8,375,000        77.2%
</TABLE>
    
 
- ---------------
(1) Except as set forth in the footnotes to this table and subject to applicable
    community property law, the persons named in the table have sole voting and
    investment power with respect to all shares.
 
(2) Applicable percentage of ownership is based on 8,800,000 shares of Common
    Stock outstanding on June 30, 1996, including 1,478,400 shares of Common
    Stock issuable upon the exercise, for nominal consideration (less than $0.25
    in the aggregate), of outstanding warrants, which warrants will be exercised
    upon the effectiveness of this offering, and 10,850,000 shares of Common
    Stock outstanding after the completion of this offering.
 
(3) The address for each of Messrs. Pandey, Koneru and Valluripalli is c/o
    Intelligroup, Inc., 517 Route One South, Iselin, NJ 08830.
 
(4) Includes, based upon an assumed initial public offering price of $9.00 per
    share, 1,404,480 shares and 73,920 shares of Common Stock issuable upon the
    exercise of warrant shares owned by Summit Ventures IV, L.P. and Summit
    Investors III, L.P., respectively. The number of shares underlying the
    warrants is subject to a one-time adjustment upon the effectiveness of this
    offering based upon the initial public offering price. Such warrants may
    represent in the aggregate between 11.0% and 20.8% of the total number of
    shares of Common Stock outstanding prior to this offering. See
    "Capitalization." The address of both entities is 600 Atlantic Avenue, Suite
    2800, Boston, MA 02210.
 
(5) Kevin P. Mohan is a Vice President of Summit Partners and, as such, has the
    power to vote or direct the vote of and to dispose of or direct the
    disposition of the shares owned by Summit Ventures IV, L.P. and Summit
    Investors III, L.P. See Note 4. Mr. Mohan expressly disclaims beneficial
    ownership of such shares, except as to his proportionate interest in Summit
    Ventures IV, L.P. and Summit Investors III, L.P.
 
(6) Thomas S. Roberts is a General Partner of Summit Partners and, as such, has
    the power to vote or direct the vote of and to dispose of or direct the
    disposition of the shares owned by Summit Ventures IV, L.P. and Summit
    Investors III, L.P. See Note 4. Mr. Roberts expressly disclaims beneficial
    ownership of such shares, except as to his proportionate interest in Summit
    Ventures IV, L.P. and Summit Investors III, L.P.
 
(7) See Notes 3, 5 and 6.
 
                                       39
<PAGE>   41
 
                          DESCRIPTION OF CAPITAL STOCK
 
     The Company's authorized capital stock consists of 25,000,000 shares of
Common Stock, $.01 par value per share, and, upon the effective date of this
offering, 5,000,000 shares of undesignated Preferred Stock, $.01 par value per
share (the "Preferred Stock").
 
     The following statements are brief summaries of certain provisions with
respect to the Company's capital stock contained in its Amended and Restated
Certificate of Incorporation, a copy of which has been filed as an exhibit to
the Registration Statement. The following summary is qualified in its entirety
by reference thereto.
 
COMMON STOCK
 
     Holders of shares of Common Stock are entitled to one vote for each share
held of record on matters to be voted on by the shareholders of the Company.
Holders of shares of Common Stock will be entitled to receive dividends, subject
to the senior rights of preferred shareholders, if any, when, as and if declared
by the Board of Directors (see "Dividend Policy") and to share ratably in the
assets of the Company legally available for distribution to its shareholders in
the event of the liquidation, dissolution or winding-up of the Company. Holders
of Common Stock have no preemptive, subscription, redemption or conversion
rights. All of the issued and outstanding shares of Common Stock are, and all
shares of Common Stock to be sold in this offering will be, duly authorized,
validly issued, fully paid and nonassessable.
 
     At July 31, 1996, there were 7,321,600 shares issued and outstanding and
held of record by three shareholders, excluding shares issuable upon the
exercise of warrants. See "-- Warrants."
 
PREFERRED STOCK
 
     The Company's Board of Directors may without further action by the
Company's shareholders, from time to time, direct the issuance of shares of
Preferred Stock in series and may, at the time of issuance, determine the
rights, preferences and limitations of each series. The holders of Preferred
Stock would normally be entitled to receive a preference payment in the event of
any liquidation, dissolution or winding-up of the Company before any payment is
made to the holders of the Common Stock. The Company does not presently intend
to issue any series of Preferred Stock.
 
     The overall effect of the ability of the Company's Board of Directors to
issue Preferred Stock may be to render more difficult the accomplishment of
mergers or other takeover or change-in-control attempts. To the extent that this
ability has this effect, removal of the Company's incumbent Board of Directors
and management may be rendered more difficult. Further, this may have an adverse
impact on the ability of shareholders of the Company to participate in a tender
or exchange offer for the Common Stock and in so doing diminish the market value
of such stock. See "Risk Factors -- Control by Management and Existing
Shareholders" and "-- Anti-takeover Effect of Certain Charter and By-law
Provisions and New Jersey Law."
 
WARRANTS
 
     In April 1996, in connection with the issuance and sale by the Company to
Summit Ventures IV, L.P. and Summit Investors III, L.P. of the subordinated
debentures, the Company also issued warrants to purchase, for nominal
consideration, up to a maximum of 1,922,845 shares of Common Stock of the
Company. The number of shares underlying the warrants is subject to downward
adjustment based upon the initial public offering price. At an assumed initial
public offering price of $9.00 per share, there are 1,478,400 shares of Common
Stock underlying the warrants. See "Capitalization." The warrants will be
exercised, for nominal consideration (less than $0.25 in the aggregate), upon
effectiveness of this offering. The holders of the shares of Common Stock
issuable upon the exercise of the warrants are entitled to certain registration
rights. See "-- Registration Rights."
 
REGISTRATION RIGHTS
 
     In April 1996, the Company, in connection with the issuance of warrants to
Summit Ventures IV, L.P. and Summit Investors III, L.P., executed a Registration
Rights Agreement (the "Rights Agreement")
 
                                       40
<PAGE>   42
 
pursuant to which the Company granted certain registration rights to such
entities. Pursuant to the Rights Agreement, at any time beginning six months
after the consummation of this offering, the holders of at least 25% of the
Common Stock issuable upon the exercise of the warrants (the "Registrable
Securities") have the right, subject to certain restrictions set forth in the
Rights Agreement, to require that the Company register, under the Securities
Act, the Registrable Securities requested by such holders at the Company's
expense (on no more than two occasions).
 
     Under the Rights Agreement, the Company is obligated to use its best
efforts to qualify for registration of securities on Form S-3 under the
Securities Act. After the Company has qualified for the use of Form S-3, the
holders of Registrable Securities have the right to an unlimited number of
registrations on such form. The Company is not, however, required to effect the
registration on a Form S-3 more than once in any six-month period, or if the
aggregate market value of such securities to be registered is less than $1.0
million.
 
     Also pursuant to the Rights Agreement, if, at any time following this
offering, subject to the lock-up agreements entered into by the holders of the
Registrable Securities, the Company proposes to register any of its Common Stock
under the Securities Act for sale to the public, the holders of the Registrable
Securities have unlimited piggyback registration rights at the Company's
expense, subject to certain restrictions set forth in the Rights Agreement. In
addition, the Company has agreed to indemnify the holders of such registration
rights and each underwriter in any such offering against certain liabilities,
including liabilities under the Securities Act.
 
LIMITATION OF DIRECTOR LIABILITY
 
     The Amended and Restated Certificate of Incorporation of the Company limits
the liability of directors and officers of the Company to the Company or its
shareholders to the fullest extent permitted by New Jersey law. Specifically,
directors and officers of the Company will not be personally liable for money
damages for breach of a duty as a director or an officer, except for liability
(i) for any breach of the director's or officer's duty of loyalty to the Company
or its shareholders, (ii) for acts or omissions not in good faith or which
involve a knowing violation of law, (iii) as to directors only, under section
14A:6-12(1) of the New Jersey Business Corporation Act, which relates to
unlawful declarations of dividends or other distributions of assets to
shareholders or the unlawful purchase of shares of the corporation, or (iv) for
any transaction from which the director or officer derived an improper personal
benefit.
 
ANTI-TAKEOVER PROVISIONS
 
     The Company is governed by the provisions of Section 14A:10A-1 et seq., the
New Jersey Shareholders Protection Act (the "New Jersey Act"), of the New Jersey
Business Corporation Act, an anti-takeover law. In general, the statute
prohibits a publicly-held New Jersey corporation from engaging in a "business
combination" with an "interested shareholder" for a period of five years after
the date of the transaction in which the person became an interested
shareholder, unless the business combination is approved in a prescribed manner.
A "business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested shareholder. An "interested
shareholder" is a person who, together with affiliates and associates, owns (or
within three years, did own) 10% or more of the corporation's voting stock.
After the five-year waiting period has elapsed, a business combination between a
corporation and an interested shareholder will be prohibited unless the business
combination is approved by the holders of at least two-thirds of the voting
stock not beneficially owned by the interested shareholder, or unless the
business combination satisfies the New Jersey Act. The New Jersey Act's fair
price provision is intended to provide that all shareholders (other than the
interested shareholders) receive a fair price for their shares.
 
