<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
OR
[ ] 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: 000-23889
-------------------------------
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 76-0553110
(STATE OF OTHER JURISDICTION OF (I.R.S.EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
10375 RICHMOND AVENUE, SUITE 1620
HOUSTON, TEXAS 77042
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 361-2500
-------------------------------
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 X No .
The number of shares of Common Stock of the Registrant, par value $.001
per share, outstanding at June 30, 1998, was 7,746,199. The number of shares of
Restricted Common Stock of the Registrant, par value $.001 per share,
outstanding at June 30, 1998, was 242,760.
* The Registrant became subject to the reporting requirements of Section
13 of the Securities Exchange Act of 1934 on April 16, 1998.
================================================================================
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
GENERAL INFORMATION - The following historical consolidated financial statements
of BrightStar Information Technology Group, Inc. (the "Company" or "BrightStar")
are the historical financial statements of Brian R. Blackmarr and Associates,
Inc. ("Blackmarr"), which became a wholly owned subsidiary of BrightStar in
April 1998, and has been identified as the "accounting acquirer" for
BrightStar's financial reporting purposes in connection with the purchase
acquisitions described in Notes 1 and 2 to the following financial statements.
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
ASSETS 1997 1998
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,994 $ 11,616,466
Trade accounts receivable, net of allowance for doubtful accounts
of $451,534 and $652,381, respectively 4,202,180 17,826,973
Accounts receivable - employees 3,355 23,615
Income tax refund receivable 37,515 --
Unbilled revenue 652,711 482,165
Deferred tax asset 161,564 161,564
Prepaid expenses and other current assets -- 836,367
------------ ------------
Total current assets 5,060,319 30,947,150
PROPERTY AND EQUIPMENT - Net 276,753 3,264,874
GOODWILL -- 52,558,177
DEFERRED TAX ASSET 31,541 --
OTHER ASSETS 56,759 591,301
TOTAL $ 5,425,372 $ 87,361,502
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 423,143 $ 4,108,974
Line of credit 847,764 --
Current maturities of notes payable 213,185 66,238
Current maturities of capital lease obligations 64,322 455,946
Accrued salaries and payroll taxes 675,669 --
Other accrued expenses 1,935,260 3,286,885
Income taxes payable -- 1,032,394
Deferred revenue 621,329 1,001,947
------------ ------------
Total current liabilities 4,780,672 9,952,384
COMMITMENTS AND CONTINGENCIES
LONG-TERM NOTES PAYABLE, NET 61,410
LONG-TERM CAPITAL LEASES, NET 242,903
LONG-TERM DEFERRED TAXES 737,187
STOCKHOLDERS' EQUITY:
Common stock, no par value - 13,068 no par value shares issued and outstanding
in 1997; and 7,955,952, $.001 par value, shares issued and outstanding in 1998 318,068 7,956
Stock warrants -- 450,000
Additional paid-in capital -- 83,016,905
Common stock payable -- 5,299,819
Deferred compensation -- (6,319,178)
Retained earnings 326,632 (6,085,257)
Cumulative translation adjustment -- (2,627)
------------ ------------
Total stockholders' equity 644,700 76,367,618
------------ ------------
TOTAL $ 5,425,372 $ 87,361,502
============ ============
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE> 3
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1997 1998 1997 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES $ 3,452,623 $18,556,833 $ 6,398,071 $ 23,665,714
COST OF REVENUES 2,571,298 12,865,943 4,904,908 16,871,099
------------ ------------ ------------ ------------
Gross profit 881,325 5,690,890 1,493,163 6,794,615
OPERATING EXPENSES:
Selling, general and administrative 418,107 3,930,066 501,404 4,596,861
Stock compensation expense -- 1,263,896 305,000 1,263,896
In process research & development -- 3,000,000 -- 3,000,000
Depreciation and amortization 41,265 405,679 66,966 436,235
