INNODATA ISOGEN INC (Form: 10-Q, Received: 08/13/2007 14:54:00)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

		For the quarterly period ended June 30, 2007

		OR

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

		For the transition period from ________________ to ________________

Commission file number: 0-22196

INNODATA ISOGEN, INC.

(Exact name of registrant as specified in its charter)

Delaware		13-3475943
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

Three University Plaza		07601
Hackensack, New Jersey		(Zip Code)
(Address of principal executive offices)

(201) 371-2828

(Registrant’s telephone number, including area code)

[None]

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

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

Large accelerated filer o

Accelerated filer o

Non-accelerated filer þ

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

Yes o No þ

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Common Stock		Outstanding at July 31, 2007
$.01 par value per share		24,023,141 shares

INNODATA ISOGEN, INC. AND SUBSIDIARIES

For the Quarter Ended June 30, 2007

Table of Contents

		Page No.

PART I - FINANCIAL INFORMATION

	ITEM 1 - Financial Statements	3

	ITEM 2 - Management Discussion and Analysis of Financial Conditions and Results of Operations	17

	ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk	25

	ITEM 4 - Controls and Procedures	25

PART II - OTHER INFORMATION		26

	ITEM 1 - Legal Proceedings	26

	ITEM 1A - Risk Factors	26

	ITEM 2 - Unregistered Sales of Equity Securities and Use of Proceeds	26

	ITEM 3 - Defaults upon Senior Securities	26

	ITEM 4 - Submission of Matters to a Vote of Security Holders	26

	ITEM 5 - OTHER INFORMATION	26

	ITEM 6 - EXHIBITS	28

INNODATA ISOGEN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

	June 30,			December 31,
	2007			2006
	Unaudited			Derived from
				audited
				financial
				Statements
ASSETS

CURRENT ASSETS:
Cash and equivalents	$	11,208		$	13,597
Accounts receivable-net		10,483			6,484
Prepaid expenses and other current assets		1,835			1,589
Refundable income taxes		1,062			1,062
Deferred income taxes		298			190

Total current assets		24,886			22,922

PROPERTY AND EQUIPMENT - NET		5,141			4,564

OTHER ASSETS		2,027			1,912

DEFERRED INCOME TAXES		257			256

GOODWILL		675			675

TOTAL	$	32,986		$	30,329

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable	$	1,202		$	987
Accrued expenses		2,290			2,117
Accrued salaries, wages and related benefits		5,586			4,259
Income and other taxes		1,548			1,295
Current portion of long term obligations		481			632

Total current liabilities		11,107			9,290

DEFERRED INCOME TAXES		1,209			1,126

LONG TERM OBLIGATIONS		1,244			904

STOCKHOLDERS' EQUITY:
Serial preferred stock; 5,000,000 shares authorized, none outstanding
Common stock, $.01 par value; 75,000,000 shares authorized;
24,164,000 and 24,087,000 issued at June 30, 2007
And December 31, 2006, and 23,982,000 and 23,905,000 outstanding
at June 30, 2007 and December 31, 2006		242			241
Additional paid-in capital		17,391			17,225
Retained earnings		2,841			2,622
Accumulated other comprehensive income		(729	)		(760	)
		19,745			19,328
Less: treasury stock - at cost; 182,000 shares		(319	)		(319	)
Total stockholders’ equity		19,426			19,009

TOTAL	$	32,986		$	30,329

See notes to condensed consolidated financial statements

INNODATA ISOGEN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2007 AND 2006

(In thousands, except per share amounts)

(Unaudited)

	2007			2006

REVENUES	$	16,347		$	9,721

OPERATING COSTS AND EXPENSES:
Direct operating expenses		11,970			8,545
Selling and administrative expenses		3,549			4,167
Interest (income) - net		(125	)		(161	)

Total		15,394			12,551
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		953			(2,830	)

PROVISION FOR INCOME TAXES		91			122
NET INCOME (LOSS)	$	862		$	(2,952	)

BASIC INCOME (LOSS) PER SHARE	$	.04		$	(.12	)
DILUTED INCOME (LOSS) PER SHARE	$	.03		$	(.12	)

WEIGHTED AVERAGE BASIC SHARES OUTSTANDING		23,953			24,087
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING		25,051			24,087

See notes to condensed consolidated financial statements

INNODATA ISOGEN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2007 AND 2006

(In thousands, except per share amounts)

(Unaudited)

	2007			2006

REVENUES	$	29,076		$	20,006

OPERATING COSTS AND EXPENSES:
Direct operating expenses		22,014			16,898
Selling and administrative expenses		6,994			7,553
Interest (income) - net		(262	)		(312	)

Total		28,746			24,139
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		330			(4,133	)

PROVISION FOR INCOME TAXES		111			165
NET INCOME (LOSS)	$	219		$	(4,298	)

BASIC INCOME (LOSS) PER SHARE	$	.01		$	(.18	)
DILUTED INCOME (LOSS) PER SHARE	$	.01		$	(.18	)

WEIGHTED AVERAGE BASIC SHARES OUTSTANDING		23,930			24,060
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING		24,897			24,060

See notes to condensed consolidated financial statements

INNODATA ISOGEN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2007 and 2006

(In thousands)

(Unaudited)

	2007			2006
OPERATING ACTIVITIES:
Net income (loss)	$	219		$	(4,298	)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization		1,490			1,772
Non-cash compensation		95			117
Deferred income taxes		(30	)		-
Changes in operating assets and liabilities:
Accounts receivable		(3,999	)		1,267
Prepaid expenses and other current assets		(501	)		(586	)
Other assets		(137	)		(63	)
Accounts payable and accrued expenses		388			855
Accrued salaries and wages		1,327			568
Income and other taxes		253			(34	)
Net cash used in operating activities		(895	)		(402	)

INVESTING ACTIVITIES:
Capital expenditures		(1,196	)		(1,589	)

FINANCING ACTIVITIES:
Payment of long-term obligations		(370	)		(398	)
Proceeds from exercise of stock options		72			356

Net cash used in financing activities		(298	)		(42	)

DECREASE IN CASH AND EQUIVALENTS		(2,389	)		(2,033	)

CASH AND EQUIVALENTS, BEGINNING OF PERIOD		13,597			20,059

CASH AND EQUIVALENTS, END OF PERIOD	$	11,208		$	18,026

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	10		$	4
Income taxes	$	34		$	166
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Software licenses and support to be vendor financed	$	-		$	164
Acquisition of equipment utilizing capital leases	$	511		$	-

See notes to condensed consolidated financial statements

INNODATA ISOGEN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

SIX MONTHS ENDED JUNE 30, 2007 AND 2006

(In thousands)

					Additional					Accumulated
	Common Stock				Paid-in		Retained			Comprehensive			Treasury
	Shares		Amount		Capital		Earnings			Income			Stock			Total

January 1, 2007		23,905	$	241	$	17,225	$	2,622		$	(760	)	$	(319	)	$19,009

Net income		-		-		-		219			-			-		219
Issuance of common stock upon exercise of stock options		77		1		71		-			-			-		72
Amortization of transitional projected benefit obligation		-		-		-		-			31			-		31
Non-cash equity compensation		-		-		95		-			-			-		95

June 30, 2007		23,982	$	242	$	17,391	$	2,841		$	(729	)	$	(319	)	$19,426

January 1, 2006		23,669	$	237	$	16,632	$	9,945		$	-0-		$	-0-			26,814

Net loss		-		-		-		(4,298	)		-			-			(4,298	)
Issuance of common stock upon exercise of stock options		418		4		352		-			-			-			356
Non-cash equity compensation		-		-		117		-			-			-			117

June 30, 2006		24,087	$	241	$	17,101	$	5,647		$	-0-		$	-0-		$	22,989

See notes to condensed consolidated financial statements

INNODATA ISOGEN, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2007 AND 2006

(Unaudited)

1.	DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business -Innodata Isogen, Inc. and subsidiaries (the “Company”), is a leading provider of business services that help organizations create, manage, use and distribute information more effectively and economically. The Company provides content-related business process outsourcing (BPO) services and content-related information technology (IT) professional services. The Company’s content-related BPO services focus on fabrication services and knowledge services. Fabrication services include digitization and data conversion services, content creation and XML services. Knowledge services include content enhancement, hyperlinking, indexing and general editorial services. The Company’s content-related IT professional services focus on the design, implementation, integration and deployment of systems used to author, manage and distribute content.

Basis of Presentation -Consolidated financial statements for the interim periods included herein are unaudited; however, they contain all adjustments (consisting of only normal recurring accruals) which in the opinion of management, are necessary to present fairly the consolidated financial position of the Company as of June 30, 2007, the results of its operations and its cash flows for the three and six months ended June 30, 2007 and 2006. The results of operations for the interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year.