     In addition, the Company is authorized to issue up to 5,000,000 shares of
Preferred Stock, with rights, preferences and other designations, including
voting rights, to be determined by the Board of Directors. Furthermore, the
Amended and Restated Certificate of Incorporation also provides that: (i) the
affirmative vote of the holders of at least 80% of the voting power of all
outstanding shares of the capital stock of the Company shall be required to
adopt, amend or repeal any provision of the By-laws of the Company; (ii)
shareholders of the Company may not take any action by written consent; (iii)
special meetings shareholders may be called only by the President, the Chairman
of the Board or a majority of the Board of
 
                                       41
<PAGE>   43
 
Directors and business transacted at any such special meeting shall be limited
to matters relating to the purposes set forth in the notice of such special
meeting; (iv) the Board of Directors, when evaluating an offer related to a
tender or exchange offer or other business combination, is authorized to give
due consideration to any relevant factors, including the social, legal and
economic effects upon employees, suppliers, customers, creditors, the community
in which the Company conducts its business, and the economy of the state, region
and nation; and (v) the affirmative vote of the holders of at least 80% of the
voting power of all outstanding shares of the capital stock of the Company shall
be required to amend the above provisions or the limitation on director
liability. The New Jersey statute, the undesignated authorized Preferred Stock
and the foregoing provisions of the Amended and Restated Certificate of
Incorporation may discourage certain types of transactions involving an actual
or potential change in control of the Company and could have the effect of
delaying, deterring or preventing a change in control of the Company. In
addition, in the event of a merger or consolidation of the Company with or into
another corporation or the sale of all or substantially all of the Company's
assets in which the successor corporation does not assume outstanding options or
issue equivalent options, the Board of Directors of the Company is required to
provide accelerated vesting of outstanding options.
 
TRANSFER AGENT AND REGISTRAR
 
     The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     Upon completion of this offering, the Company will have outstanding
10,850,000 shares of Common Stock. See "Capitalization." Of these shares, the
2,475,000 shares sold in this offering will be freely transferable by persons
other than "affiliates" of the Company without restriction or further
registration under the Securities Act. The remaining 8,375,000 shares of Common
Stock, including the remaining 1,435,000 shares underlying the warrants, such
number of shares calculated on the basis of an assumed initial public offering
price of $9.00 per share, are "restricted securities" (the "Restricted Shares")
within the meaning of Rule 144 under the Securities Act and may not be sold in
the absence of registration under the Securities Act unless an exemption from
registration is available, including an exemption afforded by Rule 144.
 
     The Company's current shareholders and warrantholders have entered into
"lock-up" agreements with the Representatives of the Underwriters, providing
that, subject to certain exceptions, they will not offer, sell or otherwise
dispose of any shares of Common Stock for a period of 180 days after the date of
this Prospectus without the prior written consent of Cowen & Company, acting as
a Representative of the Underwriters. Following the expiration of the "lock-up"
period, 6,940,000 of the Restricted Shares will be eligible for resale in the
public market pursuant to Rule 144, subject to certain limitations described
below. The remaining 1,435,000 shares of Common Stock underlying the warrants
will become eligible for sale over a period of less than two years and could be
sold earlier if the warrantholders exercise any available registration rights.
The warrantholders have the right in certain circumstances to require the
Company to register under the Securities Act the shares of Common Stock
underlying the warrants for resale to the public. See "Description of Capital
Stock -- Registration Rights."
 
     Rule 144, as currently in effect, provides that an affiliate of the Company
or a person (or persons whose sales are aggregated) who has beneficially owned
Restricted Shares for at least two years but less than three years is entitled
to sell, commencing 90 days after the date of this Prospectus, within any
three-month period, a number of shares that does not exceed the greater of one
percent of the then outstanding shares of Common Stock (108,500 shares
immediately after this offering) or the average weekly trading volume in the
Common Stock during the four calendar weeks preceding such sale. Sales under
Rule 144 also are subject to certain manner-of-sale provisions, notice
requirements and the availability of current public information about the
Company. However, a person who is not an "affiliate" of the Company at any time
during the three months preceding a sale, and who has beneficially owned
Restricted Shares for at least three years, is entitled to sell such shares
under Rule 144 without regard to the limitations described above.
 
                                       42
<PAGE>   44
 
     The Securities and Exchange Commission has proposed certain amendments to
Rule 144 that would reduce by one year the holding period required for shares
subject to Rule 144 to become eligible for resale in the public market. The
proposal, if adopted, would substantially increase the number of shares of
Common Stock eligible for immediate resale following the expiration of the
lock-up agreements, with a potential adverse effect on the market price. No
assurance can be given concerning whether or when such proposal will be adopted
by the Securities and Exchange Commission.
 
     As of the date of this Prospectus, there were outstanding options to
purchase an aggregate of 500,000 shares of Common Stock. Giving effect to
vesting provisions limiting the exercisability of all of the outstanding
options, 166,667 additional shares of Common Stock will be eligible, commencing
January 1997, for immediate resale in compliance with Rules 144 and 701 under
the Securities Act (relating to the sale of shares issuable under certain
compensatory stock plans).
 
     Since there has been no public market for shares of the Common Stock prior
to this offering, the Company is unable to predict the effect that sales made
pursuant to Rules 144 or 701, or otherwise, may have on the prevailing market
price at such times for shares of the Common Stock. Nevertheless, sales of a
substantial amount of the Common Stock in the public market, or the perception
that such sales could occur, could adversely affect market prices. See "Risk
Factors -- Shares Eligible for Future Sale."
 
                                       43
<PAGE>   45
 
                                  UNDERWRITING
 
     Subject to the terms and conditions of an underwriting agreement dated as
of the date hereof (the "Underwriting Agreement"), the Company and the Selling
Shareholders have agreed to sell to each of the Underwriters named below, and
each of the Underwriters, for whom Cowen & Company and Montgomery Securities are
acting as representatives (the "Representatives"), has severally agreed to
purchase from the Company and the Selling Shareholders the respective number of
shares of Common Stock set forth opposite the name of such Underwriter below:
 
<TABLE>
<CAPTION>
                                    NAME                                   NUMBER OF SHARES
    ---------------------------------------------------------------------  ----------------
    <S>                                                                    <C>
    Cowen & Company......................................................
    Montgomery Securities................................................
 
                                                                               ---------
              Total......................................................      2,475,000
                                                                               =========
</TABLE>
 
     The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters are committed to purchase all of the shares of Common Stock offered
hereby (other than those covered by the over-allotment option described below),
if any of such shares are purchased.
 
     The Underwriters propose to offer the shares of Common Stock, in part,
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus and, in part, to certain dealers at such price
less a concession not in excess of $          per share. The Underwriters may
allow, and such dealers may re-allow, a concession not in excess of $
per share to certain brokers and dealers. After the shares of Common Stock are
released for sale to the public, the offering price and other selling terms may
from time to time be varied by the Representatives.
 
     The Selling Shareholders have granted the Underwriters an option,
exercisable for up to 30 days after the date of this Prospectus to purchase up
to an aggregate of 371,250 additional shares of Common Stock to cover
over-allotments, if any. If the Underwriters exercise their over-allotment
option, the Underwriters have severally agreed, subject to certain conditions,
to purchase approximately the same percentage thereof that the number of shares
to be purchased by each of them as shown in the foregoing table bears to the
2,475,000 shares of Common Stock offered hereby. The Underwriters may exercise
such option only to cover over-allotments made in connection with the sale of
the 2,475,000 shares of Common Stock offered hereby.
 
     The Company and the Selling Shareholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act, as amended, and to contribute to payments that the
Underwriters may be required to make in respect thereof.
 
     The Company, the Company's officers and directors, and all Selling
Shareholders have agreed not to offer, sell, contract to sell or otherwise
dispose of any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or any right to acquire Common
Stock for a period of 180 days after the date of this Prospectus without the
prior written consent (which consent may be given without notice to the
Company's shareholders or other public announcement) of Cowen & Company. Cowen &
Company has advised the Company that it has no present intention of releasing
any of the Company's shareholders or warrantholders from such lock-up agreements
until the expiration of such 180-day period. See "Shares Eligible for Future
Sale."
 
     The Representatives have advised the Company that they currently intend to
make a market in the Company's Common Stock following this offering although
they have no obligation to do so and may cease
 
                                       44
<PAGE>   46
 
such market making at any time. There can be no assurance that a market in the
Common Stock will develop after the offering.
 
     The Representatives have advised the Company and the Selling Shareholders
that the Underwriters do not intend to confirm sales in excess of 5% of the
shares offered hereby to any accounts over which they exercise discretionary
authority.
 
     Prior to this offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price will be determined by
negotiation among the Company, the Selling Shareholders and the Representatives.
Among the factors to be considered in such negotiations are the prevailing
market conditions, the results of operations of the Company in recent periods,
the market capitalization and stage of development of other companies that the
Company, the Selling Shareholders and the Representatives believe to be
comparable to the Company, estimates of the business potential of the Company,
the present state of the Company's development, and other factors deemed
relevant. The estimated initial public offering price range set forth on the
cover of this Prospectus is subject to change as a result of market conditions
and other factors.
 