------------ ------------ ------------ ------------
Total operating expenses 459,372 8,599,641 873,370 9,296,992
------------ ------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS 421,953 (2,908,751) 619,793 (2,502,377)
OTHER INCOME 11,500 133,667 24,605 134,719
INTEREST EXPENSE (27,142) (29,442) (50,662) (61,741)
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES 406,311 (2,804,526) 593,736 (2,429,399)
------------ ------------ ------------ ------------
INCOME TAX EXPENSE 52,927 596,669 52,927 692,469
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 353,384 $ (3,401,195) $ 540,810 $ (3,121,868)
============ ============ ============ ============
Shares outstanding (Note 4):
Basic 1,012,306 7,203,560 893,453 4,107,933
============ ============ ============ ============
Diluted 1,012,306 7,203,560 893,453 4,107,933
============ ============ ============ ============
Earnings (loss) per share:
Basic $ 0.35 $ (0.47) $ 0.61 $ (0.76)
============ ============ ============ ============
Diluted $ 0.35 $ (0.47) $ 0.61 $ (0.76)
============ ============ ============ ============
</TABLE>
See notes to consolidated financial statement
-3-
<PAGE> 4
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC. AND SUBSIDIARES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1998 1998
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) (3,401,195) (3,121,868)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Cumulative translation adjustment (2,627) (2,627)
Depreciation and amortization 405,679 436,235
Additions (reductions) to allowance for doubtful accounts 427,749 200,847
In process research and development expense 3,000,000 3,000,000
Compensation expense on issuance of common stock 1,263,896 1,263,896
Cash provided by (used in) operating working capital:
Trade accounts receivable (2,806,665) (3,140,218)
Accounts receivable - employee 7,632 3,355
Income tax refund receivable 19,039 37,515
Unbilled revenue 2,119,845 2,035,027
Prepaid and other assets 395,045 378,234
Accounts payable (493,380) 567,345
Accrued salaries and payroll taxes (747,355) (675,669)
Other accrued expenses (3,717,676) (5,070,002)
Income taxes payable 941,008 1,036,808
Deferred revenue (1,405,367) (674,684)
------------ ------------
Net cash used in operating activities (3,994,372) (3,725,806)
------------ ------------
INVESTING ACTIVITIES:
Cash paid to acquire founding companies (41,890,581) (41,890,581)
Additions of property and equipment (249,132) (241,698)
------------ ------------
Net cash used in financing activities (42,139,713) (42,132,279)
------------ ------------
FINANCING ACTIVITIES:
Borrowings under (payments on) line of credit 0 (175,000)
Proceeds from (payments on) capital lease obligations (59,067) (99,010)
Payments on short-term debt and notes payable (1,344,308) (1,344,308)
Net proceeds from issuance of common stock 59,089,875 59,089,875
------------ ------------
Net cash provided by financing activities 57,686,500 57,471,557
------------ ------------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 11,552,415 11,613,472
CASH AND CASH EQUIVALENTS:
Beginning of period 64,051 2,994
------------ ------------
End of period $ 11,616,466 $ 11,616,466
============ ============
SUPPLEMENTAL INFORMATION - Interest paid $ 29,442 $ 61,741
============ ============
Property and equipment financed through capital leases $ 253,888 $ 253,888
============ ============
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE> 5
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
BrightStar Information Technology Group, Inc. (the "Company" or
"BrightStar") was formed to create a international provider of information
technology consulting services. BrightStar has conducted no operations
prior to April 16, 1998, and acquired the Founding Companies concurrently
with and as a condition to the closing of its initial public offering on
April 16, 1998.
Concurrent with and as a condition to the closing of the offering,
BrightStar acquired all of the outstanding capital stock or substantially
all the net assets of Brian R. Blackmarr and Associates, Inc.