Principles of Consolidation - The consolidated financial statements include the accounts of Innodata Isogen, Inc. and its subsidiaries, all of which are wholly owned. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates -In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent 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. Significant estimates include deferred taxes and related valuation allowances, allowances for bad debts and billing adjustments, cash flows used in impairment analysis of long-lived assets, litigation accruals, post retirement benefits, and estimated accruals for various tax exposures.

These financial statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2006 included in the Company's Annual Report on Form 10-K. Unless otherwise noted, the accounting policies used in preparing these financial statements are the same as those described in the December 31, 2006 financial statements.

Foreign Currency -The functional currency for the Company’s production operations located in the Philippines, India and Sri Lanka is U.S. dollars. As such, transactions denominated in Philippine pesos, Indian and Sri Lanka rupees were translated to U.S. dollars at rates which approximate those in effect on transaction dates. Monetary assets and liabilities denominated in foreign currencies at June 30, 2007 and 2006 were translated at the exchange rate in effect as of those dates. Exchange gains and (losses) resulting from such transactions were ($158,000) and $144,000 in the three months ended June 30, 2007 and 2006, respectively, and ($202,000) and $44,000 in the six months ended June 30, 2007 and 2006, respectively.

Cash Equivalents- For financial statement purposes (including cash flows), the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

2.	LONG TERM OBLIGATIONS

In 2007, the Company financed the acquisition of certain computer and communications equipment approximating $511,000. The capital lease obligations bear interest ranging from 7% to 10% and are payable over two to five years.

The cost of equipment under capital leases is included in the balance sheets as property, plant, and equipment and was $1,218,000 and $707,000 at June 30, 2007 and December 31, 2006, respectively. Accumulated amortization of the leased equipment at June 30, 2007 and December 31, 2007, was approximately $703,000 and $671,000, respectively. Amortization of assets under capital leases is included under depreciation expense.

The future minimum lease payments required under the capital leases and the present value of the net minimum lease payments as of June 30, 2007 are as follows (in thousands):

As of June 30	Amount
2007-2008		209
2008-2009		215
2009-2010		133
2010-2011		10
2011		6
Thereafter		-
Total minimum lease payments		573
Less: Amount representing interest		70
Present value of net minimum lease payments		503
Less: Current maturities of capital lease obligations		172
Long-term capital lease obligations		331

In 2006, the Company financed the acquisition of software licenses totaling $164,000. The amount is payable in eight equal quarterly installments through December 31, 2007.

Total long term obligations as of June 30, 2007 and December 31, 2006 consist of the following (amounts in thousands):

	2007		2006

Vendor obligations for software licenses	$	310	$	609
Capital lease obligations		503		23
Deferred lease payment		70		27
Pension obligations - accrued pension liability		842		877
		1,725		1,536
Less: current portion of long term obligations		481		632

Long term obligations	$	1,244	$	904

3.	INCOME TAXES

The provision for income taxes for the three and six months ended June 30, 2007 and 2006 principally represents foreign taxes.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible and net operating losses are utilized. Based on a consideration of these factors, the Company has established a valuation allowance of approximately $4,365,000 and $4,229,000, at June 30, 2007 and December 31, 2006, respectively.

The Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”) “Accounting for Uncertainty in Income Taxes” on January 1, 2007. FIN 48 requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any tax benefit can be recorded in the financial statements. It also provides guidance on the recognition, measurement, classification and disclosure in the financial statements for uncertain tax positions taken or expected to be taken in a tax return. No cumulative effect of a change in accounting principle or adjustment to the liability for unrecognized tax benefits was recognized as a result of the adoption of FIN 48. Accordingly, the adoption of FIN 48 did not have an effect on the results of operations or financial position of the Company.

The Company is subject to US federal income tax as well as income tax in various states and foreign jurisdictions. In the third quarter of 2007, the IRS completed the audit of the Company’s 2004 and 2005 income tax returns which will result in a decrease to the Company’s net operating loss carryforward of approximately $70,000.

The Company is no longer subject to examination of federal and New Jersey taxing authorities for years prior to 2006.

Various foreign subsidiaries currently have open tax years ranging from 2003 through 2006.

Pursuant to an income tax audit by the Indian bureau of taxation, on March 27, 2006, one of the Company’s Indian subsidiaries received a tax assessment approximating $394,000, including interest through June 30, 2007, for the fiscal tax year ended March 31, 2003. Management disagrees with the basis of the tax assessment, and has filed an appeal against the assessment, which it will fight vigorously. The Indian bureau of taxation has also completed an audit of the Company’s Indian subsidiary’s income tax return for the fiscal tax year ended March 31, 2004. The ultimate outcome was favorable, and there was no tax assessment imposed for the fiscal tax year ended March 31, 2004. On March 20, 2007, the Indian bureau of taxation commenced an audit of the subsidiary’s income tax return for the fiscal year ended 2005. The ultimate outcome cannot be determined at this time.

The liability for net unrecognized tax benefits at June 30, 2007 and December 31, 2006 was approximately $478,000 and $481,000, respectively. This liability represents an accrual relating to uncertain income tax positions the Company has taken on its domestic and foreign tax returns. The Company reports interest expense and penalties related to income tax liabilities as a component of its provision for income taxes. As of June 30, 2007 and December 31, 2006, the Company had accrued a liability for interest and penalties totaling approximately $185,000 and $138,000, respectively.

Furthermore the Company has unrecognized tax benefits of $167,000 as of June 30, 2007 and December 31, 2006, respectively, which, if recognized, would increase the Company’s net operating loss carryforward. Such increase, if recognized, would not have an impact on the Company’s effective tax rate since the increase to its deferred tax assets would result in a corresponding increase to its valuation allowance.

The following presents a rollforward of the Company’s unrecognized tax benefits and associated interest for the six months ended June 30, 2007 (amounts in thousands):

	Unrecognized tax benefits			Interest and penalties
Balance - January 1, 2007	$	648		$	138
Interest accrual		-			47
Other		(3	)		-
Balance - June 30, 2007	$	645		$	185

As a result of the IRS audit settlement mentioned above, the Company expects to recognize approximately $70,000 of previously unrecognized tax benefits in the third quarter of 2007. The Company currently cannot estimate the range of any further possible change in unrecognized tax benefits in the next twelve months. In addition the Company is subject to various tax audits and claims which arise in the ordinary course of business. Management currently believes that the ultimate outcome of these audits and claims will not have a material adverse effect on the Company’s financial position or results of operations.

4.	COMMITMENTS AND CONTINGENT LIABILITIES

Line of Credit -The Company has an uncommitted line of credit of $5 million which expires on May 31, 2008. Under the terms of the agreement any amounts drawn against this facility must be secured by a certificate of deposit of an equal amount. Additionally, any amounts drawn will bear interest at the bank’s alternate base rate plus ½% or LIBOR plus 3%. The Company has no outstanding obligations under this credit line.

Litigation -In connection with the cessation of all operations at certain foreign subsidiaries, certain former employees have filed various actions against certain of the Company’s Philippine subsidiaries, and have purported to also sue the Company and certain of its officers and directors, seeking to require reinstatement of employment and to recover back wages for an allegedly illegal facility closing on June 7, 2002 based on the terms of a collective bargaining agreement with this subsidiary. If complainants' claims had merit, they could be entitled to back wages and benefits of up to approximately $6.0 million, based upon exchange rates as of June 30, 2007, and consistent with prevailing jurisprudence. Based on consultation with legal counsel, we believe that the complainants' claims are without merit and continue to defend against them vigorously.

In addition, the Company is subject to various legal proceedings and claims which arise in the ordinary course of business.

While management currently believes that the ultimate outcome of all these proceedings will not have a material adverse effect on the Company’s financial position or overall trends in results of operations, litigation is subject to inherent uncertainties. Were an unfavorable ruling to occur, there exists the possibility of a material adverse impact on the operating results of the period in which the ruling occurs. In addition, the estimate of potential impact on the Company’s financial position or overall results of operations for the above legal proceedings could change in the future.

5.	EMPLOYMENT AGREEMENTS

On May 18, 2007, the Company entered into a three year agreement with its Chief Operating Officer (“COO”) whereby the Company agreed to cause two of its subsidiaries to employ the COO. The agreement, which has an effective date of January 1, 2007, provides for annual base compensation of $175,000 subject to annual reviews for discretionary annual increases by the Company; incentive compensation pursuant to an incentive compensation plan; and a signing bonus of $30,000. The agreement also provides for insurance and other fringe benefits, and contains confidentiality, non-compete and non-interference provisions. In the event the Company terminates the agreement without cause, the COO is entitled to receive his then base salary for 12 months following the date of termination.