     The Company's Common Stock has been approved for quotation, subject to
notice of effectiveness, on the Nasdaq National Market under the symbol "ITIG."
 
                                 LEGAL MATTERS
 
     The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Buchanan Ingersoll, Princeton, New Jersey.
Certain legal matters will be passed upon for the Underwriters by Willkie Farr &
Gallagher, New York, New York.
 
                                    EXPERTS
 
     The consolidated financial statements of the Company included in this
Prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and is included herein in reliance upon the
authority of said firm as experts in giving said report.
 
     On December 15, 1995, the Company retained Arthur Andersen LLP to act as
its independent public accountants and informed the prior auditors, Amper,
Politziner & Mattia, the Company's independent accountants since January 1995,
of its decision. In connection with its audit of the consolidated financial
statements for the year ended December 31, 1994, there were no disagreements
with the prior auditors on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures. The prior
auditors' report on the Company's consolidated financial statements for the year
ended December 31, 1994 contained no adverse opinion or disclaimer of opinion
and was not modified or qualified as to uncertainty, audit scope, or accounting
principles. The decision to change accountants was approved by the Board of the
Directors of the Company. The Company has provided the prior auditors with a
copy of the disclosure contained in this section of the Prospectus and the prior
auditors have furnished the Company with a letter addressed to the Securities
and Exchange Commission (the "Commission") stating its agreement with the above
statements. Prior to retaining Arthur Andersen LLP, the Company had not
consulted with Arthur Andersen LLP regarding accounting principles.
 
                             ADDITIONAL INFORMATION
 
     The Company has filed with the Commission a Registration Statement on Form
SB-2 (the "Registration Statement") under the Securities Act, with respect to
the shares of Common Stock offered hereby. This Prospectus, which forms a part
of the Registration Statement, does not contain all the information set forth in
the Registration Statement and the exhibits and schedules filed therewith. For
further information with respect to the Company and the shares of Common Stock
offered hereby, reference is made to the
 
                                       45
<PAGE>   47
 
Registration Statement and to such exhibits and schedules filed therewith.
Statements contained herein as to the content of any contract or other document
are not necessarily complete and, in each instance, reference is made to the
copy of such contract or other document filed as an exhibit to the Registration
Statement, and each such statement shall be deemed qualified in its entirety by
such reference.
 
     The Registration Statement and the exhibits and schedules thereto may be
inspected without charge at the principal office of the Commission at the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington D.C. 20549, and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such documents may be obtained from the Public
Reference Section of the Commission, at prescribed rates.
 
                                       46
<PAGE>   48
 
                       INTELLIGROUP, INC. AND SUBSIDIARY
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                     <C>
Report of Independent Public Accountants..............................................   F-2
Financial Statements:
  Consolidated Balance Sheets as of December 31, 1995 and June 30, 1996 (unaudited)...   F-3
  Consolidated Statements of Operations for the Years Ended December 31, 1994 and 1995
     and for the Six Months Ended June 30, 1995 (unaudited) and 1996 (unaudited)......   F-4
  Consolidated Statements of Changes in Shareholders' Equity (Deficit) for the Years
     Ended December 31, 1994 and 1995 and for the Six Months Ended June 30, 1996
     (unaudited)......................................................................   F-5
  Consolidated Statements of Cash Flows for the Years Ended December 31, 1994 and 1995
     and for the Six Months Ended June 30, 1995 (unaudited) and 1996 (unaudited)......   F-6
  Notes to Consolidated Financial Statements..........................................   F-7
</TABLE>
 
                                       F-1
<PAGE>   49
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Intelligroup, Inc.:
 
     We have audited the accompanying consolidated balance sheet of
Intelligroup, Inc. and subsidiary as of December 31, 1995, and the related
consolidated statements of operations, shareholders' equity (deficit) and cash
flows for the years ended December 31, 1994 and 1995 (as revised, see Note 1).
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Intelligroup, Inc. and subsidiary as of December 31, 1995, and the results of
their operations and their cash flows for the years ended December 31, 1994 and
1995 in conformity with generally accepted accounting principles.
 
                                          ARTHUR ANDERSEN LLP
 
Princeton, New Jersey
May 31, 1996 (except with respect to Note 8,
  as to which the date is July 12, 1996)
 
                                       F-2
<PAGE>   50
 
                       INTELLIGROUP, INC. AND SUBSIDIARY
 
                          CONSOLIDATED BALANCE SHEETS
                      DECEMBER 31, 1995 AND JUNE 30, 1996
 
<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                                        1995
                                                                    ------------      JUNE 30,
                                                                                        1996
                                                                                     -----------
                                                                                     (UNAUDITED)
<S>                                                                 <C>              <C>
ASSETS
Current Assets:
  Cash and cash equivalents.......................................  $     71,000     $   250,000
  Restricted cash held in escrow..................................       100,000              --
  Accounts receivable, less allowance for doubtful accounts of
     $531,000 at December 31, 1995 and $705,000 at June 30,
     1996.........................................................     4,729,000       5,744,000
  Unbilled services...............................................     1,569,000       3,193,000
  Other current assets............................................         3,000          81,000
                                                                     -----------     -----------
          Total current assets....................................     6,472,000       9,268,000
Property and equipment, less accumulated depreciation of $99,000
  at December 31, 1995 and $147,000 at June 30, 1996..............       282,000         464,000
Other assets......................................................        30,000         560,000
                                                                     -----------     -----------
                                                                    $  6,784,000     $10,292,000
                                                                     ===========     ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
  Cash overdraft..................................................  $     83,000     $        --
  Line of credit..................................................        45,000          40,000
  Loans from factors..............................................     3,343,000       1,822,000
  Accounts payable................................................     1,480,000       1,398,000
  Accrued payroll and related taxes...............................     2,568,000       2,208,000
  Accrued expenses and other liabilities..........................       532,000         759,000
  Current portion of obligations under capital leases.............        18,000          18,000
  Income taxes payable............................................            --         218,000
                                                                     -----------     -----------
          Total current liabilities...............................     8,069,000       6,463,000
                                                                     -----------     -----------
Subordinated debt, net of unamortized
  discount of $1,372,000 at June 30, 1996.........................            --       4,628,000
                                                                     -----------     -----------
Interest payable..................................................            --         105,000
                                                                     -----------     -----------
Obligations under capital leases, less current portion............        81,000          67,000
                                                                     -----------     -----------
Warrants..........................................................            --       1,400,000
                                                                     -----------     -----------
Commitments and Contingencies
Shareholders' Deficit:
  Common stock, $0.01 par value, 25,000,000 shares authorized,
     12,202,666 and 7,321,600 shares issued and outstanding at
     December 31, 1995 and June 30, 1996, respectively............       122,000          73,000
  Accumulated deficit.............................................    (1,488,000)     (2,444,000)
                                                                     -----------     -----------
          Total shareholders' deficit.............................    (1,366,000)     (2,371,000)
                                                                     -----------     -----------
                                                                    $  6,784,000     $10,292,000
                                                                     ===========     ===========
</TABLE>
 
          The accompanying notes to consolidated financial statements
                 are an integral part of these balance sheets.
 
                                       F-3
<PAGE>   51
 
                       INTELLIGROUP, INC. AND SUBSIDIARY
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995 AND
                FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996
 
<TABLE>
<CAPTION>
                                         YEARS ENDED DECEMBER 31,        SIX MONTHS ENDED JUNE 30,
                                        ---------------------------     ---------------------------
                                           1994            1995            1995            1996
                                        -----------     -----------     -----------     -----------
                                                                        (UNAUDITED)
<S>                                     <C>             <C>             <C>             <C>
Revenue...............................  $ 6,800,000     $24,589,000     $ 9,473,000     $19,626,000
Cost of sales.........................    5,842,000      20,021,000       8,311,000      14,146,000
                                        -----------     -----------     -----------     -----------
     Gross profit.....................      958,000       4,568,000       1,162,000       5,480,000
Selling, general and administrative
  expenses............................      986,000       4,452,000       1,537,000       4,065,000
                                        -----------     -----------     -----------     -----------
     Operating income (loss)..........      (28,000)        116,000        (375,000)      1,415,000
                                        -----------     -----------     -----------     -----------
Other expenses:
  Interest expense....................        3,000           4,000           2,000         129,000
  Factor charges......................      406,000       1,171,000         635,000         573,000
                                        -----------     -----------     -----------     -----------
                                            409,000       1,175,000         637,000         702,000
                                        -----------     -----------     -----------     -----------
Income (loss) before provision for
  income taxes........................     (437,000)     (1,059,000)     (1,012,000)        713,000
Provision for income taxes............           --              --              --         218,000
                                        -----------     -----------     -----------     -----------
     Net income (loss)................  $  (437,000)    $(1,059,000)    $(1,012,000)    $   495,000
                                        ===========     ===========     ===========     ===========
Net income (loss) per share...........  $     (0.03)    $     (0.08)    $     (0.07)    $      0.04
                                        ===========     ===========     ===========     ===========
Shares used in per share
  calculation.........................   13,737,000      13,737,000      13,737,000      11,913,000
                                        ===========     ===========     ===========     ===========
</TABLE>
 
          The accompanying notes to consolidated financial statements
                   are an integral part of these statements.
 