("Blackmarr"), Integrated Controls, Inc., Mindworks Professionals
Education Group, Inc., Software Innovators, Inc., Zelo Group, Inc.,
Software Consulting Services America, LLC and SCS Unit Trust (the
"Founding Companies"). The acquisitions were accounted for using the
purchase method of accounting, with Blackmarr being treated as the
accounting acquirer, in accordance with Staff Accounting Bulletin No. 97
("SAB 97").
The accompanying historical consolidated financial statements include only
the historical financial information for Blackmarr, the accounting
acquirer, prior to the IPO, which elected to change its fiscal year-end
from September 30 to December 31 and the "Founding Companies" from May 1,
1998 through June 30, 1998. These financial statements have not been
audited. In the opinion of the Company's management, the financial
statements reflect all adjustments necessary to present fairly the results
of operations for the periods ended June 30, 1998 and 1997, the Company's
financial position at December 31, 1997 and June 30, 1998, and the cash
flows for the periods ended June 30, 1998 and 1997. These adjustments are
of a normal recurring nature.
Certain notes and other information have been condensed in or omitted from
the interim financial statements presented in the Quarterly Report on Form
10-Q. Therefore, these financial statements should be read in conjunction
with the Company's registration statement on Form S-1.
The operating results of the Company for the three month period ended June
30, 1998, are not necessarily indicative of the results that may be
expected for the entire year.
2. ACQUISITION OF FOUNDING COMPANIES
The following unaudited pro forma information gives effect to (i) the
acquisitions (the "Acquisitions") by BrightStar of the outstanding capital
stock or substantially all the net assets of the Founding Companies and
(ii) a share exchange with BIT Investors, LLC ("BITI") and senior
management of BrightStar for all outstanding common stock of BIT Group
Services, Inc. ("BITG") and (iii) the closing of BrightStar's initial
public offering and the application of the net proceeds therefrom. The
unaudited pro forma information gives effect to the acquisitions, the
share exchange and the offering as if they had occurred on January 1,
1998.
-5-
<PAGE> 6
The Company believes the combination of the Founding Companies will
provide opportunities to improve operating margins and increase
profitability, including the consolidation of certain duplicative
administrative functions. The Company believes it will be able to achieve
operating efficiencies by consolidating certain administrative functions.
The pro forma financial information herein reflects neither expected
savings nor margin improvements but does reflect management's estimate of
certain incremental corporate general and administrative costs.
The pro forma adjustments are based on preliminary estimates, available
information and certain assumptions that management deems appropriate, but
which may be revised as additional information becomes available. The pro
forma financial information does not purport to represent what the
Company's results of operations would actually have been if such
transactions had in fact occurred on the dates assumed and is not
necessarily representative of the Company's financial position or results
of operations for any future period. Since the Founding Companies were not
under common control or management, historical combined pro forma results
may not be comparable to, or indicative of, future performance.
<TABLE>
<CAPTION>
THREE-MONTH PERIOD SIX-MONTH PERIOD
ENDED JUNE 30, 1998 ENDED JUNE 30, 1998
(IN THOUSANDS, EXCEPT (IN THOUSANDS, EXCEPT
PRO FORMA PER SHARE DATA) PER SHARE DATA)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Revenues $24,137 $44,064
Net income $ 855 $ 1,432
Net income per share - diluted $ 0.10 $ .17
</TABLE>
The computation of pro forma net income per share of common stock
presented above is based on 8,497,822 shares of common stock outstanding
as of June 30, 1998.