6.	RESTRUCTURING COST

As part of an overall cost reduction plan to reduce operating costs, in September 2006 the Company announced a worldwide workforce reduction of slightly under 300 employees, the majority of whom were based in Asia. Most of these employees were terminated prior to September 30, and the plan was complete as of June 30, 2007.

As of December 31, 2006, accrued expenses included approximately $102,000 related to restructuring costs charged in 2006. During the six months ended June 30, 2007, the Company paid severance costs totaling $102,000.

7.	STOCK OPTIONS

The following table presents information related to stock options for the six months ended June 30, 2007.

	Number Outstanding			Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price

Balance 1/1/07		4,548,950		$	2.14		4,478,167	$	2.12

Forfeit		(30,000	)	$	2.88
Expired		(1,750	)	$	4.00
Granted		105,000		$	3.21
Exercised		(76,500	)	$	0.94

Balance 6/30/07		4,545,700		$	2.18		4,437,789	$	2.15

	June 30, 2007
	Options Outstanding								Options Exercisable
Per Share Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Aggregate Intrinsic Value as of June 30, 2007		Number Exercisable		Weighted Average Exercise Price		Aggregate Intrinsic Value as of June 30, 2007
$0.25 - 0.42		130,668		-	$	0.26	$	488,871		130,668	$	0.26	$	488,871
$0.50 - 0.67		1,143,996		3	$	0.57		3,920,106		1,143,996	$	0.57		3,920,106
$1.29		399,996		-	$	1.29		1,083,989		399,996	$	1.29		1,083,989
$2.00		95,844		7	$	2.00		191,688		95,844	$	2.00		191,688
$2.59 - 2.88		1,244,346		4	$	2.60		1,745,828		1,221,846	$	2.59		1,720,628
$3.00 - 3.75		1,530,850		7	$	3.44		842,488		1,445,439	$	3.43		813,028
		4,545,700					$	8,272,970		4,437,789			$	8,218,310

The fair value of options at date of grant was estimated using the Black-Scholes pricing model with the following weighted average assumptions for options granted in the six months ended June 30, 2007: eight years; risk free interest rate of 4.61%; expected volatility of 123% and a zero dividend rate. The weighted average grant date fair value of options granted in 2007 was $2.98. No options were granted during the six months ended June 30, 2006.

The number and weighted-average grant-date fair value of non-vested stock options is as follows:

	Shares			Weighted Average Grant-Date Fair Value
Non-vested January 1, 2007		70,783		$	2.92
Granted 2007		105,000		$	2.72
Forfeited 2007		(30,000	)	$	2.68
Vested 2007		(37,872	)	$	2.87
Non-vested June 30, 2007		107,911		$	2.82

The total compensation cost related to non-vested stock options not yet recognized as of June 30, 2007 totaled approximately $316,000. The weighted-average period over which these costs will be recognized is thirty-five months.

The total intrinsic value of options exercised for the six months ended June 30, 2007 and June 30, 2006 was $161,000 and $1,130,000 respectively. The total fair value of stock options vested during the six months ended June 30, 2007 was $87,000.

8.	SEGMENT REPORTING AND CONCENTRATIONS

The Company’s operations are classified into two reporting segments: (1) content-related BPO services and (2) content-related IT professional services. The content-related BPO services segment focuses on fabrication services and knowledge services. Fabrication services include digitization and data conversion services, content creation and XML services. Knowledge services include content enhancement, hyperlinking, indexing and general editorial services. The content-related IT professional services segment focuses on the design, implementation, integration and deployment of systems used to author, manage and distribute content. The Company’s content-related BPO services revenues are generated principally from its production facilities located in the Philippines, India and Sri Lanka. The Company does not depend on revenues from sources internal to the countries in which the Company operates; nevertheless, the Company is subject to certain adverse economic and political risks relating to overseas economies in general, such as inflation, currency fluctuations and regulatory burdens.

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
	(in thousands)						(in thousands)
Revenues:
Content-related BPO services	$	15,380		$	8,411		$	26,929		$	17,669
Content-related IT Professional services		967			1,310			2,147			2,337
Total consolidated	$	16,347		$	9,721		$	29,076		$	20,006


Depreciation and amortization:
Content-related BPO services	$	625		$	765		$	1,223		$	1,503
Content-related IT Professional services		31			32			60			62
Selling and corporate administration		97			119			207			207
Total consolidated	$	753		$	916		$	1,490		$	1,772


Income (Loss) before income taxes:
Content-related BPO services	$	4,481		$	753		$	7,187		$	2,405
Content-related IT Professional services		(325	)		281			(564	)		342
Selling and corporate administration		(3,203	)		(3,864	)		(6,293	)		(6,880	)
Total consolidated	$	953		$	(2,830	)	$	330		$	(4,133	)

	June 30, 2007		December 31, 2006
	(in thousands)
Total assets:
Content-related BPO services	$	15,267	$	13,057
Content-related IT Professional services		1,894		2,043
Corporate (includes corporate cash)		15,825		15,229
Total consolidated	$	32,986	$	30,329

One client accounted for 17% and 24% of revenues for the three months ended June 30, 2007 and 2006, respectively. A second client accounted for 31% of the Company's revenues for the three months ended June 30, 2007. Another client accounted for 15% of the Company’s revenues for the three months ended June 30, 2006. No other client accounted for 10% or more of the total revenues for these periods. Further, for each of the three months ended June 30, 2007 and 2006, revenues to non-US clients accounted for 23% and 34% respectively, of the Company's revenues.

One client accounted for 17% and 27% of revenues for the six months ended June 30, 2007 and 2006, respectively. Another client accounted for 26% of the Company’s revenues for the six months ended June 30, 2007. Two other clients accounted for 11% and 13% of the Company’s revenue for the six months ended June 30, 2006. No other client accounted for 10% or more of the total revenues for these periods. Further, for each of the six months ended June 30, 2007 and 2006, revenues to non-US clients accounted for 24% and 36% respectively, of the Company's revenues.

A significant amount of the Company’s revenues is derived from clients in the publishing industry. Accordingly, the Company’s accounts receivable generally include significant amounts due from such clients. In addition, as of June 30, 2007, approximately 22% of the Company’s accounts receivable was from foreign (principally European) clients and 50% of accounts receivable was due from two clients. As of December 31, 2006, approximately 28% of the Company’s accounts receivable was from foreign (principally European) clients and 36% of accounts receivable was due from one client.

9.	INCOME (LOSS) PER SHARE

	Three Months Ended June 30,					Six Months Ended June 30,
	2007		2006			2007		2006

Net income (loss)	$	862	$	(2,952	)	$	219	$	(4,298	)

Weighted average common shares outstanding		23,953		24,087			23,930		24,060
Dilutive effect of outstanding options		1,098		-			967		-
Adjusted for dilutive computation		25,051		24,087			24,897		24,060

Basic income (loss) per share	$	.04	$	(.12	)	$	.01	$	(.18	)

Diluted income (loss) per share	$	.03	$	(.12	)	$	.01	$	(.18	)

Basic income (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted income (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. The dilutive effect of the outstanding options is reflected in diluted income (loss) per share by application of the treasury stock method. Options to purchase 411,000 shares of common stock in 2007 and 3.0 million shares of common stock in 2006 were outstanding but not included in the computation of diluted income per share because the options’ exercise price was greater than the average market price of the common shares and therefore, the effect would have been antidilutive. In addition, diluted net loss per share does not include 795,000 and 905,000 potential common shares derived from stock options for the three months and six months ended June 30, 2006, respectively, because as a result of the Company incurring losses, their effect would have been antidilutive .

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Disclosures in this Form 10-Q contain certain forward-looking statements, including without limitation, statements concerning our operations, economic performance, and financial condition. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “estimate,” “believe,” “expect,” and “anticipate” and other similar expressions generally identify forward-looking statements, which speak only as of their dates.

These forward-looking statements are based largely on our current expectations, and are subject to a number of risks and uncertainties, including without limitation, continuing revenue concentration in a limited number of clients, continuing reliance on project-based work, worsening of market conditions, changes in external market factors, the ability and willingness of our clients and prospective clients to execute business plans which give rise to requirements for digital content and professional services in knowledge processing, difficulty in integrating and deriving synergies from acquisitions, potential undiscovered liabilities of companies that we acquire, changes in our business or growth strategy, the emergence of new or growing competitors, various other competitive and technological factors, and other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission.

