<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 MARCH 31, 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 OR 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 proceeding 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 No X *
--- ---
The number of shares of Common Stock of the Registrant, par value $.001
per share, outstanding at May 28, 1998, was 7,746,199. The number of shares of
Restricted Common Stock of the Registrant, par value $.001 per share,
outstanding at May 28, 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.
================================================================================
- 1 -
<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, MARCH 31,
ASSETS 1997 1998
---------- ----------
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 2,994 $ 64,051
Trade accounts receivable, net of allowance for doubtful accounts
of $451,534 and $224,632, respectively 4,202,180 4,762,635
Accounts receivable - employees 3,355 7,632
Income tax refund receivable 37,515 19,039
Unbilled revenue 652,711 737,529
Deferred tax asset 161,564 161,564
---------- ----------
Total current assets 5,060,319 5,752,450
PROPERTY AND EQUIPMENT - Net 276,753 238,763
DEFERRED TAX ASSET 31,541 31,541
OTHER ASSETS 56,759 73,570
---------- ----------
TOTAL ASSETS $5,425,372 $6,096,324
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 423,143 $1,483,868
Line of credit 847,764 672,764
Current maturities of notes payable 213,185 191,389
Current maturities of capital lease obligations 64,322 46,175
Accrued salaries and payroll taxes 675,669 747,355
Other accrued expenses 1,935,260 582,934
Income taxes payable -- 95,800
Deferred revenue 621,329 1,352,012
---------- ----------
Total current liabilities 4,780,672 5,172,297
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par value - 100,000 shares authorized,
13,068 shares issued and outstanding 318,068 318,068
Retained earnings 326,632 605,959
---------- ----------
Total stockholders' equity 644,700 924,027
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,425,372 $6,096,324
========== ==========
</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 MONTH PERIOD
ENDED MARCH 31,
1997 1998
----------- -----------
<S> <C> <C>
REVENUES $ 3,003,438 $ 5,108,881
COST OF REVENUES 2,400,249 4,177,123
----------- -----------
Gross profit 603,189 931,758
OPERATING EXPENSES:
Selling, general and administrative 361,129 494,828
Stock compensation expense 305,000 --
Depreciation and amortization 25,702 30,556
----------- -----------
Total operating expenses 691,831 525,384
----------- -----------
INCOME (LOSS) FROM OPERATIONS (88,642) 406,374
OTHER INCOME 13,105 1,052
INTEREST EXPENSE (25,251) (32,299)
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES (100,788) 375,127
INCOME TAX EXPENSE -- 95,800
----------- -----------
NET INCOME (LOSS) $ (100,788) $ 279,327
=========== ===========
</TABLE>
See notes to consolidated financial statements.
- 3 -
<PAGE> 4
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
-------------------- RETAINED STOCKHOLDERS'
SHARES AMOUNT EARNINGS EQUITY
-------- -------- -------- --------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 13,068 $318,068 $326,632 $644,700
Net income 279,327 279,327
-------- -------- -------- --------
BALANCE, MARCH 31, 1998 13,068 $318,068 $605,959 $924,027
======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
- 4 -
<PAGE> 5
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------
1997 1998
----------- -----------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ (100,788) $ 279,327
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 25,702 30,556
Additions (reductions) to allowance for doubtful accounts 31,611 (226,902)
Compensation expense on issuance of common stock 305,000
Cash provided by (used in) operating working capital:
Trade accounts receivable (683,048) (333,553)
Accounts receivable - employees 2,397 (4,277)
Income tax refund receivable -- 18,476
Unbilled revenue (143,854) (84,818)
Other assets 20,070 (16,811)
Accounts payable (18,695) 1,060,725
Accrued salaries and payroll taxes 209,792 71,686
Other accrued expenses 130,545 (1,352,326)
Income taxes payable -- 95,800
Deferred revenue 132,949 730,683
----------- -----------
Net cash provided by (used in) operating activities (88,319) 268,566
----------- -----------
INVESTING ACTIVITIES - Retirements (additions) of property and equipment (601) 7,434
----------- -----------
FINANCING ACTIVITIES:
Borrowings under (payments on) line of credit 37,000 (175,000)
Proceeds from (payments on) notes payable and capital lease obligations 54,720 (39,943)
Proceeds from issuance of common stock 3,068
----------- -----------
Net cash provided by (used in) financing activities 94,788 (214,943)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 5,868 61,057
CASH AND CASH EQUIVALENTS:
Beginning of year 79,314 2,994
----------- -----------
End of year $ 85,182 $ 64,051
=========== ===========
SUPPLEMENTAL INFORMATION - Interest paid $ 25,251 $ 32,299
=========== ===========
</TABLE>
See notes to consolidated financial statements.
- 5 -
<PAGE> 6
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 national 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 will be 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, which elected to change its fiscal year-end from September 30 to
December 31. 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
three month periods ended March 31, 1998 and 1997, the Company's financial
position at December 31, 1997 and March 31, 1998, and the cash flows for
the three month periods ended March 31, 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 Blackmarr for the three month period ended March
31, 1998, are not necessarily indicative of the results that may be
expected for the Company 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.