-6-
<PAGE> 7
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED JUNE 30,
1998
--------------
<S> <C>
REVENUES $ 24,137,115
COST OF REVENUES 16,736,441
------------
Gross profit 7,400,674
OPERATING EXPENSES:
Selling, general and administrative 5,453,023
Stock compensation expense --
In process research & development --
Depreciation and amortization 594,832
------------
Total operating expenses 6,047,855
------------
INCOME (LOSS) FROM OPERATIONS 1,352,819
OTHER INCOME 175,405
INTEREST EXPENSE (47,542)
INCOME (LOSS) BEFORE INCOME TAXES 1,480,682
INCOME TAX EXPENSE 626,063
NET INCOME (LOSS) $ 854,619
============
Shares outstanding:
Basic 8,442,035
Diluted 8,497,822
Earnings per share
Basic $ 0.10
Diluted $ 0.10
</TABLE>
3. COMPREHENSIVE INCOME
SFAS No. 130, "Reporting Comprehensive Income," became effective as of the
first quarter of 1998. This statement requires companies to report and
display comprehensive income and its components (revenues, expenses, gains
and losses). Comprehensive income includes all changes in equity during a
period except those resulting from investment by owners and distributions
to owners. For the Company, comprehensive income was $(3,403,822) and
$(3,124,495) for the three and six months ended in 1998, respectively, and
is the same as net income reported in the 1997 periods.
4. EARNINGS PER SHARE
Earnings per share is based on the weighted average number of common stock
and common stock equivalents outstanding during each period. The weighted
average shares used to calculate earnings per share on the historical
statement of operations has been determined by converting the number of
outstanding shares of Blackmarr during the periods presented, based upon
the ratio of 77 to 1, which was the ratio received as a result of the
Offering.
-7-
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION - BrightStar was organized in July 1997 and completed its
public offering April 16, 1998. BrightStar was formed to provide
enterprise-wide business and technology solutions to Fortune 1000
companies and other large organizations. BrightStar provides these
services to a diverse client base including but not limited to retail,
industrial, petrochemical, manufacturing and distribution.
The Company's services and products include ERP software implementation,
consulting, software application development, systems integration and
outsourcing, training as well as upgrades and support related to software
products. The services are generally performed at clients' locations and
at the Company's facilities. In providing ERP implementation and other IT
services, the Company may assume responsibility for project management and
bill the client on a time and material or fixed fee basis.
Revenue is recognized as services are rendered. The timing of revenue is
difficult to forecast because the Company's sales cycle for certain of its
services can be relatively long and is subject to a number of
uncertainties, including clients' budgetary constraints, the timing of
clients' budget cycles, clients' internal approval processes and general
economic conditions. In addition, as is customary in the industry, the
Company's engagements, generally, are terminable without a client penalty.
The Companies' revenue and results of operations may fluctuate
significantly from quarter to quarter or year to year because of a number
of factors, including, but not limited to, the rate of hiring and the
productivity of revenue generating personnel; the availability of
qualified IT professionals; the significance of client engagements
commenced and completed during a quarter; the number of business days in
the quarter; changes in the relative mix of the Company's services;
changes in the pricing of the Company's services; the timing and the rate
of entrance into new geographic or IT specialty markets; departures or
temporary absences of key revenue-generating personnel; the structure and
timing of acquisitions; changes in the demand for IT services; and general
economic factors.
Cost of revenue primarily consists of salaries (including non-billable and
training time) and benefits for consultants. The Company generally strives
to maintain its gross profit margins by offsetting increases in salaries
and benefits with increases in billing rates.
Selling, general and administrative expenses primarily consist of costs
associated with (i) corporate overhead, (ii) sales and account management,
(iii) telecommunications, (iv) human resources, (v) recruiting and
training and (vi) other administrative expenditures.
In July of 1996, the Securities and Exchange Commission (the "SEC") issued
Staff Accounting Bulletin No. 97 ("SAB 97") relating to business
combinations immediately prior to an initial public offering. SAB 97
requires that these combinations be accounted for using the purchase
method of accounting and requires that one of the companies be designated
as the accounting acquirer. Accordingly, for financial statement purposes,
BR Blackmarr and Associates, Inc. ("BRBA") has been designated as the
acquiring company because its current shareholders, in the aggregate,
acquired more common stock than the former shareholders of any of the
other Founding Companies in conjunction with the acquisitions. The excess
of the aggregate purchase price paid for the Founding Companies other that
BRBA over the fair value of the net assets to be acquired by BrightStar is
recorded as goodwill.