Our actual results could differ materially from the results referred to in the forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the results referred to in the forward-looking statements contained in this release will occur.

We undertake no obligation to update or review any guidance or other forward-looking information, whether as a result of new information, future developments or otherwise.

The Company

Innodata Isogen, Inc. and subsidiaries (the “Company”), is a leading provider of business services that help organizations create, manage, use and distribute information more effectively and economically. The Company provides content-related business process outsourcing (BPO) services and content-related information technology (IT) professional services.

The Company’s content-related BPO services focus on fabrication services and knowledge services. Fabrication services include digitization and data conversion services, content creation and XML services. Knowledge services include content enhancement, hyperlinking, indexing and general editorial services.

The Company’s content-related IT professional services focus on the design, implementation, integration and deployment of systems used to author, manage and distribute content.

Services for business processes that we anticipate a client will require for an indefinite period generate what we regard as recurring revenues. Services for a specific project generate revenues that we regard as non-recurring.

We have experienced, and expect to continue to experience, significant fluctuations in our quarterly revenues and results of operations. While we seek, wherever possible, to counterbalance periodic declines in revenues on completion of large projects with new arrangements to provide services to the same client or others, we have at times been unable to avoid declines in revenues when large projects are completed, and we may continue to encounter this difficulty in the future. Our inability in any period to obtain sufficient new projects to counterbalance any decreases in such work adversely affects our revenues and results of operations for the period.

We have historically relied on a very limited number of clients that have accounted for a significant portion of our revenues. We may lose any of these or any of our other major clients as a result of our failure to meet or satisfy our clients’ requirements; the completion, termination or reduction of a project or engagement; or the selection of another service provider. Our revenues and results of operations are adversely affected when these events occur.

Our services are typically subject to client requirements, and in many cases are terminable by the client upon 30 to 90 days’ notice.

Other factors, some of which are beyond our control, that may also affect our quarterly results include the size, mix, timing and terms and conditions of client projects; variations in the duration, size and scope of our projects or engagements; market acceptance of our clients’ new products and services; our ability to manage costs; local factors and events that affect our production volume, such as local holidays; unforeseen events, such as earthquakes, storms and civil unrest; currency exchange fluctuations; changes in pricing policies by us or our competitors; the introduction of new services by us or our competitors; and acquisition and integration costs related to possible acquisitions of other businesses.

Our production facilities are located in the Philippines, India and Sri Lanka. To the extent that the currencies of these countries fluctuate, we are subject to risks of changing costs of production after pricing is established for certain customer projects. However, the majority of our contracts contain provisions for an annual price adjustment.

Direct operating costs for both our content-related BPO services and content-related IT professional services consist of direct payroll, occupancy costs, depreciation, telecommunications, computer services and supplies.

Selling and administrative expenses for both our content-related BPO services and content-related IT professional services consist of management and administrative salaries, selling and marketing costs and administrative overhead.

Results of Operations

Three Months Ended June 30, 2007 and 2006

Revenues

Revenues were $16.3 million for the three months ended June 30, 2007 compared to $9.7 million for the similar period in 2006, an increase of 68%.

Revenues from content-related BPO services increased 83% to $15.4 million for the three months ended June 30, 2007 from $8.4 million for the similar period in 2006. The $7 million in increased revenues primarily reflects a $4.7 million increase from recurring revenue and $2.3 million from project revenue that we regard as non-recurring. Furthermore, more than 50% of the total revenue increase is attributable to knowledge services.

Revenues from content-related IT professional services decreased 26% to $967,000 for the three months ended June 30, 2007, from $1.3 million for the similar period in 2006. Although there were revenues derived from new projects that started during the second quarter of 2007, there were also decreases due to the completion in 2007 of several IT professional services projects.

One client accounted for 17% and 24% of our total revenues for the three months ended June 30, 2007 and 2006, respectively. A second client accounted for 31% of our total revenues for the three months ended June 30, 2007. A third client accounted for 15% of our total revenues for the three months ended June 30, 2006. No other client accounted for 10% or more of our total revenues for these periods. Further, for the three months ended June 30, 2007 and 2006, revenues from clients located in foreign countries (principally in Europe) accounted for 23% and 34% respectively, of our total revenues.

For the three months ended June 30, 2007, approximately 65% of our revenue was recurring and 35% was non-recurring, compared with 61% and 39%, respectively, for the three months ended June 30, 2006. All recurring revenues are from content-related BPO services segment.

Direct Operating Costs

Direct operating costs were $12.0 million and $8.5 million for the three months ended June 30, 2007 and 2006, respectively, an increase of 41%. Direct operating costs as a percentage of revenues for the three months ended June 30, 2007 and 2006, were 73% and 88% respectively.

Direct operating costs for content-related BPO services were $10.7 million and $7.5 million in the three months ended June 30, 2007 and 2006, respectively, an increase of 43%. Direct operating costs of content-related BPO services as a percentage of revenues from content related BPO services were 69% and 89% for the three months ended June 30, 2007 and 2006, respectively. The increase in direct operating costs of content-related BPO services was principally attributable to increases in variable labor and other operating costs in support of higher revenue volume. The d irect operating expenses as a percentage of revenues for our content-related BPO services segment were lower in the three months ended June 30, 2007, than in the comparable 2006 period, principally due to decreased variable costs as a percent of revenues, as well as a decrease in fixed costs, principally resulting from the restructuring program in September 2006. These cost decreases were offset in part by a $560,000 increase in direct operating costs resulting from a weakened US dollar against the Philippine peso and Indian rupee.

Direct operating costs for content-related IT professional services were $1.3 million and $1.0 million for the three months ended June 30, 2007 and 2006, respectively, an increase of 30%. Direct operating costs for content-related IT professional services as a percentage of revenues from content-related IT professional services were 134% and 79% for the three months ended June 30, 2007 and 2006, respectively. The increase in direct operating costs of content-related IT professional services was due to increases in labor, recruitment, and other operating costs to support both new content-related BPO and IT professional services business that we anticipate will generate revenues in future quarters.

Selling and Administrative Expenses

Selling and administrative expenses were $3.5 million and $4.2 million for the three months ended June 30, 2007 and 2006, respectively. Selling and administrative expenses as a percentage of revenues were 22% and 43% for the three months ended June 30, 2007 and 2006, respectively. Included in selling and administrative expenses for the three months ended June 30, 2006 are accrued severance costs of approximately $275,000 related to the termination of an executive’s employment and $267,000 in new services research and development. The remaining decrease in selling and administrative expenses is principally attributable to the net effect of cost reductions. In addition, we did not incur any research and development costs in the three months ended June 30, 2007. The decrease in selling and administrative expenses as a percentage of sales is principally a result of the factors described above and the increase in revenues.

Provision for Income Taxes

The provision for income taxes in the three months ended June 30, 2007 and 2006 was principally comprised of foreign income taxes attributable to certain overseas subsidiaries which generated taxable income.

Net Income / Loss

We recorded a net profit of $862,000 in the three months ended June 30, 2007 compared with a net loss of approximately $3.0 million in the comparable period in 2006. The change was principally attributable to the increase in gross margin resulting from increased revenues and lower selling and administrative expenses.

Results of Operations

Six Months Ended June 30, 2007 and 2006

Revenues

Revenues were $29.1 million for the six months ended June 30, 2007 compared to $20.0 million for the similar period in 2006, an increase of 45%.

Revenues from content-related BPO services increased 52% to $26.9 million for the six months ended June 30, 2007 from $17.7 million for the similar period in 2006. The $9.2 million in increased revenues primarily reflects a $7.2 million increase from recurring revenue and $2 million from project revenue that we regard as non-recurring. Furthermore, approximately 60% of the total revenue increase is attributable to knowledge services.

Revenues from content-related IT professional services slightly decreased by 4%, to $2.2 million for the six months ended June 30, 2007, from $2.3 million for the similar period in 2006.

One client accounted for 17% and 27% of our total revenues for the six months ended June 30, 2007 and 2006, respectively. Another client accounted for 26% of our total revenues for the six months ended June 30, 2007. Two other clients accounted for 11% and 13% of our revenue for the six months ended June 30, 2006. No other client accounted for 10% or more of our total revenues for these periods. Further, for each of the six months ended June 30, 2007 and 2006, revenues to non-US clients accounted for 24% and 36% respectively, of the Company's revenues.

For the six months ended June 30, 2007, approximately 67% of our revenue was recurring and 33% was non-recurring, compared with 60% and 40%, respectively, for the six months ended June 30, 2006. All recurring revenues are from content-related BPO services segment.