                                       F-4
<PAGE>   52
 
                       INTELLIGROUP, INC. AND SUBSIDIARY
 
           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
               FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995 AND
                     FOR THE SIX MONTHS ENDED JUNE 30, 1996
 
<TABLE>
<CAPTION>
                                                                          RETAINED        TOTAL
                                                     COMMON STOCK         EARNINGS     SHAREHOLDERS'
                                                 ---------------------   (ACCUMULATED    EQUITY
                                                   SHARES      AMOUNT     DEFICIT)      (DEFICIT)
                                                 ----------   --------   -----------   -----------
<S>                                              <C>          <C>        <C>           <C>
Balance at December 31, 1993...................  12,202,666   $122,000   $     8,000   $   130,000
  Net loss.....................................          --         --      (437,000)     (437,000)
                                                 ----------   --------    ----------    ----------
Balance at December 31, 1994...................  12,202,666    122,000      (429,000)     (307,000)
  Net loss.....................................          --         --    (1,059,000)   (1,059,000)
                                                 ----------   --------    ----------    ----------
Balance at December 31, 1995...................  12,202,666    122,000    (1,488,000)   (1,366,000)
  Net income (unaudited).......................          --         --       495,000       495,000
  Repurchase of common stock...................  (4,881,066)   (49,000)   (1,451,000)   (1,500,000)
                                                 ----------   --------    ----------    ----------
Balance at June 30, 1996 (unaudited)...........   7,321,600   $ 73,000   $(2,444,000)  $(2,371,000)
                                                 ==========   ========    ==========    ==========
</TABLE>
 
          The accompanying notes to consolidated financial statements
                   are an integral part of these statements.
 
                                       F-5
<PAGE>   53
 
                       INTELLIGROUP, INC. AND SUBSIDIARY
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995 AND
                FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996
 
<TABLE>
<CAPTION>
                                              YEARS ENDED DECEMBER 31,    SIX MONTHS ENDED JUNE 30,
                                              -------------------------   -------------------------
                                                 1994          1995          1995          1996
                                              -----------   -----------   -----------   -----------
                                                                          (UNAUDITED)
<S>                                           <C>           <C>           <C>           <C>
Cash flows from operating activities:
  Net income (loss).........................  $  (437,000)  $(1,059,000)  $(1,012,000)  $   495,000
  Adjustments to reconcile net income (loss)
     to net cash used in operating
     activities:
     Depreciation and amortization..........       34,000        51,000        26,000        76,000
     Provision for doubtful accounts........      208,000       411,000        47,000       440,000
  Changes in assets and liabilities:
     Restricted cash deposited in escrow....           --      (100,000)           --       100,000
     Accounts receivable....................   (2,009,000)   (3,339,000)     (566,000)   (1,455,000)
     Unbilled services......................       (1,000)   (1,386,000)     (854,000)   (1,624,000)
     Other current assets...................           --        27,000            --       (78,000)
     Other assets...........................      (23,000)      (30,000)        8,000      (530,000)
     Cash overdraft.........................           --        83,000            --       (83,000)
     Accounts payable.......................           --     1,480,000        19,000       (82,000)
     Accrued payroll and related taxes......    1,466,000     1,035,000     1,298,000      (360,000)
     Accrued expenses and other
       liabilities..........................       47,000       478,000       693,000       227,000
     Income taxes payable...................           --            --            --       218,000
     Interest payable.......................           --            --            --       105,000
                                              -----------   -----------   -----------   -----------
          Net cash used in operating
            activities......................     (715,000)   (2,349,000)     (341,000)   (2,551,000)
                                              -----------   -----------   -----------   -----------
Cash flows from investing activities:
  Purchase of property and equipment........      (89,000)     (142,000)      (21,000)     (230,000)
                                              -----------   -----------   -----------   -----------
Cash flows from financing activities:
  Proceeds from subordinated debt
     and warrants...........................           --            --            --     6,000,000
  Repurchase of common stock................           --            --            --    (1,500,000)
  Loans from (repayments to) factors, net...      994,000     2,349,000       521,000    (1,521,000)
  Proceeds from (repayments of) lines of
     credit, net............................       38,000         6,000        24,000        (5,000)
  Principal payments of long-term debt......      (53,000)           --            --            --
  Principal payments under capital leases...           --        (2,000)           --       (14,000)
                                              -----------   -----------   -----------   -----------
          Net cash provided by
            financing activities............      979,000     2,353,000       545,000     2,960,000
                                              -----------   -----------   -----------   -----------
          Net increase (decrease) in cash
            and cash equivalents............      175,000      (138,000)      183,000       179,000
Cash and cash equivalents at beginning
  of period.................................       34,000       209,000       209,000        71,000
                                              -----------   -----------   -----------   -----------
Cash and cash equivalents at end
  of period.................................  $   209,000   $    71,000   $   392,000   $   250,000
                                              ===========   ===========   ===========   ===========
Supplemental disclosures of cash flow
  information:
  Cash paid for interest....................  $     2,000   $     4,000   $     2,000   $    10,000
                                              ===========   ===========   ===========   ===========
Noncash transactions:
  Capital lease obligations.................  $        --   $   102,000   $        --   $        --
                                              ===========   ===========   ===========   ===========
</TABLE>
 
          The accompanying notes to consolidated financial statements
                   are an integral part of these statements.
 
                                       F-6
<PAGE>   54
 
                       INTELLIGROUP, INC. AND SUBSIDIARY
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (FINANCIAL INFORMATION WITH RESPECT TO JUNE 30, 1996 AND FOR THE
             SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
 
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Organization
 
     Intelligroup, Inc. and its subsidiary (the "Company") provide 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 markets its services to a wide variety of industries
primarily in the United States. The majority of the Company's business is with
large established companies, including consulting firms, serving numerous
industries.
 
     The Company is proposing an initial public offering of its common stock.
Existing and prospective investors should consider, among other things, the
risks and difficulties encountered by any new business, including competition
from existing companies offering the same or similar services, rapid
technological change, management of growth, lack of financial resources and
minimal previous record of operations or earnings. See "Risk Factors" included
elsewhere in this Prospectus for a discussion of these and other factors (see
Note 8).
 
  Restatement
 
     Subsequent to December 31, 1995, the Company determined that it had
unrecorded and unpaid Federal and state payroll related taxes for certain
employees. Accordingly, the Company has restated its 1994 and 1995 financial
statements resulting in a $320,000 and $680,000 increase in cost of sales in
1994 and 1995, respectively, with corresponding increases to accrued payroll and
related taxes. As a result of the Company's voluntary disclosure to the Internal
Revenue Service ("IRS") on June 5, 1996, the IRS issued an audit assessment to
the Company for $814,000 which has been included in the above accrual. The
Company's principal shareholders have agreed to indemnify the Company for any
and all losses which the Company may sustain in excess of the amounts accrued as
of December 31, 1995 arising from or relating to Federal or state tax, interest
or penalty payment obligations, net of any tax benefits realized by the Company,
resulting from the subject matter discussed above.
 
  Principles of Consolidation and Use of Estimates
 
     Effective March 31, 1994, Intelligroup, Inc. entered into an agreement with
the shareholders of Oxford Systems Inc., whereby Intelligroup, Inc. acquired all
the outstanding shares of stock of Oxford Systems Inc. in exchange for a
two-thirds interest in Intelligroup, Inc. This transaction has been accounted
for as a pooling of interests, and accordingly, the accompanying financial
statements for 1994 include the accounts of Intelligroup, Inc. and its
wholly-owned subsidiary, Oxford Systems Inc. for all periods prior to the
transaction.
 
     The accompanying financial statements include the accounts of Intelligroup,
Inc. and its wholly-owned subsidiary, Oxford Systems Inc. All significant
intercompany balances and transactions have been eliminated.
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the recorded amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
 
  Interim Financial Information
 
     The consolidated financial statements and accompanying financial
information as of June 30, 1996 and for the six months ended June 30, 1995 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
 
                                       F-7
<PAGE>   55
 
                       INTELLIGROUP, INC. AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
fair presentation of the financial position of the Company at such dates and the
operating results and cash flows for those periods. Results for interim periods
are not necessarily indicative of results for the entire year.
 
  Cash and Cash Equivalents
 
     Cash and cash equivalents consist of investments in highly liquid
short-term instruments, with original maturities of three months or less.
 
  Property and Equipment
 
     Property and equipment is stated at cost, less accumulated depreciation.
Depreciation is provided using the straight-line method over the estimated
useful lives of the assets (five years). Costs of maintenance and repairs are
charged to expense as incurred.
 
  Revenue Recognition
 
     The Company generates revenue from professional services rendered. Revenue
is recognized as services are performed with the corresponding cost of providing
those services reflected as cost of sales. Substantially all customers are
billed on a per diem basis whereby actual time is charged directly to the
customer. Billings to customers for out-of-pocket expenses are recorded as a
reduction of expenses incurred. Unbilled services represent services provided in
excess of amounts billed.
 