-8-
<PAGE> 9
HISTORICAL RESULTS OF OPERATIONS
Financial results for the quarter and six months ended June 30, 1998
contain the operations of the seven Founding Companies from the date of
the IPO. Financial results for the quarter and six months ended June 30,
1997 contain only the operations of Blackmarr the accounting acquirer, for
the period prior to the IPO. Consequently, the primary reason for
variances between periods is the combined operations of the Founding
Companies from their dates of acquisition.
Specific events which occurred during 1998 are as follows :
REVENUE - increased primarily due to new ERP contracts and additional
custom application development projects. Revenues from Training and
Education remained relatively constant during the period. The Company's
foreign operations are subject to currency fluctuations. The impact of the
fluctuation for the period was not material.
COST OF REVENUES - increased in proportion to the additional ERP and
custom application development revenue.
SELLING, GENERAL AND ADMINISTRATIVE - remained relatively constant during
the period. The Company has a sufficient amount of administrative
personnel to support its current operations. The Company continues to
invest in its infrastructure and internal reporting systems in order to
support its growth.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1998, and as a result of the successful completion of a
public offering on April 16, 1998, BrightStar had $11.6 million in cash
and cash equivalents and no borrowings outstanding from commercial lenders
other than $.7 million of capital lease obligations.
The proceeds of the offering, $59.0 million, net of commissions, were used
to (i) pay the cash portion of the aggregate consideration for the
Acquisitions, (ii) repay certain indebtedness of the Founding Companies,
(iii) repay the advances from BITI under the BITI Loan Agreement, and (iv)
pay certain professional and other related fees related to the public
offering. The remaining cash and cash equivalents provide working capital
and unallocated net proceeds for potential acquisitions.
BrightStar is a company that conducts all of its operations through its
subsidiaries. Accordingly, the Company's principal sources of liquidity
are the cash flows of its subsidiaries, the cash available from any lines
of credit that it may establish and the unallocated net proceeds of the
offering.
The Company expects to install or upgrade its accounting and management
information systems and to install an internal network and communications
system to facilitate exchange of information among the Founding Companies.
Management presently anticipates that expenditures for these items will
total approximately $3.0 million over the next two years; however, no
assurance can be made with respect to the actual timing and amount of such
expenditures.
-9-
<PAGE> 10
The Company has received a commitment from Banque Paribas to provide a
Credit Facility. The Company expects that under the Credit Facility, the
Company will have available to it an aggregate of up to $30.0 million in
borrowings, which will be divided into two tranches: (i) a revolving
credit facility (the "Revolving Credit Facility"), providing for
borrowings of up to $20.0 million. Under the terms of the Banque Paribas
commitment, the Revolving Credit Facility will be available to support
working capital needs, to issue letters of credit, to refinance Founding
Company indebtedness, if necessary, and for general corporate purposes;
and the Acquisition Facility will be secured by liens on substantially all
of the Company's assets (including accounts receivable) and a pledge of
the Company's equity interest in each of its subsidiaries. The Company
expects that the Credit Facility will require the Company to comply with
various loan covenants, including (i) maintenance of certain financial
ratios, (ii) restrictions on additional indebtedness and (iii)
restrictions on liens, guarantees and payments of dividends. The Company
anticipates that the Revolving Credit Facility will be available for
advances and repayments through July 2001 and that, unless such facility
is extended or renewed, all outstanding principal and accrued and unpaid
interest under the Revolving Credit Facility will be due on such date. The
Company anticipates that the Acquisition Facility will be available for
advances and repayments through July 2003. The Credit Facility will
contain provisions requiring mandatory prepayment of outstanding
borrowings from the issuance of debt or equity securities for cash,
excluding certain equity issued in connection with future acquisitions,
and cash realized in connection with permitted asset sales outside of the
ordinary course of business. The Company is presently negotiating the
definitive loan documents with Banque Paribas; however, there can be no
assurance that the Company will enter into the Credit Facility on the
terms described or that the Company will enter into any credit facility at
all.