Direct Operating Costs

Direct operating costs were $22.0 million and $16.9 million for the six months ended June 30, 2007 and 2006, respectively, an increase of 30%. Direct operating costs as a percentage of revenues for the six months ended June 30, 2007 and 2006, were 76% and 84% respectively.

Direct operating costs for content-related BPO services were $19.3 million and $14.9 million in the six months ended June 30, 2007 and 2006, respectively, an increase of 30%. Direct operating costs of content-related BPO services as a percentage of revenues from content related BPO services were 72% and 84% for the six months ended June 30, 2007 and 2006, respectively. The increase in direct operating costs of content-related BPO services was principally attributable to increases in variable labor and other operating costs in support of higher revenue volume. The d irect operating expenses as a percentage of revenues for our content-related BPO services segment were lower in the six months ended June 30, 2007, than in the comparable 2006 period, principally due to decreased variable costs as a percent of revenues, as well as a decrease in fixed costs, principally resulting from the restructuring program in September 2006. These cost decreases were offset in part by a $900,000 increase in direct operating costs resulting from a weakened US dollar against the Philippine peso and Indian rupee.

Direct operating costs for content-related IT professional services were $2.7 million and $2.0 million for the six months ended June 30, 2007 and 2006, respectively, an increase of 35%. Direct operating costs for content-related IT professional services as a percentage of revenues from content-related IT professional services were 123% and 85% for the six months ended June 30, 2007 and 2006, respectively. The increase in direct operating costs of content-related IT professional services was due to increases in labor, recruitment, and other operating costs to support both new content-related BPO and IT professional services business that we anticipate will generate revenues in future quarters.

Selling and Administrative Expenses

Selling and administrative expenses were $7.0 million and $7.6 million for the six months ended June 30, 2007 and 2006, respectively, a decrease of 8%. Selling and administrative expenses as a percentage of revenues were 24% and 38% for the six months ended June 30, 2007 and 2006, respectively. Included in selling and administrative expenses for the six months ended June 30, 2006 are accrued severance costs of approximately $275,000 related to the termination of an executive’s employment and $552,000 in new services research and development. Also included as a reduction of selling and administrative expenses for the six months ended June 30, 2006 is approximately $246,000 received as inducement to terminate our Dallas office lease prior to its contractual expiration date. We did not incur any research and development costs in the six months ended June 30, 2007. The decrease in selling and administrative expenses as a percentage of sales is principally a result of the factors described above and the increase in revenues.

Provision for Income Taxes

The provision for income taxes in the six months ended June 30, 2007 and 2006 was principally comprised of foreign income taxes attributable to certain overseas subsidiaries which generated taxable income.

Net Income / Loss

We recorded a net profit of $219,000 in the six months ended June 30, 2007 compared with a net loss of approximately $4.3 million in the comparable period in 2006. The change was principally attributable to the increase in gross margin resulting from increased revenues.

Liquidity and Capital Resources

Selected measures of liquidity and capital resources, expressed in thousands are as follows:

	June 30, 2007		December 31, 2006

Cash and Cash Equivalents	$	11,208	$	13,597
Working Capital		13,779		13,632

Net Cash Used In Operating Activities

Net cash used in operating activities was $895,000 for the six months ended June 30, 2007 compared to $402,000 for the six months ended June 30, 2006, an increase of approximately $493,000. The $493,000 increase in net cash used in operating activities is principally due to a $5.3 million increase in accounts receivable net of a $4.5 million decrease in net loss and a $300,000 net change in operating assets and liabilities and non-cash items.

Accounts receivable totaled approximately $10.5 million at June 30, 2007, representing approximately 55 days of sales outstanding compared to $6.5 million, or 56 days, at December 31, 2006.

A significant amount of our revenues is derived from clients in the publishing industry. Accordingly, our accounts receivable generally include significant amounts due from such clients. In addition, as of June 30, 2007, approximately 22% of our accounts receivable was from foreign (principally European) clients, and 50% of accounts receivable was due from two clients.

Net Cash Used in Investing Activities

For the six months ended June 30, 2007, we spent cash approximating $1.2 million for capital expenditures, compared to approximately $1.6 million for the six months ended June 30, 2006. Capital spending in 2007 related principally to normal ongoing equipment upgrades and to office improvements. Capital spending in the six months ended June 30, 2006 related principally to normal ongoing equipment upgrades, office reimbursements and to relocation of one of our Asian facilities. Furthermore, during the six months ended June 30, 2007, we acquired certain computer and communications equipment approximating $511,000 through finance leases, and during the six months ended June 30, 2006, we financed the purchase of software licenses totaling approximately $164,000. During the next twelve months, we anticipate that capital expenditures for ongoing technology, hardware, equipment and infrastructure upgrades will approximate $3.0 to $4.0 million.

Net Cash Used In Financing Activities

Proceeds from the exercise of stock options provided cash approximating $72,000 and $356,000 for the six months ended June 30, 2007 and 2006, respectively. In addition, payments of long-term obligations approximated $370,000 and $400,000 for the six months ended June 30, 2007 and 2006, respectively.

Availability of Funds

We have an uncommitted line of credit of $5 million which expires on May 31, 2008. Under the terms of the agreement, any amounts drawn against this facility must be secured by a certificate of deposit of an equal amount. Additionally, any amounts drawn will bear interest at the bank’s alternate base rate plus ½% or LIBOR plus 3%. We have no outstanding obligations under this credit line.

We believe that existing cash and internally generated funds will be sufficient for our reasonably anticipated working capital and capital expenditure requirements during the next 12 months. We fund our foreign expenditures from our U.S. corporate headquarters on an as-needed basis.

Inflation, Seasonality and Prevailing Economic Conditions

To date, inflation has not had a significant impact on our operations. We generally perform work for our clients under project-specific contracts, requirements-based contracts or long-term contracts. Contracts are typically subject to numerous termination provisions.

Our quarterly operating results are subject to certain seasonal fluctuations. Our fourth and first quarters include the months of December and January, when billable services activity by professional staff, as well as engagement decisions by clients, may be reduced due to client budget planning cycles. Demand for our services generally may be lower in the fourth quarter due to reduced activity during the holiday season and fewer working days for our Philippines-based staff during this period. These and other seasonal factors may contribute to fluctuations in our operating results from quarter to quarter.

Critical Accounting Policies and Estimates

There were no material changes during the six months ended June 30, 2007 to our critical accounting policies as reported in our Annual Report on Form 10-K for the year ended December 31, 2006.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to interest rate change market risk with respect to our credit line with a financial institution which is priced based on the bank’s alternate base rate (8.25% at June 30, 2007) plus ½% or LIBOR (5.375%) plus 3%. We have no outstanding obligations under our credit line. To the extent we utilize all or a portion of this line of credit, changes in the interest rate will have a positive or negative effect on our interest expense.

We have operations in foreign countries. While we are exposed to foreign currency fluctuations, we presently have no financial instruments in foreign currency and do not maintain significant funds in foreign currency beyond those necessary for operations.

Item 4. Controls and Procedures

An evaluation has been carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and the operation of our “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) under the Securities Exchange Act of 1934) as of June 30, 2007 (“Evaluation Date”). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the disclosure controls and procedures are reasonably designed and effective to ensure that (i) information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal controls over financial reporting in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 under the Exchange Act that occurred during our last fiscal quarter that materially affected or are reasonably likely to materially affect the internal controls over financial reporting.

PART II. OTHER INFORMATION

Items 1, 1A, 2, 3, and 5 are not applicable and have been omitted.

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

The following matters were voted on at the June 7, 2007 Annual Meeting of Stockholders. The total shares voted were 20,565,699.

Election of Directors:

*Nominee*	*For*		*Withheld*

Jack Abuhoff		20,272,375		293,324
Haig Bagerdjian		20,053,719		511,980
Louise Forlenza		20,483,146		82,553
John Marozsan		20,482,146		83,553
Peter Woodward		20,482,146		83,553

To ratify the selection and appointment by the Company’s Board of Directors of Grant Thornton LLP, independent auditors, as auditors for the Company for the year ending December 31, 2007.

	*For*		*Against*		*Abstain*

Auditors		20,538,331		17,167		10,201

Item 6. (a) Exhibits .

10.1 Agreement dated as of January 1, 2007 with Ashok Mishra.

31.1 Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

31.2 Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INNODATA ISOGEN, INC.

Date:	August 10, 2007	/s/ Jack Abuhoff
		Jack Abuhoff
		Chairman of the Board of Directors,
		Chief Executive Officer and President


Date:	August 10, 2007	/s/ Steven L. Ford
		Steven L. Ford
		Executive Vice President,
		Chief Financial Officer
		and Principal Accounting Officer

EXHIBIT 10.1

AGREEMENT

This Agreement (the "Agreement") is dated as of the 1 ^st day of January 2007 by and between Innodata Isogen, Inc. (“Innodata Isogen”) and Ashok Mishra (the "Executive").