  Allowance for Doubtful Accounts
 
     The Company provides an allowance for doubtful accounts arising from
services, which is based upon a review of outstanding receivables as well as
historical collection information. In determining the amount of the allowance,
management is required to make certain estimates and assumptions regarding the
timing and amount of collection. Actual results could differ from those
estimates and assumptions. The provision for doubtful accounts totaled $208,000,
$411,000 and $440,000 in 1994, 1995 and the six months ended June 30, 1996,
respectively. Credit is granted to substantially all customers on an unsecured
basis.
 
  Recoverability of Long-Lived Assets
 
     The Company reviews the recoverability of its long-lived assets on a
periodic basis in order to identify business conditions which may indicate a
possible impairment. The assessment for potential impairment is based primarily
on the Company's ability to recover the unamortized balance of its long-lived
assets from expected future cash flows from its operations on an undiscounted
basis.
 
  Stock-Based Compensation
 
     In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock-Based Compensation," which requires companies to
measure employee stock compensation plans based on the fair value method using
an option pricing model or to continue to apply APB No. 25, "Accounting for
Stock Issued to Employees," and provide pro forma footnote disclosures under the
fair value method. The Company continues to apply APB No. 25 and will provide
the pro forma footnote disclosures.
 
  Concentrations
 
     For the years ended December 31, 1994 and 1995 and the six months ended
June 30, 1996, approximately 33%, 69% and 73% of revenue, respectively, was
derived from projects in which Company personnel implemented software developed
by SAP. The Company's future success in its SAP-related consulting services
depends largely on its continued relationship with SAP and on its continued
status as a SAP National Implementation Partner, which was first obtained in
1995. The Company's agreement with SAP (the
 
                                       F-8
<PAGE>   56
 
                       INTELLIGROUP, INC. AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
"Agreement") is awarded on an annual basis pursuant to contract. The Company's
current contract expires on December 31, 1996. The Agreement contains no minimum
revenue requirements or cost sharing arrangements and does not provide for
commissions or royalties to either party.
 
     A substantial portion of the Company's revenue is derived from projects in
which an information technology consulting firm other than the Company has been
retained by the end-user organization to manage the overall project. For the
years ended December 31, 1994 and 1995 and for the six months ended June 30,
1996, 64%, 50% and 50%, respectively, of the Company's revenue was generated by
serving as a member of consulting teams assembled by other information
technology consulting firms.
 
     One customer accounted for approximately 10% and 20% of revenue for the
year ended December 31, 1995 and the six months ended June 30, 1996,
respectively. Accounts receivable due from this customer was
$611,000 and $1,341,000 as of December 31, 1995 and June 30, 1996, respectively.
Another customer accounted for approximately 12% of revenue for the year ended
December 31, 1995 and the six months ended June 30, 1996, respectively. Accounts
receivable due from this customer was $1,400,000 and $833,000 as of December 31,
1995 and June 30, 1996, respectively. Another customer accounted for
approximately 15% of revenue for the year ended December 31, 1994.
 
  Foreign Operations
 
     Revenues from foreign operations were not significant in 1994 and 1995 and
for the six months ended June 30, 1996. Translation effects were not material.
 
  Income Taxes
 
     The Company accounts for income taxes pursuant to the provisions of
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes," which utilizes the liability method and results in the determination of
deferred taxes based on the estimated future tax effects of differences between
the financial statement and tax basis of assets and liabilities, using enacted
tax rates currently in effect. The principal differences arise from the
reporting of income and expenses under the accrual method for financial
statement purposes versus the cash basis method for income tax purposes.
 
  Net Income (Loss) Per Share
 
     Net income (loss) 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 the stock split (see Note 8). 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 initial public offering (see Note 8) have been included in computing net
income (loss) per share as if they were outstanding for all periods using the
treasury stock method with an estimated public offering price of $9.00 per
share.
 
  Financial Instruments
 
     Financial instruments that potentially subject the Company to credit risk
consist principally of trade receivables and unbilled services. The fair value
of accounts receivable and unbilled services approximates carrying value.
 
                                       F-9
<PAGE>   57
 
                       INTELLIGROUP, INC. AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
(2) PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following as of December 31, 1995 and
June 30, 1996:
 
<TABLE>
<CAPTION>
                                                                                JUNE 30,
                                                                                  1996
                                                              DECEMBER 31,     -----------
                                                                  1995
                                                              ------------     (UNAUDITED)
        <S>                                                   <C>              <C>
        Vehicles............................................    $ 26,000        $   26,000
        Furniture...........................................      98,000            98,000
        Equipment...........................................     257,000           487,000
                                                                --------         ---------
                                                                 381,000           611,000
        Less- Accumulated depreciation......................     (99,000)         (147,000)
                                                                --------         ---------
                                                                $282,000        $  464,000
                                                                ========         =========
</TABLE>
 
     Included in the above is $102,000 of equipment held under capital leases.
Depreciation expense was $34,000 and $51,000 in 1994 and 1995, respectively, and
$26,000 and $48,000 for the six months ended June 30, 1995 and 1996,
respectively.
 
(3) LINES OF CREDIT AND SUBORDINATED DEBENTURES
 
     The Company had available, under an agreement with a bank, a $50,000 line
of credit bearing interest at the bank's prime lending rate plus 2% (10.5% as of
December 31, 1995), which was collateralized by all Company assets and
personally guaranteed by one of the Company's shareholders. The line of credit
expired May 26, 1996 and is anticipated to be renewed for a term of one year.
The outstanding balance was $45,000 as of December 31, 1995 and $40,000 as of
June 30, 1996.
 
     In March 1996, in anticipation of the financing discussed below, the
Company obtained a $750,000 line of credit, payable on demand, from a bank. The
line of credit bears interest at the Federal funds rate plus 1%. Aggregate
borrowings in the amount of $300,000 were repaid and the line was terminated by
the Company in accordance with the financing described below.
 
     In April 1996, the Company issued $6,000,000 of five-year, 9% subordinated
debentures. All principal and interest is due at maturity (April 2001) or at
prepayment. The debentures were issued with detachable warrants to purchase
common stock of the Company (see Note 7). Proceeds from the debentures were
allocated between the debentures and the warrants based on estimated fair value
which resulted in a discount on the debentures (based on a 15% interest rate)
and a value assigned to the warrants of $1,400,000.
 
     Subsequent to the issuance of the subordinated debentures, the Company
purchased and retired 4,881,066 shares of its common stock for $1,500,000 from
its shareholders.
 
(4) LOANS PAYABLE TO FACTORS
 
     On October 20, 1995, the Company entered into a new factoring agreement
with a financing institution ("current factor") under which the Company must
offer all its trade accounts receivable to the current factor for financing;
however, the current factor is not obligated to accept them. The agreement has a
term of one year with automatic one-year renewals unless the Company or current
factor give notice of cancellation. The current factor charges an administrative
fee of 0.75% on each invoice plus an additional 0.75% for each 15-day increment
the invoice remains unpaid, to a maximum of 120 days, or 6.5%. If the amount of
a factored receivable is not paid by reason of the financial inability of the
customer, the Company is not liable to reimburse the current factor. If,
however, the current factor, through legal action or otherwise, settles,
compromises or assigns the claim for any receivable, the amount of any reduction
resulting from such settlement, compromise or assignment will reduce the balance
due to the Company.
 
                                      F-10
<PAGE>   58
 
                       INTELLIGROUP, INC. AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The Company had factoring agreements with a former financing institution
("former factor") under which it could sell qualified trade accounts receivable,
with recourse provisions. The agreements, which were terminated in October 1995
required the Company to repurchase or replace any receivable remaining
uncollected for more than 120 days. At December 31, 1995, the Company had
unresolved differences with this former factor regarding the determination of
former factor fees and amounts due between the two parties. As of December 31,
1995, the Company had placed $100,000 in escrow which was subsequently increased
to $300,000 in May 1996, subject to the disposition of this matter. In June
1996, the parties agreed to settle the dispute for $103,000, which had
previously been accrued. Such amount was paid out of the escrow fund with the
remainder of the escrow fund remitted to the Company.
 
(5) INCOME TAXES
 
     The provision for income taxes for the six months ended June 30, 1996
consists of $167,000 related to current Federal and $51,000 related to current
state and local income taxes.
 
     For the years ended December 31, 1994 and 1995 and the six months ended
June 30, 1995, no income tax benefit was provided as management could not
determine that it was more likely than not that such benefit would be realized.
For the six months ended June 30, 1996, the effective rate was less than the
statutory rate due to the reversal of a portion of the valuation allowance.
 
     The Company's deferred tax asset was $668,000 and $526,000 as of December
31, 1995 and June 30, 1996, respectively, and relates primarily to the Company's
allowance for doubtful accounts ($234,000 and $288,000, respectively) and
certain accrued liabilities ($434,000 and $245,000, respectively). Other
temporary differences are not significant. The deferred tax asset as of December
31, 1995 and June 30, 1996 has been offset by a valuation allowance.
 
