2005 LETTER FROM CEO

Dear Valued Customers,

First of all, thank you for making 2005 a successful year for all of us!

The year 2005 was another key year in the history of Gillani, Inc. In January 2002, Gillani acquired the FourGen/Endura business from Irista, Inc., the software division of HK Systems. At the three-year anniversary of the acquisition, we would like to share our progress with you – our most important asset in this acquisition.

Who is Gillani?

By way of the FourGen/Endura acquisition, Gillani provides an Enterprise Distribution Management™ (EDM) software solution, iDistribute™, focused on the Supply Chain Management processes that particularly help distribution business win and keep customers. These solutions also work for many businesses across the globe in different industries including Manufacturing, Retail, Healthcare, Hospitality, Services, Government and 3PL. The Distribution Management solution features an integrated Financials solution that also functions as a freestanding ERP package for many of our customers who do not distribute product.

What is our Value Proposition?

Successful experience – since 1983, has shown that companies which value a flexible, scalable and modifiable software solution built on a solid functional foundation, become Gillani customers. These customers are today the users of FourGen® Accounting, Endura® Enterprise and iDistribute™ - as the latest V8.2 is now known, and FourGen® CASE Tools. Off course, all of these customers have utilized the FourGen® CASE Tools to modify the base system or have developed new custom application utilizing these Rapid Application Development tools.

Who are the Customers?

After more than two decades of providing software solutions, Gillani solutions are today utilized by more than one million end-users and over 1500 small & medium size businesses and large enterprises across the globe. The customers are spread across North America, South America, Europe, Africa, Middle East, East Asia and Australia. Most of these customers are companies like Verizon, AT&T, Sikorsky, Wesco International, Motorola, GE Supply, ChevronTexaco, Full Service Supply, Avaya, Lucent, Mandell Foods, Harp’s Food, Kenya Roads Board, Bank of Nigeria, Coles Myer, Huyck Australia and many others.

The Gillani Advantage

A company’s success is determined by the decisions it makes and how it conducts business. Instead of forcing clients to run their business the way the software forces them to operate, Modifiability By Design (MDB) allows a client to implement business practices necessary to win and keep customers. Gillani offers several specific advantages over its competition in providing applications for Enterprise Distribution Management and Enterprise Resource Planning (ERP) or Financials, to its clients in several key industries:

Modifiability By Design
Understanding of the Distribution, Retail, Healthcare, Manufacturing, Hospitality, Services & 3PL Industries
Distribution, Retail, Light Manufacturing/Kitting and Financials functionality
Application Integration
Key Reference Customers in Key Industries
Shorter and More Certain Time to Value
Proven and Streamlined Implementation Methodology
Measurable Return on Investment (ROI)

Benefits To Gillani Customers

The Gillani iDistribute™ solution offers the following benefits to its clients and their customers:

Dramatic improvements in accuracy of product availability, customer order handling, product delivery, customer billing, accurate accounting and product replenishment, resulting in improved customer service.
Improved order fill rates in the retention of customers through the ability to offer substitutions and upgrades, increasing the speed and reducing the error in picking, packing and shipping processes.
Support of our clients’ unique customer value proposition, enabling better selection, higher volumes, smaller shipments, buying convenience, lower prices, better availability and improved customer service.
The ability of clients to tailor their systems to meet their customers’ special needs, versus forcing customers to adjust to them because of system limitations, resulting in improved customer service.
Open systems and open architectures that facilitate integration of their internal systems and with those of their customers.
Integrated analytics or business intelligence tools that enable the analyst and management to understand customer, product, cost, and market sales and profitability.
Products, processes and systems that support and facilitate transitions to new technologies that can create new value for customers, resulting in reduction in cost for IT and increase in profitability for the company.

What has Gillani Accomplished in 2005?

Since we completed the acquisition of the FourGen/Endura business, Gillani has added tremendous value to the software and our clients. Some of the key accomplishments in 2005 can be summed-up as follows:

· Added new functionality to Gillani products with the release of latest version 8.2 of iDistribute®, Gillani Financials® and FourGen® CASE Tools.

· Ported iDistribute to the latest version of Informix Dynamic Server (IDS) V10.

· Added North Lake College of Irving, TX to iScholar - Gillani Scholars Program

· Earned Certified IBM Education Center for IBM Software (ECIS) Educator status.

· Enhanced iDistribute product to support WebSphere Portal and Workplace Services Express. This allows end users to access iDistribute via browser on a user's profile while supporting a collaborative environment.

· Gillani applications ported on the latest releases of the following technologies:

§ IBM Informix Express V10 and IBM Express Runtime

§ DB2 UDB V8.2

§ IBM AIX 5.2

§ RedHat Linux EE3/EE4

§ SuSe LINUX 2.4.2

§ Sun Solaris 9 OS 5.9 64-bit

§ Ported Gillani eSCM (Web Order Entry) system on WebSphere.

· IBM Workplace Solutions Catalog: WebSphere Portal and Workplace Services
Express catalog entries.

· Achieved industry optimized status within the IBM PartnerWorld Industry Networks (PWIN) for Wholesale and Retail industries.

· Participated as an IBM Beta Testing Partner for Rational 4GL to EGL Conversion project.

· Gillani Inc. joined Novell's PartnerNet program to deliver Linux-based Gillani iDistribute Xpress, an ERP and Distribution Management Software, rapidly deployable within 8-10 weeks, running on SUSE Linux from Novell.

· Gillani Inc. released Gillani Database Independence (DBI) technology which offers a new level of flexibility for Informix 4GL application users by extending choice in selection of databases offered by IBM. The same 4GL application can be compiled to run against either Informix or DB2 database.

· Through client nominations, IBM has declared Gillani as one of the two finalists for the prestigious IBM Beacon Award for the Hot Linux category for its flagship product, iDistribute V8.2.

What are the plans for 2006?

Gillani plans to continue on the growth path it has been on for the past seven years. We project to become a key player in both the Distribution Management and ERP solutions markets in the next 3-5 years:

Gillani is totally committed in aligning its iDistribute applications with the latest technologies, supporting Informix, DB2, WebSphere, xSeries and pSeries on Linux.
Gillani extends its commitment to build applications to meet the needs of SMB businesses of varying sizes.
Radio frequency identification (RFID) is revolutionizing the supply chain. Gillani is working with some of the RFID industry leaders to allow the iDistribute system to track objects via radio waves and help integrate RFID into businesses for greater gain and productivity.
Gillani is also working to integrate its iDistribute product with mobile devices to exchange information between the database, application and the mobile device in real time. Consequently, Gillani is exploring IBM's Workplace Client Technology Micro Edition technology.
Gillani deployed Rational Application Developer for developing Portlets and the WebSphere Portal and Workplace Services Express environment. Gillani recognizes that Services Oriented Architecture (SOA) will rely on tools such as the Rational Software Development Platform.
Start an annual FourGen/Gillani user group meeting with help of active clients.
Continue to consolidate all clients onto the latest version of software by offering V8.1 upgrade path and incentives. Offer FourGen Passport Program to all customers with lapsed support, to come under maintenance.

We understand that you rely on Gillani iDistribute™, Gillani Financials, FourGen® CASE Tools and their future to solve your business problems. Your loyalty and commitment to these solutions is highly valued by Gillani and we are dedicated to delivering value to you – our most valuable asset, long into the future.

Yours sincerely,

Syed M. Kamal
President and Chief Executive Officer
January 20, 2006