WITNESSETH

Employment . Innodata Isogen hereby agrees to cause one or more of its wholly-owned subsidiaries to offer employment to the Executive for and during the term of this Agreement (as set forth in Paragraph 4 below). The subsidiary or subsidiaries offering employment to the Executive shall be referred to herein as the “Employing Subsidiary” or the “Employing Subsidiaries”, and shall be indentified in Appendix “A” to this Agreement. Innodata Isogen may change the identity of the Employing Subsidiaries upon written notice to the Executive. Innodata Isogen and the Employing Subsidiaries will be collectively referred to herein as the “Company”. The Executive will be employed by the the Employing Subsidiaries as Chief Operating Officer, and will be an Executive Vice President of the Company and member of the Company’s Executive Mangement Team. The Executive hereby accepts such employment with the Employing Subsidiaries under the terms and conditions set forth in this Agreement.

Duties and Authorities of the Executive . The Executive shall have such duties and authorities as shall be consistent with his position as Executive Vice President and Chief Operating Officer of the Company, as may be reasonably assigned to him from time to time by the Company. The Executive shall report directly to the Chief Executive Officer of Innodata Isogen (or such other officer as the Company may designate from time to time).

Full Business Time . The Executive agrees to devote his full business time and services to the faithful performance of his duties hereunder. During the term of his employment with the Employing Subsidiaries, the Executive shall engage in no other business activities whatsoever during normal working hours and shall perform his services primarily from the Company’s offices located in Mandaue, the Philippines and Noida, India.

Page 1 of 12

Term . The term of this Agreement shall commence on January 1, 2007 and end on December 31, 2009 (the "Term"), unless terminated earlier pursuant to this Agreement. By not later than June 30, 2009, the Company shall notify Executive in writing in accordance with Paragraph 12 of this Agreement whether the Company intends to renew Executive's employment with the Employing Subsidiaries. If the Company does not provide a notice of non-renewal by June 30, 2009 or if the parties do not execute a new employment agreement prior to the end of the Term, then this Agreement shall automatically renew for a period of one (1) year until December 21, 2010 provided Executive continues to be employed by the Employing Subsidiaries. If the Company provides Executive with a notice of non-renewal, this Agreement shall automatically terminate at the conclusion of the Term. During any renewal period, the Company shall provide written notice of non-renewal of this Agreement not later than June 30 of such calendar year. If the Company does not provide Executive with a written notice of non-renewal by June 30 of such calendar year or if the parties do not execute a new employment agreement prior the expiration of any such renewal period, then this Agreement shall continue to renew for successive one (1) year periods unless otherwise terminated or written notice of non-renewal is provided as set forth in this Agreement. If the Executive is timely provided pursuant to this paragraph with notice of non-renewal during a renewal period, this Agreement shall automatically terminate at the conclusion of the renewal period. Non-renewal of this Agreement is not a termination of this Agreement pursuant to Paragraph 7. In no event shall the Executive be entitled to any severance payments upon the Company's non-renewal of this Agreement pursuant to Paragraph 7.

5.	Compensation .

(a)

The Employing Subsidiaries shall pay the Executive a base annual salary ("Base Salary") totalling the equivalent to U.S. One hundred seventy-five thousand dollars and No Cents (U.S.$175,000) per annum for the Term, payable in accordance with the Employing Subsidiaries normal payroll cycle(s), subject to annual reviews by the Company for discretionary annual increases. In the event the Executive is employed by more than one Employing Subsidiary, the percent of Base Salary paid by each of the Employing Subsidiaries shall be communciated to the Executive at the commencement of the Term.

(b)

The Employing Subsidiaries shall pay the Executive a total signing bonus equivalent to U.S. Thirty Thousand Dollars and No Cents (U.S.$30,000.00) within thirty (30) days of the Executive’s execution of this Agreement. In the event the Executive is employed by more than one Employing Subsidiary, the percent of the signing bonus paid by each of the Employing Subsidiaries shall be communciated to the Executive at the commencement of the Term.

(c)

For each calendar year during the Term, the Executive may be eligible to receive incentive compensation pursuant to an incentive compensation plan (the “Plan”). The terms of the Plan will be determined by the Company and communicated in writing to the Executive. In connection with the Plan, the terms of the official Plan documents, as may be amended from time to time, shall govern and be controlling.

Page 2 of 12

(d)

Base Salary payments shall be made in accordance with the Employing Subsidiaries’ payroll policies. Base Salary, signing bonus and incentive payments, if any, shall be subject to deduction for applicable withholding taxes.

6.	Employee Benefits .

(a)

Throughout his employment during the Term, the Employing Subsidiaries shall provide the Executive with medical insurance in amounts of coverage available to other expatriat senior executives of the Employing Subsidiaries with employee payment obligations on the same terms as such other senior executives.

(b)

The Executive shall be entitled to four weeks paid vacation per annum and personal and sick leave in accordance with the policies of the Employing Subsidiaries, which leave shall be taken by the Executive in accordance with the reasonable business requirements of the Company. The Employing Subsidiaries official policy documents on vacation, personal and sick leave, as may be modified from time to time, shall govern and be controlling. Two (2) weeks vacation per annum may be carried over from one year to the next, and the Executive shall be entitled to payment for any accrued, but unused, vacation upon the termination of the Executive's employment with the Company; provided that in noevent shall the amount of such payment exceed payment for six (6) weeks of accrued, but unused, vacation.

7.	Termination . Notwithstanding any other provision in this Agreement, during the Term:

(a)

Death . If the Executive dies, this Agreement shall automatically terminate as of the date of the Executive's death.

(b)

Disability . If the Executive is unable to perform his duties hereunder as a result of any physical or mental disability (i) which continues for 90 consecutive days or (ii) for 90 days in any 365 consecutive-day period, then Innodata Isogen may terminate this Agreement upon 30 days written notice to the Executive, provided that the Executive's Base Salary shall continue to accrue ratably for 90 days after the date of the termination.

(c)

Termination by the Company for Cause . Innodata Isogen may terminate this Agreement for Cause. For purposes of the Agreement, "Cause" shall mean (i) the E xecutive is charged or convicted by a court of competent jurisdiction of a felony or a crime involving Innodata Isogen or its subsidiaries ; (ii) the Executive’s conviction by a court of competent jurisdiction of a felony involving moral turpitude or unlawful, dishonest, or unethical conduct that a reasonable person would consider damaging to the reputation of Innodata Isogen or its subsidiaries, or is charged with a felony involving moral turpitude or unlawful, dishonest, or unethical conduct that a reasonable person would consider damaging to the reputation of the Innodata Isogen or its subsidiaries, which in the reasonable judgment of the Board of Directors of Innodata Isogen is reasonably likely to lead to a conviction; (iii) the Executive’s willful or persistent refusal or failure to perform assigned duties consistent with duties of the Executive's position or to comply with the reasonable directions of the Company officer to whom he reports, the Chief Executive Officer of Innodata Isogen, or Innodata Isogen’s Board of Directors; (iv) any material breach of any provision of this Agreement, or any other agreements between the Executive and the Company or its subsidiaries and affiliates, by the Executive; (v) the Executive’s gross negligence in the performance of his duties.

Page 3 of 12

If this Agreement is terminated by Innodata Isogen for cause the Executive’s employment with the Employing Subsidiaries shall automatically terminate, and the Employing Subsidiaries shall pay the Executive his full accrued Base Salary through the date of termination of employment at the rate in effect at the time of such termination, and the Company shall have no further obligation to the Executive under this Agreement or under any other agreements or plans. Executive is not entitled to any other compensation including, without limitation, bonuses, severance, incentive compensation and/or stock option grants if this Agreement is terminated for Cause.

(d)

Termination by the Company without Cause . Innodata Isogen may terminate this Agreement without Cause at any time, provided that, in such case, the Employing Subsidiaries shall continue to pay to the Executive his then Base Salary in normal payroll installments for twelve (12) months following the date of his termination.

For all purposes of this Agreement, including but not limited to the Executive's entitlement to the payments pursuant to Paragraph 7(e), this Agreement shall be deemed to have been terminated by Innodata Isogen without Cause if (i) Innodata Isogen breaches any of its material obligations under this Agreement, (ii) Innodata Isogen purports to terminate this Agreement prior to the end of the Term (other than for Cause), (iii) the Company reduces the Executive's Base Salary below the amount provided for in this Agreement, without the Executive’s written consent, or (iv) the Company assigns duties to the Executive which are not consistent with his office set forth in Paragraph 2, but in each case only if within 30 days after the Executive first has actual knowledge of the occurrence of such action or event, the Executive gives notice to the Company of his intention to terminate his employment with the Employing Subsidiaries, the Company does not revoke or reasonably cure any such action or event within 60 days after the date of such notice, and the Executive resigns his employment with the Employing Subsidiaries within 15 days thereafter.