(6) COMMITMENTS AND CONTINGENCIES
 
  Employment Agreements
 
     Commencing June 1, 1996, the Company entered into two year employment
agreements with five employees with aggregate annual compensation of $900,000.
 
  Leases
 
     The Company leases office space and office equipment under capital and/or
operating leases that have initial or remaining noncancelable lease terms in
excess of one year as of December 31, 1995. Future minimum aggregate annual
lease payments are as follows:
 
<TABLE>
<CAPTION>
                   FOR THE YEARS ENDING DECEMBER 31                  CAPITAL      OPERATING
    ---------------------------------------------------------------  --------     ---------
    <S>                                                              <C>          <C>
    1996...........................................................  $ 37,000      $77,000
    1997...........................................................    37,000       15,000
    1998...........................................................    37,000        5,000
    1999...........................................................    20,000
    2000...........................................................    20,000
                                                                     --------
                                                                      151,000
    Less-Interest..................................................   (52,000)
                                                                     --------
                                                                       99,000
    Less-Current portion...........................................   (18,000)
                                                                     --------
                                                                     $ 81,000
                                                                     ========
</TABLE>
 
                                      F-11
<PAGE>   59
 
                       INTELLIGROUP, INC. AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Rent expense for the years ended December 31, 1994 and 1995 was $24,000 and
$74,000, respectively, and $43,000 for the six months ended June 30, 1996.
 
     Commencing June 1, 1996, the Company entered into a lease for office space
at an annual rent of $220,000, plus common costs. The lease term is through
November 1999.
 
  Legal
 
     The Company currently is being investigated by the Immigration and
Naturalization Service concerning possible violations of the Immigration Reform
and Control Act of 1990. Although a notice of intent to fine has not been served
upon the Company and therefore the potential for fines is not known, the Company
believes that fines, if any, would not exceed $150,000. Management believes that
reserves recorded related to this matter are adequate. There can be no
assurance, however, as to the ultimate amount of the fines, which may be
assessed or the length of time it may take to conclude the investigation.
 
   
     On February 16, 1996, the Company, as plaintiff, filed a complaint in the
Superior Court of New Jersey, Chancery Division, Middlesex County, against a
former consultant to the Company, seven former employees of the Company and
Pegasus Systems, Inc. ("Pegasus"), a corporation which currently employs such
individuals (collectively, the "Defendants"). Upon the filing of its complaint,
the Company obtained a temporary restraining order and in May 1996 obtained a
preliminary injunction prohibiting the Defendants from using or disclosing the
Company's proprietary information, prohibiting the Defendants from contacting or
soliciting certain of the Company's customers and prohibiting the Defendants
from recruiting or attempting to recruit the Company's employees, agents or
contractors. In a related matter, on August 21, 1996, the Company was named as
defendant in a complaint filed by plaintiff, Systems America, Inc. ("Systems
America"), a computer and technology consulting firm. Systems America alleges
that it subcontracted Pegasus consultants to perform SAP consulting services for
two companies which are also customers of the Company, and alleges that the
Company has interfered with Systems America's customer relationships, and as a
result thereof, Systems America has sustained damages. The complaint, which
seeks unspecified monetary damages, treble damages, attorney fees and injunctive
relief against the Company, alleges deceptive trade practices, defamation and
tortious interference with prospective business or contractual relations by the
Company. This action is in a very early stage, and accordingly, the Company
cannot currently assess the ultimate outcome. However, the Company denies the
allegations made and intends to defend the claim vigorously.
    
 
   
     The Company is engaged in certain other legal and administrative
proceedings. Management believes the outcome of these proceedings will not have
a material adverse effect on the Company's financial position or results of
operations.
    
 
(7) STOCK OPTION PLANS AND WARRANTS
 
     The Company's 1996 Stock Plan (the "Plan") permits the granting of options
to employees, nonemployee directors and consultants. The Plan is administered by
the Option Committee of the Board of Directors, which generally has the
authority to select individuals who are to receive options and to specify the
terms and conditions of each option so granted, including the number of shares
covered by the option, the type of option (incentive stock option or
nonqualified stock option), the exercise price (which in all cases must be at
least 100% of the fair market value of the common stock on the date of grant),
vesting provisions, and the overall option term. Options to purchase a total of
1,450,000 shares of common stock were reserved for future grants of options
under the Plan. In June 1996, effective July 1996, the Company granted options
to purchase an aggregate of 500,000 shares of its common stock to certain key
employees at an exercise price of $8.00 per share. One-third of these options
vest six months from date of grant with the remaining options vesting over the
following two years.
 
                                      F-12
<PAGE>   60
 
                       INTELLIGROUP, INC. AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The 1996 Non-Employee Director Stock Option Plan provides for the granting
of options to purchase a maximum of 140,000 shares of common stock of the
Company to non-employee directors. An option to purchase 20,000 shares of common
stock, at an exercise price equal to the then fair value of the shares, will be
granted to non-employee directors. All options will vest in five equal
installments, commencing one year after grant and have a ten-year term.
 
     The subordinated debenture holders (see Note 3) received warrants for the
purchase of 20.8% of the fully diluted common stock of the Company, as defined,
at a nominal exercise price (less than $0.25 in the aggregate). If the Company
becomes a public company prior to April 10, 1997, the potential fully diluted
common stock ownership of the warrant holders reduces on a straight-line formula
from the 20.8% to 11%, depending on the premoney valuation of the public
offering, as defined. The warrants are exercisable on the earlier of April 10,
1997, an initial public offering of the Company's common stock or a merger of or
sale of 50% or more of the Company. Such warrants expire in April, 2002. In
addition, the holders have certain registration rights, as defined. The
agreement provides that the debenture holders may put these warrants to the
Company at fair market value, as defined, in April, 2001 or earlier upon the
occurrence of certain events which include an initial public offering of the
Company's common stock. The put provision will terminate and the holders have
agreed to exercise the warrants upon the effectiveness of the initial public
offering. The Company has reserved up to a maximum of 1,922,845 shares of its
common stock relating to the warrants. At an assumed initial offering price of
$9.00 per share, there are 1,478,400 shares of common stock underlying the
warrants.
 
(8) PUBLIC OFFERING, STOCK SPLIT AND PREFERRED STOCK AUTHORIZATION
 
     In June 1996, the Board of Directors authorized management of the Company
to file a registration statement with the Securities and Exchange Commission
permitting the Company to sell common stock to the public. In July 1996, the
Company's Board of Directors recommended and shareholders approved an amendment
to the Company's Certificate of Incorporation to effect an 81,351.1111-for-1
stock split. All common shares and per share amounts in the accompanying
financial statements have been adjusted retroactively to give effect to the
stock split.
 
     In addition, the Company's Board of Directors authorized a change in the
Company's authorized capitalization to 25,000,000 shares of common stock, $0.01
par value per share, and 5,000,000 shares of undesignated preferred stock, $0.01
par value per share.
 
                                      F-13
<PAGE>   61
 
- ------------------------------------------------------------
- ------------------------------------------------------------
 
  No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this Prospectus and,
if given or made, such information or representations not contained herein must
not be relied upon as having been authorized by the Company, the Selling
Shareholders, any of the Underwriters or by any other person. This Prospectus
does not constitute an offer to sell, or a solicitation of any offer to buy, any
securities other than the shares of Common Stock offered hereby, nor does it
constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby, to any person in any jurisdiction in which it is
unlawful to make such an offer or solicitation to such person. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information contained herein is
correct as of any date subsequent to the date hereof.
                         ------------------------------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                         Page
                                         ----
<S>                                      <C>
Prospectus Summary.....................    3
Risk Factors...........................    6
Use of Proceeds........................   13
Dividend Policy........................   13
Capitalization.........................   14
Dilution...............................   15
Selected Consolidated Financial Data...   16
Management's Discussion and Analysis of
  Financial Condition and Results of
  Operations...........................   17
Business...............................   23
Management.............................   34
Certain Transactions...................   37
Principal and Selling Shareholders.....   39
Description of Capital Stock...........   40
Shares Eligible for Future Sale........   42
Underwriting...........................   44
Legal Matters..........................   45
Experts................................   45
Additional Information.................   45
Index to Consolidated Financial
  Statements...........................  F-1
</TABLE>
 
                         ------------------------------
     Until            , 1996 (25 days after the date of this Prospectus), all
dealers effecting transactions in the Common Stock, whether or not participating
in this distribution, may be required to deliver a Prospectus. This delivery
requirement is in addition to the obligation of dealers to deliver a Prospectus
when acting as Underwriters and with respect to their unsold allotments or
subscriptions.
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
                                2,475,000 Shares
 
                                      LOGO
 
                                  Common Stock
                         ------------------------------
                                   PROSPECTUS
                         ------------------------------
                                COWEN & COMPANY
                             MONTGOMERY SECURITIES
                                           , 1996
- ------------------------------------------------------------
- ------------------------------------------------------------
<PAGE>   62
 
                                    PART II
 
ITEM 24.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
     Section 14A:3-5 of the New Jersey Business Corporation Act permits each New
Jersey business corporation to indemnify its directors, officers, employees and
agents against expenses and liabilities in connection with any proceeding
involving such persons by reason of his serving or having served in such
capacities or for each such person's acts taken in his capacity as a director,
officer, employee or agent of the corporation if such actions were taken in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and with respect to any criminal
proceeding, if he had no reasonable cause to believe his conduct was unlawful,
provided that any such proceeding is not by or in the right of the corporation.
 