The Company intends to pursue acquisition opportunities. The timing, size
or success of any acquisition effort and the associated potential capital
commitments are unpredictable. The Company expects to fund future
acquisitions through the issuance of additional equity, as well as through
a combination of working capital, cash flow from operations and
borrowings, including borrowings under the Credit Facility.
The Company believes that cash flow from operations, borrowings under the
Credit Facility and the unallocated net proceeds of the offering will be
sufficient to fund its requirements for the foreseeable future.
STOCK COMPENSATION EXPENSE - is a non-cash expense item related to the
issuance of stock to certain Founders as a part of the IPO. This amount is
being amortized over a 12 month period.
IN PROCESS RESEARCH AND DEVELOPMENT - is a one time non-cash expense
related to the research and development costs attributable to the Founding
companies at the time of the IPO.
DEPRECIATION AND AMORTIZATION - remained relatively constant during the
period.
INFLATION - Due to the relatively low levels of inflation experienced in
the last three years, inflation did not have a significant effect on the
results of operations of any of the Founding Companies in those periods.
YEAR 2000 COMPLIANCE - All of the Company's management information and
other date-referenced systems, including computer software and hardware,
are Year 2000 compliant. There are no internal matters, therefore, that
will affect the Company's ability to process systems date-referenced
information when the Year 2000 arrives. The Company does not know the
extent to which the current preparedness of its external business
associates could adversely affect the Company's business transactions.
There can be no assurance that such business associates will be compliant.
-10-
<PAGE> 11
CHANGES IN ACCOUNTING STANDARDS - SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information," will become effective
in 1998. This statement establishes standards for defining and reporting
business segments. The Company is currently determining its reportable
segments. The adoption of SFAS No. 131 will not affect the Company's
consolidated financial position, results of operations or cash flows.
FORWARD-LOOKING INFORMATION - Management's Discussion and Analysis of
Financial Condition and Results of Operations ("MD&A") includes
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. All statements, other than statements of historical facts, included
in this MD&A regarding the Company's financial position, business strategy
and plans and objectives of management of the Company for future
operations are forward-looking statements. These forward-looking
statements rely on a number of assumptions concerning future events and
are subject to a number of uncertainties and other factors, many of which
are outside of the Company's control, that could cause actual results to
materially differ from such statements. While the Company believes that
the assumptions concerning future events are reasonable, it cautions that
there are inherent difficulties in predicting certain important factors,
especially the timing and magnitude of technological advances; the
performance of recently acquired businesses; the prospects for future
acquisitions; the possibility that a current customer could be acquired or
otherwise be affected by a future event that would diminish their
information technology requirements; the competition in the information
technology industry and the impact of such competition on pricing,
revenues and margins; the degree to which business entities continue to
outsource information technology and business processes; uncertainties
surrounding budget reductions or changes in funding priorities or existing
government programs and the cost of attracting and retaining highly
skilled personnel.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This item is not applicable to the Registrant.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
This item is not applicable to the Registrant.
-11-
<PAGE> 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
The sole stockholder of the Company held a special meeting on January 26,
1998, to consider action with respect to an amendment to the certificate
of incorporation of the Company, creating two million shares of a new
class of capital stock designated as Restricted Common Stock. The sole
stockholder of the Company held a special meeting on February 27, 1998, to
approve and ratify the long-term incentive plan adopted by the Company's
board of directors. Both actions were approved by the sole stockholder.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
-12-
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
BRIGHTSTAR INFORMATION
TECHNOLOGY GROUP, INC.
By: /s/ MARSHALL G. WEBB
-------------------------------
Marshall G. Webb
President and
Chief Executive Officer
By: /s/ DANIEL M. COFALL
-------------------------------
Daniel M. Cofall
Chief Financial Officer
-13-
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 11,616,466
<SECURITIES> 0
<RECEIVABLES> 18,479,354
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0
0
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</TABLE>