(e)

In addition to any other payments pursuant to Paragraph 7(d), upon the Executive's resignation or upon any of the terminations identified in Paragraphs 7(a), (b) or (d) above, the Executive or his estate shall be entitled to receive his Base Salary and any earned but unpaid incentive compensation and all of his then incurred but un-reimbursed business expenses, in each case to the date of the Executive's resignation or termination of this Agreement. Executive is not entitled to any unearned compensation of any kind including, without limitation, bonuses, severance, incentive compensation and/or stock option grants. Executive shall not be entitled to any other compensation except as may be set forth in this Agreement.

Page 4 of 12

(f)

In order to be entitled to the payments under Paragraphs 7(d) and 7(e), the Executive agrees to execute a separation agreement and release in the form to be provided by the Company, following the termination of this Agreement. In order to be entitled to receive the payments under Paragraphs 7(d) and 7(e), the Executive acknowledges and agrees that Executive will fully comply with the covenants set forth in Paragraphs 8, 9 and 10 and that Executive’s failure to fully comply with such covenants shall result in immediate cessation of any such payments, as well as the Company’s right to seek recoupment of all prior payments made under Paragraph 7(d) and 7(e), plus interest, attorney’s fees and costs, in addition to all other available relief.

(g)

Executive’s employment with the Employing Subsidiaries shall automatically terminate upon any termination of this Agreement by Innodata Isogen.

8.	Confidentiality Agreement and Ownership of Information .

(a)

Executive agrees that during the course of employment with the Employing Subsidiaries, Executive has and will come into contact with and have access to various forms of the Company’s Confidential Information and Trade Secrets, which are the property of the Company. This information relates both to the Company, and its subsidiaries, affiliates, customers and employees. Such Confidential Information and Trade Secrets include, but are not limited to: (i) financial and business information, such as information with respect to costs, commissions, fees, profits, sales, markets, mailing lists, strategies and plans for future business, new business, product or other development, potential acquisitions or divestitures, and new marketing ideas; (ii) product and technical information, such as product formulations, new and innovative product ideas, methods, procedures, devices, machines, equipment, data processing programs, software, software codes, computer models, and research and development projects; (iii) marketing information, such as the identity of the Company’s and/or its subsidiaries and affiliates’ customers, distributors and suppliers and their names and addresses, the names of representatives of the customers of the Company and/or its subsidiaries and affiliates, distributors or suppliers responsible for entering into contracts with the Company and/or its subsidiaries and affiliates, the amounts paid by such customers to the Company and/or its subsidiaries and affiliates, specific customer needs and requirements, and leads and referrals to prospective customers; and (iv) personnel information, such as the identity and number of the Company’s and/or its subsidiaries and affiliates’ employees, skills, qualifications, and abilities. Executive acknowledges and agrees that the Company’s Confidential Information and Trade Secrets are not generally known or available to the general public, but have been developed, compiled or acquired by the Company and/or its subsidiaries and affiliates at their great effort and expense. Confidential Information and Trade Secrets can be in any form: oral, written or machine readable, including electronic files.

Page 5 of 12

(b)

During the Executive's employment with the Employing Subsidiaries and for as long as such information shall remain Confidential Information or Trade Secrets of the Company and/or its subsidiaries and affiliates (except, during the course of his employment with the Employing Subsidiaries, if in furtherance of the Company and/or its subsidiaries’ and affiliates’ business and in accordance with Company policy):

(i)

The Executive will not disclose to any person or entity, without the Company's prior consent, any Confidential Information or Trade Secrets, whether prepared by him or others.

(ii)

The Executive will not remove Confidential Information or Trade Secrets from the premises of the Company without the prior written consent of the Company.

(c)

(i)

Upon the later of the termination of this Agreement and the resignation or termination of the Executive’s employment with the the Employing Subsidiaries for whatever reason, with or without cause, or at any other time the Company so requests, the Executive will promptly deliver to the Company all originals and copies (whether in note, memo or other document form or on video, audio or computer tapes or discs or otherwise) of (A) Confidential Information and Trade Secrets of the Company and/or its subsidiaries and affiliates, or the Company and/or its subsidiaries and affiliates’ customers (including, but not limited to, customers obtained for the Company and/or its subsidiaries and affiliates by the Executive), that is in his possession, custody or control, whether prepared by him or others, and (B) all records, designs, patents, plans, manuals, memoranda, lists and other property of the Company and/or its subsidiaries and affiliates delivered to the Executive by or on behalf of the Company and/or its subsidiaries and affiliates, as the case may be, or by the Company’s and/or its subsidiaries and affiliates’ customers (including, but not limited to, customers obtained for the Company and/or its subsidiaries and affiliates by the Executive), and all records compiled by the Executive which pertain to the business of the Company and/or its subsidiaries and affiliates, whether or not confidential. All such material shall be and remain the property of the Company and/or its subsidiaries and affiliates and shall be subject at all times to the Company’s and/or its subsidiaries and affiliates discretion and control.

Page 6 of 12

(ii)

Information shall not be deemed Confidential Information or Trade Secrets if:

(A)

such information was available to the public prior to disclosure thereof by the Executive, or

(B)

such information shall, other than by an act or omission on the Executive's part, be or become available to the public or lawfully made available by a third party to the public without restrictions as to disclosure.

(d)

Confidential Information may be disclosed where required by law or order of a court of competent jurisdiction, provided that the Executive first gives to the General Counsel of Innodata Isogen reasonable written prior notice of such disclosure and affords the Company the reasonable opportunity for the Company to obtain protective or similar orders, where available.

(e)

The Executive acknowledges that he executed a copy of the Company’s “Agreement Concerning Confidentiality and Non-Disclosure” (the “NDA”) on December 27, 1997 and that the terms and provision of the NDA remain in full force and effect. The NDA is incorporated in this Agreement as if more fully set forth herein.

9.	Non-Compete and Non-Interference Provisions .

(a)

Executive acknowledges and agrees that the Company and its subsidiaries and affiliates are engaged in a highly competitive business and that by virtue of Executive’s position and responsibilities with the Company and Executive’s access to the Confidential Information and Trade Secrets, engaging in any business which is directly competitive with the Company and/or its subsidiaries and affiliates will cause it great and irreparable harm. Accordingly, the Executive covenants that during the Limitation Period (as hereinafter defined), the Executive will not directly or indirectly be employed, engaged or otherwise associated in any capacity the same or substantially similar to that in which Executive was employed by the Company by (i) any person or entity which competes with the business the Company and/or its subsidiaries and affiliates shall be conducting at the time of the termination of this Agreement or (ii) any person or entity the major business of which is competitive with the Company and/or it subsidiaries and affiliates, nor will the Executive directly or indirectly own any interest in any such person or entity or render to it any consulting, brokerage, contracting, or other services the same or substantially similar to those performed by the Executive for the Company. In recognition that the Company and its subsidiaries and affiliates business includes the sale of its products and services throughout the world, this restriction shall apply on a worldwide basis. The foregoing shall not prohibit the Executive from owning not in excess of 2% of the outstanding stock of any company that is a reporting company under the Securities Act of 1934.

Page 7 of 12

(b)

During the Limitation Period (as herein defined), the Executive will not, without the prior written consent of Innodata Isogen’s Chief Executive Officer, directly or indirectly, solicit, divert or appropriate or attempt to solicit, divert or appropriate any customers or clients of the Company and/or its subsidiaries and affiliates who or which (i) were customers or clients of the Company and/or its subsidiaries and affiliates at the time of the termination of this Agreement; and/or (ii) with whom the Executive had contact during his employment with the Employing Subsidiaries; and/or (iii) about whom the Executive possesses Confidential Information or Trade Secrets for purposes of the Executive’s offering to such customers or clients of the Company and/or their subsidiaries and affiliates products or services which are directly competitive to the products and services offered by the Company and/or their subsidiaries and affiliates as of the date of the termination of this Agreement or the date of Executive’s termination or resignation from employment with the Employing Subsidiaries for any reason.