     Section 14A:2-7(3) of the New Jersey Business Corporation Act enables a
corporation in its certificate of incorporation to limit the liability of
directors and officers of the corporation to the corporation or its
shareholders. Specifically, the certificate of incorporation may provide that
directors and officers of the corporation will not be personally liable for
money damages for breach of a duty as a director or an officer, except for
liability (i) for any breach of the director's or officer's duty of loyalty to
the corporation or its shareholders, (ii) for acts or omissions not in good
faith or which involve a knowing violation of law, (iii) as to directors only,
under Section 14A:6-12(1) of the New Jersey Business Corporation Act, which
relates to unlawful declarations of dividends or other distributions of assets
to shareholders or the unlawful purchase of shares of the corporation, or (iv)
for any transaction from which the director or officer derived an improper
personal benefit.
 
     The registrant's Amended and Restated Certificate of Incorporation limits
the liability of its directors and officers as authorized by Section 14A:2-7(3).
The affirmative vote of the holders of at least 80% of the voting power of all
outstanding shares of the capital stock of the Company is required to amend such
provisions.
 
     Article 11 of the registrant's Amended and Restated By-laws specifies that
the registrant shall indemnify its directors, officers, employees and agents to
the extent such parties are a party to any action because he was a director,
officer, employee or agent of the Company. The Company has agreed to indemnify
such parties for their actual and reasonable expenses if such party acted in
good faith and in a manner he reasonably believed to be in the best interests of
the Company and such party had no reasonable cause to believe his conduct was
unlawful. This provision of the By-laws is deemed to be a contract between the
registrant and each director and officer who serves in such capacity at any time
while such provision and the relevant provisions of the New Jersey Business
Corporation Act are in effect, and any repeal or modification thereof shall not
offset any action, suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts. The
affirmative vote of the holders of at least 80% of the voting power of all
outstanding shares of the capital stock of the Company is required to adopt,
amend or repeal such provision of the By-laws.
 
     The registrant has executed indemnification agreements with each of its
officers and directors pursuant to which the registrant has agreed to indemnify
such parties to the full extent permitted by law, subject to certain exceptions,
if such party becomes subject to an action because such party is a director,
officer, employee, agent or fiduciary of the Company.
 
     The registrant intends to obtain liability insurance for the benefit of its
directors and officers which will provide coverage for losses of directors and
officers for liabilities arising out of claims against such persons acting as
directors or officers of the registrant (or any subsidiary thereof) due to any
breach of duty, neglect, error, misstatement, misleading statement, omission or
act done by such directors and officers, except as prohibited by law.
 
     At present, there is no pending litigation or proceeding involving a
director or officer of the registrant as to which indemnification is being
sought nor is the registrant aware of any threatened litigation that may result
in claims for indemnification by any director or officer.
 
                                      II-1
<PAGE>   63
 
     Reference is made to Section 6 of the Underwriting Agreement, the proposed
form of which is filed as Exhibit One, in which the Underwriters agree to
indemnify the directors and officers of the registrant and certain other
persons, against civil liabilities, including certain liabilities under the
Securities Act.
 
ITEM 25.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
     The following table sets forth an itemized estimate of fees and expenses
payable by the registrant in connection with the offering described in this
registration statement, other than underwriting discounts and commissions:
 
<TABLE>
    <S>                                                                       <C>
    SEC registration fee....................................................  $ 10,706.90
    NASD filing fee.........................................................     3,605.00
    Nasdaq/NNM listing fee..................................................    44,500.00
    Counsel fees and expenses...............................................   225,000.00
    Accounting fees and expenses............................................   200,000.00
    Blue sky fees and expenses..............................................    20,000.00
    Printing expenses.......................................................   135,000.00
    Transfer agent and registrar fees.......................................     8,500.00
    Miscellaneous...........................................................    11,188.10
                                                                               ----------
              Total.........................................................  $658,500.00
                                                                               ==========
</TABLE>
 
- ---------------
 
   
     All of the above expenses will be paid by the registrant.
    
 
ITEM 26.  RECENT SALES OF UNREGISTERED SECURITIES.
 
     The following information relates to all securities of the registrant sold
by the registrant within the past three years which were not registered under
the Securities Act:
 
          1. On March 31, 1994, the registrant issued an aggregate of 8,135,111
     shares of Common Stock (on a post-stock split recapitalization basis) to
     Messrs. Koneru and Valluripalli in exchange for all of the issued and
     outstanding shares of Oxford Systems Inc.
 
          2. On April 19, 1996, the registrant issued to two venture capital
     funds 9.0% subordinated debentures with warrants to purchase up to 20.8% of
     the Common Stock of the Company for an aggregate purchase price of
     $6,000,000.
 
     No underwriter was employed by the registrant in connection with the
issuance and sale of the securities described above. The registrant claims that
the issuance and sale of all of the foregoing securities were exempt from
registration under Section 4(2) of the Securities Act as transactions not
involving any public offering. Appropriate legends were affixed to the stock
certificates issued in such transactions. All recipients had adequate access to
information about the registrant.
 
     There were no other securities sold by the registrant within the past three
years.
 
                                      II-2
<PAGE>   64
 
ITEM 27.  EXHIBITS AND FINANCIAL STATEMENTS.
 
     (a) Exhibits
 
   
<TABLE>
<CAPTION>
EXHIBIT NO.                                 DESCRIPTION OF EXHIBIT
- -----------   ----------------------------------------------------------------------------------
<S>           <C>
 1            Revised Form of Underwriting Agreement.
 3.1          Amended and Restated Certificate of Incorporation.
 3.2          Amended and Restated Bylaws.
 4.1          Debenture and Warrant Purchase Agreement dated April 10, 1996 by and between the
              Company, Messrs. Pandey, Koneru and Valluripalli and Summit Ventures IV, L.P. and
              Summit Investors III, L.P.
 4.2          Warrant Agreement dated April 10, 1996 by and between the Company and Summit
              Ventures IV, L.P. and Summit Investors III, L.P.
 4.3          Registration Rights Agreement dated April 10, 1996 by and between the Company and
              Summit Ventures IV, L.P. and Summit Investors III, L.P.
 4.4          Redemption Agreement dated April 10, 1996 by and between the Company and Summit
              Ventures IV, L.P. and Summit Investors III, L.P.
 4.5          Shareholders Agreement dated April 10, 1996 by and between the Company, Messrs.
              Pandey, Koneru and Valluripalli and Summit Ventures IV, L.P. and Summit Investors
              III, L.P.
 5            Opinion of Buchanan Ingersoll as to validity of Common Stock.
10.1          1996 Stock Plan of the Company.
10.2          1996 Non-Employee Director Stock Option Plan.
10.3          Employment Agreement dated June 1, 1996 between the Company and Ashok Pandey.
10.4          Employment Agreement dated June 1, 1996 between the Company and Rajkumar Koneru.
10.5          Employment Agreement dated June 1, 1996 between the Company and Nagarjun
              Valluripalli.
10.6          Employment Agreement dated June 1, 1996 between the Company and Robert M. Olanoff,
              together with Change in Control Severance Pay Agreement dated June 1, 1996 between
              the Company and Robert M. Olanoff.
10.7          Employment Agreement dated June 1, 1996 between the Company and Paul Coombs.
10.8          Form of Indemnification Agreement entered into by the Company and each of its
              directors and officers.
10.9          Sublease Agreement between Micrognosis, Inc., as sublessor, the Company, as
              sublessee, with master lease.
10.10         Employee's Invention Assignment and Confidentiality Agreement.
10.11         R/3 National Implementation Partner Agreement between SAP America, Inc. and the
              Company dated January 13, 1995.
10.12         Services Provider Agreement by and between Oracle Corporation and the Company
              dated July 26, 1994.
10.13         Amended and Restated Agreement by Messrs. Pandey, Koneru and Valluripalli dated
              July 16, 1996 to indemnify the Company for certain losses.
10.14         Factoring Agreement by and between Access Capital, Inc. and the Company dated as
              of October 20, 1995, with exhibits.
10.15         Agreement of Waiver and Consent dated as of June 4, 1996 by and among the Company,
              the current shareholders of the Company, and Summit Ventures IV, L.P. and Summit
              Investors III, L.P., with Amendment No. 1 thereto.
10.16         Agreement by and between the Company and Intelligroup Asia Private Limited
              ("Intelligroup Asia") relating to operational control of Intelligroup Asia, with
              related agreements.
11            Statement re: Computation of per share earnings.
16            Letter re: Change of Certifying Accountant.
21            Subsidiaries of the Registrant.
</TABLE>
    
 
                                      II-3
<PAGE>   65
 
   
<TABLE>
<CAPTION>
EXHIBIT NO.                                 DESCRIPTION OF EXHIBIT
- -----------   ----------------------------------------------------------------------------------
<S>           <C>
23.1(*)       Consent of Arthur Andersen LLP.
23.2          Consent of Buchanan Ingersoll (contained in the opinion filed as Exhibit 5 to the
              Registration Statement).
24            Powers of Attorney of certain officers and directors of the Company (contained on
              the signature page of this Registration Statement).
27.1          Financial Data Schedule for the year ended December 31, 1995.
27.2          Financial Data Schedule for the six months ended June 30, 1996.
</TABLE>
    
 
- ---------------
* Filed herewith. All other exhibits previously filed.
 
     (b) Financial Statement Schedules
 
     All financial statement schedules are omitted because the information is
not required, or is otherwise included in the consolidated financial statements
or the notes thereto.
 
ITEM 28.  UNDERTAKINGS.
 
     The undersigned registrant hereby undertakes that:
 
          (1) Insofar as indemnification for liabilities arising under the
     Securities Act of 1933 (the "Securities Act") may be permitted to
     directors, officers, and controlling persons of the registrant pursuant to
     the provisions described in Item 24, or otherwise, the registrant has been
     advised that in the opinion of the Securities and Exchange Commission such
     indemnification is against public policy as expressed in the Securities Act
     and is, therefore, unenforceable. In the event that a claim for
     indemnification against such liabilities (other than the payment by the
     registrant of expenses incurred or paid by a director, officer or
     controlling person of the registrant in the successful defense of any
     action, suit or proceeding) is asserted by such director, officer or
     controlling person in connection with the securities being registered, the
     registrant will, unless in the opinion of its counsel the matter has been
     settled by controlling precedent, submit to a court of appropriate
     jurisdiction the question whether such indemnification by it is against
     public policy as expressed in the Securities Act and will be governed by
     the final adjudication of such issue.
 
          (2) For purpose of determining any liability under the Securities Act,
     the information omitted from the form of prospectus filed as part of this
     registration statement in reliance upon Rule 430A and contained in a form
     of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
     497(h) under the Securities Act shall be deemed to be part of this
     registration statement as of the time it was declared effective.
 
          (3) For the purpose of determining any liability under the Securities
     Act each post-effective amendment that contains a form of prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein, and the offering of such securities at that time shall be
     deemed to be the initial bona fide offering thereof.
 
          (4) At the closing specified in the Underwriting Agreement, registrant
     shall provide the Underwriters certificates in such denominations and
     registered in such names as required by the Underwriters to permit prompt
     delivery to each purchaser.
 
                                      II-4
<PAGE>   66
 
                                   SIGNATURES
 
   
     In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and has duly caused this Amendment
to the Registration Statement to be signed on its behalf by the undersigned, in
the Township of Iselin, State of New Jersey, on August 30, 1996.
    
 
                                          Intelligroup, Inc.
 


                                          By: /s/  ASHOK PANDEY
                                              ----------------------------------
                                              Ashok Pandey, President, and
                                              Chief Executive Officer
 
     In accordance with the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed by the following persons
in the capacities and on the dates stated.
 
   
<TABLE>
<CAPTION>
              SIGNATURE                                TITLE                         DATE
              ---------                                -----                         ----
<S>                                      <C>                                   <C>
/s/  ASHOK PANDEY                        President, Chief Executive Officer    August 30, 1996
- -------------------------------------    and Director
Ashok Pandey

                  *                      Vice President -- Business            August 30, 1996
- -------------------------------------    Solutions and Director
Rajkumar Koneru

                  *                      Vice President -- Advanced            August 30, 1996
- -------------------------------------    Technology and Director
Nagarjun Valluripalli

/s/  ROBERT M. OLANOFF                   Chief Financial Officer, Treasurer    August 30, 1996
- -------------------------------------    and Secretary
Robert M. Olanoff

                  *                      Director                              August 30, 1996
- -------------------------------------
Kevin P. Mohan

                  *                      Director                              August 30, 1996
- -------------------------------------
Thomas S. Roberts
</TABLE>
    
 
- ---------------
* By his signature set forth below the undersigned, pursuant to duly authorized
  powers of attorney filed with the Securities and Exchange Commission, has
  signed this Amendment to the Registration Statement on behalf of the persons
  indicated.


By: /s/  ROBERT M. OLANOFF
    ---------------------------------------------
    Robert M. Olanoff (Attorney-in-fact)
 
                                      II-5
<PAGE>   67
 
                                 EXHIBIT INDEX
 
   
<TABLE>
<CAPTION>
                                                                                        SEQUENTIALLY
                                                                                         NUMBERED
EXHIBIT NO.                            DESCRIPTION OF EXHIBIT                              PAGE
- -----------   ------------------------------------------------------------------------  ----------
<S>           <C>                                                                       <C>
 1            Revised Form of Underwriting Agreement.
 3.1          Amended and Restated Certificate of Incorporation.
 3.2          Amended and Restated Bylaws.
 4.1          Debenture and Warrant Purchase Agreement dated April 10, 1996 by and
              between the Company, Messrs. Pandey, Koneru and Valluripalli and Summit
              Ventures IV, L.P. and Summit Investors III, L.P.
 4.2          Warrant Agreement dated April 10, 1996 by and between the Company and
              Summit Ventures IV, L.P. and Summit Investors III, L.P.
 4.3          Registration Rights Agreement dated April 10, 1996 by and between the
              Company and Summit Ventures IV, L.P. and Summit Investors III, L.P.
 4.4          Redemption Agreement dated April 10, 1996 by and between the Company and
              Summit Ventures IV, L.P. and Summit Investors III, L.P.
 4.5          Shareholders Agreement dated April 10, 1996 by and between the Company,
              Messrs. Pandey, Koneru and Valluripalli and Summit Ventures IV, L.P. and
              Summit Investors III, L.P.
 5            Opinion of Buchanan Ingersoll as to validity of Common Stock.
10.1          1996 Stock Plan of the Company.
10.2          1996 Non-Employee Director Stock Option Plan.
10.3          Employment Agreement dated June 1, 1996 between the Company and Ashok
              Pandey.
10.4          Employment Agreement dated June 1, 1996 between the Company and Rajkumar
              Koneru.
10.5          Employment Agreement dated June 1, 1996 between the Company and Nagarjun
              Valluripalli.
10.6          Employment Agreement dated June 1, 1996 between the Company and Robert
              M. Olanoff, together with Change in Control Severance Pay Agreement
              dated June 1, 1996 between the Company and Robert M. Olanoff.
10.7          Employment Agreement dated June 1, 1996 between the Company and Paul
              Coombs.
10.8          Form of Indemnification Agreement entered into by the Company and each
              of its directors and officers.
10.9          Sublease Agreement between Micrognosis, Inc., as sublessor, the Company,
              as sublessee, with master lease.
10.10         Employee's Invention Assignment and Confidentiality Agreement.
10.11         R/3 National Implementation Partner Agreement between SAP America, Inc.
              and the Company dated January 13, 1995.
10.12         Services Provider Agreement by and between Oracle Corporation and the
              Company dated July 26, 1994.
10.13         Amended and Restated Agreement by Messrs. Pandey, Koneru and
              Valluripalli dated July 16, 1996 to indemnify the Company for certain
              losses.
10.14         Factoring Agreement by and between Access Capital, Inc. and the Company
              dated as of October 20, 1995, with exhibits.
</TABLE>
    
<PAGE>   68
 
   
<TABLE>
<CAPTION>
                                                                                        SEQUENTIALLY
                                                                                         NUMBERED
EXHIBIT NO.                            DESCRIPTION OF EXHIBIT                              PAGE
- -----------   ------------------------------------------------------------------------  ----------
<S>           <C>                                                                       <C>
10.15         Agreement of Waiver and Consent dated as of June 4, 1996 by and among
              the Company, the current shareholders of the Company, and Summit
              Ventures IV, L.P. and Summit Investors III, L.P., with Amendment No. 1
              thereto.
10.16         Agreement by and between the Company and Intelligroup Asia Private
              Limited ("Intelligroup Asia") relating to operational control of
              Intelligroup Asia, with related agreements.
11            Statement re: Computation of per share earnings.
16            Letter re: Change of Certifying Accountant.
21            Subsidiaries of the Registrant.
23.1(*)       Consent of Arthur Andersen LLP.
23.2          Consent of Buchanan Ingersoll (contained in the opinion filed as Exhibit
              5 to the Registration Statement).
24            Powers of Attorney of certain officers and directors of the Company
              (contained on the signature page of this Registration Statement).
27.1          Financial Data Schedule for the year ended December 31, 1995.
27.2          Financial Data Schedule for the six months ended June 30, 1996.
</TABLE>
    
 
- ---------------
* Filed herewith. All other exhibits previously filed.

<PAGE>   1
 
                                                                    EXHIBIT 23.1
 
                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Intelligroup, Inc.:
 
     As independent public accountants, we hereby consent to the use of our
report and all references to our firm included in or made part of this
registration statement.
 
                                          ARTHUR ANDERSEN LLP
 
Princeton, New Jersey
   
August 26, 1996
    


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