(c)

During the Limitation Period (as herein defined), the Executive will not anywhere directly or indirectly (whether as an owner, partner, employee, consultant, broker, contractor or otherwise, and whether personally or through other persons) approve, solicit or retain, or assist in the employment or retention (whether as an employee, consultant or otherwise) of, any person who, to the Executive's then actual knowledge, was an employee of the Company or its subsidiaries and affiliates at any time during the twelve (12) month period preceding the later of termination of this Agreement or the resignation or termination of the Executive's employment with the Employing Subsidiaries for any reason.

(d)

The "Limitation Period" shall mean (i) with respect to Paragraph 9(a), the period during which this Agreement is effective and/or the period the Executive is actually employed by the Employing Subsidiaries and for a period of twelve (12) months thereafter; and (ii) with respect to Paragraph 9(b) and Paragraph 9(c), the period during which this Agreement is effective and/or the period the Executive is actually employed by the Employing Subsidiaries and for a period of twenty-four (24) months thereafter.

(e)

Since monetary damages may be inadequate and the Company and its affiliates would be irreparably harmed if the provisions of Paragraphs 8, 9 or 10 are not specifically enforced, the Company and/or its subsidiaries and affiliates shall be entitled, among other remedies, to seek an injunction from a court of competent jurisdiction (without the necessity of posting a bond or other security) restraining any violation of the provisions of Paragraphs 8, 9 or 10 by the Executive and by any person or entity to whom the Executive provides or proposes to provide any services or information in violation of such provisions.

10.

Inventions .

(a)

The Executive shall disclose promptly to Innodata Isogen’s General Counsel any and all inventions, improvements and valuable discoveries, whether patentable or not, which are conceived or made by the Executive solely or jointly with another during the term of this Agreement and/or his employment by the Employing Subsidiaries and which are related to the business or activities of the Company and/or its subsidiaries and affiliates or which the Executive conceives during and as a direct result of this Agreement and/or his employment by the Employing Subsidiaries, and the Executive hereby assigns and agrees to assign all his interests therein to Innodata Isogen or its nominee. Whenever reasonably requested to do so by the Company or their subsidiaries and affiliates, the Executive shall execute any and all applications, assignments or other instruments that the Company and/or their subsidiaries and affiliates shall deem necessary to apply for and obtain Letters Patent of the United States or any foreign country or to otherwise protect the Company's and/or their subsidiaries and affiliates interest therein.

Page 8 of 12

(b)

Executive further covenants and agrees that the Company and/or its subsidiaries and affiliates shall be entitled to shop rights with respect to any invention and development conceived or made by Executive during the period of this Agreement and/or his employment by the Employing Subsidiaries that is not related in any manner to the business of the Company or their subsidiaries and affiliates but which was conceived or made on the Company’s time or with the use of the Company’s or their subsidiaries’ and affiliates’ facilities or materials.

(c)

Executive further covenants and agrees that it shall be conclusively presumed as against Executive that the following shall belong to the Company or their subsidiaries and affiliates: (i) any invention and development described in a patent service mark, trademark or copyright application or disclosed in any manner to a third person; and (ii) any computer program, modification of any computer program, or systems technique for processing data conceived or made by Executive during the term of this Agreement and/or the period of his employment by the Employing Subsidiaries which is disclosed, used or described by Executive or any person with whom Executive has any business, financial or confidential relationship, within one (1) year after the later of the termination of this Agreement and the Executive leaving the employ of the Employing Subsidiaries.

(d)

If any provision contained in this Paragraph 10 or Paragraphs 8 or 9 above is determined to be void, illegal or unenforceable, in whole or in part, then the other provisions contained herein shall remain in full force and effect as if the provision which was determined to be void, illegal, or unenforceable had not been contained herein. The courts enforcing this Paragraph 10 or Paragraphs 8 or 9 above shall be entitled to modify the duration and scope of any restriction contained therein to the extent such restriction would otherwise be unenforceable, and such restriction as modified shall be enforced. To the extent that any provision of this Paragraph 10 or Paragraphs 8 or 9 above conflicts with any provision of the NDA, the more restrictive provision (as benefiting the Company) shall be deemed to control.

11.

General Provisions .

(a)

Notices . All notices, requests, consents, and other communications under this Agreement shall be in writing and shall be deemed to have been delivered (i) on the date personally delivered, or (ii) one day after properly sent by Federal Express, DHL or other reasonable overnight courier service, addressed to the respective parties at the following addresses:

Page 9 of 12

To the Company:

Innodata Isogen, Inc.

Three University Plaza

Suite 506

Hackensack, New Jersey 07601

U.S.A.

Attention: Office of the General Counsel

To the Executive:

Ashok Mishra

A-63, Sector-53

Noida - 201307, India

Either party hereto may designate a different address by providing written notice of such new address to the other party hereto as provided above. A copy of each notice to the Company shall be forwarded to Ms. Felice B. Ekelman, Esq., Jackson Lewis LLP, 59 Maiden Lane, New York, NY 10038-4502, U.S.A. All such copies shall be given in the manner provided for notices in this Paragraph 11(a).

(b)

Severability . If any provision contained in this Agreement shall be determined to be void, illegal or unenforceable, in whole or in part, then the other provisions contained herein shall remain in full force and effect as if the provision which was determined to be void, illegal, or unenforceable had not been contained herein.

(c)

Waiver and Modification . The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach of any party. This Agreement may not be modified, altered or amended except by written agreement of both of the parties hereto.

(d)

Integration . This Agreement constitutes the entire agreement between the parties relating to the subject matter contained herein and supersedes any and all other prior agreements, oral or written between Executive and Innodata Isogen and its subsidiaries, and all other negotiations and communications between the parties, relating to the subject matter hereof, including, without limitation, any employment of the Executive by an Innodata Isogen subsidiary, except for (i) the “Agreement Concerning Confidentiality and Non-Disclosure” signed by the Executive on December 27, 1997, which shall remain in full force and effect; and (iii) any official employee benefit plan documents, the terms and conditions of which shall be controlling.

Page 10 of 12

(e)

Binding Effect . This Agreement shall be binding upon and shall inure to the benefit of the Company and its subsidiaries and affiliates and their successors and permitted assigns, and upon the Executive, his heirs and his executors and administrators. This Agreement is not assignable by the Executive, but may be assigned by Innodata Isogen.

(f)

Jurisdiction, Etc . Executive hereby consents to the jurisdiction of the courts of the State of New Jersey, County of Bergen, and the United States District Court, District of New Jersey, U.S.A. with respect to any claims or disputes arising from or in connection with this Agreement, except that the Company and/or its subsidiaries and affiliates shall not be precluded hereunder from seeking injunctive or other equitable relief in any federal, state or local court pursuant to Paragraph 9(e) above. Service of process shall be effective when forwarded in the manner provided for notices in Paragraph 11(a). Trial by jury is hereby waived by both of the parties to this Agreement. The prevailing party in any dispute shall be entitled to recover reasonable attorneys' fees and costs from the other.

(g)

Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey, U.S.A. without regard to its conflicts of law principles.

(h)

Survival . The obligations of the parties hereto contained in Paragraphs 7, 8, 9, 10, and 11 shall survive the termination of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.


	Innodata Isogen, Inc.

	By:	/s/ Jack S. Abuhoff
		Jack S. Abuhoff
		Its: Chairman and CEO


		/s/ Ashok Mishra
		Ashok Mishra

Page 11 of 12

Appendix “A”

CONSENT OF THE EMPLOYING SUBSIDIARIES:

We hereby agree to employ the Executive on the terms and conditions set forth in the Agreement between Innodata Isogen, Inc. and Ashok Mishra dated as of the 1 ^st day of January 2007:

Innodata XML Content Factory Inc.



By: /s/ Jack S. Abuhoff
Its: President

INNODATA ISOGEN PVT. LTD.



By: /s/ Jack S. Abuhoff
Its: President

Page 12 of 12

EXHIBIT 31.1

CERTIFICATIONS

I, Jack Abuhoff, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Innodata Isogen, Inc.;

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 10, 2007

	/s/ Jack Abuhoff
	Jack Abuhoff
	Chairman of the Board,
	Chief Executive Officer and President

EXHIBIT 31.2

I, Steven L. Ford, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Innodata Isogen, Inc.;

3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and we have:

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 10, 2007

	/s/ Steven L. Ford
	Steven L. Ford
	Executive Vice President,
	Chief Financial Officer
	and Principal Accounting Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Innodata Isogen, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jack Abuhoff, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Jack Abuhoff
	Jack Abuhoff
	Chairman of the Board,
	Chief Executive Officer and President
	August 10, 2007

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Innodata Isogen, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven L. Ford, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Steven L. Ford
	Steven L. Ford
	Executive Vice President,
	Chief Financial Officer
	and Principal Accounting Officer
	August 10, 2007