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
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<PAGE> 7
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
ENDED MARCH 31, 1998
(IN THOUSANDS, EXCEPT
PRO FORMA PER SHARE DATA)
--------- --------------------
<S> <C>
Revenues $ 20,466
Net income $ 577
Net income per share - diluted $ 0.07
</TABLE>
The computation of pro forma net income per share of common stock
presented above is based on 8,476,235 shares of common stock outstanding.
- 7 -
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION - BrightStar was organized in July 1997 to combine selected
complementary businesses to provide enterprise-wide business and
technology solutions to Fortune 1000 companies and other large
organizations. BrightStar has entered into definitive agreements to
acquire the Founding Companies concurrently with and as a condition to the
closing of its initial public offering on April 16, 1998. Collectively,
the Founding Companies provide IT services to a diverse client base. Each
of the Founding Companies is specialized and generally provides its IT
services to clients primarily based on daily rates (or time and materials
charges).
The Company's services and products include ERP software implementation,
consulting, software application development systems integration,
outsourcing, training, upgrade and support and related software products.
The Company's services are performed at clients' locations and at the
Company's facilities. In providing ERP implementation and other IT
services, the Company generally assumes responsibility for project
management and bills the client on a time and materials basis, although a
small percentage of projects are billed on a fixed-price basis.
Revenue is primarily recognized as services are rendered for time and
materials charges or, to a lesser extent, using the
percentage-of-completion method for fixed-priced contracts. 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 client penalty. The
Company's 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 a quarter;
changes in the relative mix of the Company's services; changes in the
pricing of the Company's services; the timing and 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 cost
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 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
presentation purposes, Blackmarr 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 connection with the acquisitions. The excess of the aggregate
- 8 -
<PAGE> 9
purchase price paid for the Founding Companies other than Blackmarr over
the fair value of the net assets to be acquired by BrightStar will be
recorded as goodwill.
RESULTS OF OPERATIONS - BLACKMARR - The following table presents certain
selected data (and that data as a percentage of revenue) of Blackmarr on a
historical basis for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1997 1998
------------------ ------------------
<S> <C> <C> <C> <C>
Revenue $ 3,003 100.0% $ 5,109 100.0%
Cost of revenue 2,400 79.9 4,177 81.8
Selling, general and administrative
expenses 361 12.0 495 9.7
Stock compensation expense 305 10.2 - -
Depreciation and amortization 26 0.8 31 0.6
------- ------- ------- ------
Income (loss) from operations $ (89) (2.9)% $ 406 7.9%
======= ======= ======= ======
</TABLE>
THREE MONTHS ENDED MARCH 31, 1998, COMPARED TO THREE MONTHS ENDED MARCH
31, 1997 - Revenue increased $2.1 million, or 70%, for the three months
ended March 31, 1998 compared to the three months ended March 31, 1997.
The increase resulted from the addition of new customer contracts
representing an increase of $1.7 million, higher sales from the Education
division of $.3 million due to expanded course offerings and higher
student enrollment and increased sales of software products of $.1
million.
COST OF REVENUE - Cost of revenue increased $1.8 million, or 74%, for the
three months ended March 31, 1998, compared to the three months ended
March 31, 1997. The increase for the period is proportional to the
increase in sales and is directly related to the costs associated with the
sales effort.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and
administrative expenses increased $.1 million, or 30%, for the three
months ended March 31, 1998, compared to the three months ended March 31,
1997. As a percentage of revenue, selling, general and administrative
expenses decreased from 12.0% for the three months ended March 31, 1997,
to 9.7% for the three months ended March 31, 1998. The decrease was
attributable to the Company being able to increase revenue without
substantial additions to the number of support personnel. The overall
increase in selling, general and administrative expenses is primarily
attributable to a proportional increase in bad debt expense related to
higher sales.
LIQUIDITY AND CAPITAL RESOURCES (BLACKMARR) - Accounts receivable
increased $.56 million at March 31, 1998, compared to December 31, 1997,
as a result of increased sales in its Consulting operations.
At March 31, 1998, Blackmarr had $.67 million of borrowings outstanding
under a revolving line of credit provided by a commercial bank. The
borrowing capacity under the line of credit is $1.25 million, with
interest payable monthly at prime lending rate plus 1%. Borrowings under
the line of credit are due and payable on demand, are subject to a
borrowing base calculation based upon 80% of eligible accounts receivable
and are secured by Blackmarr's accounts receivable and guaranteed by
Blackmarr's principal stockholder.
- 9 -
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES (BRIGHTSTAR) - The Company is a holding
company that will conduct all of its operations through its subsidiaries.
Accordingly, the Company's principal sources of liquidity are the cash
flow of its subsidiaries, cash available from lines of credit it may
establish and the unallocated net proceeds of the offering.
At March 31, 1998, on a pro forma combined basis, after giving effect to
(i) the Acquisitions, (ii) the closing of the Offering and BrightStar's
application of the net proceeds therefrom to pay the cash portion of the
aggregate consideration for the Acquisitions and concurrently to repay
certain indebtedness of the Founding Companies (approximately $7.3
million) and (iii) the repayment by BrightStar of advances from BITI under
the BITI Loan Agreement, which have been used to fund payment of a part of
the expenses of the Offering, the Company would have had an aggregate of
approximately $13 million of cash and cash equivalents.
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.
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 $10.0 million and (ii) an acquisition facility (the
"Acquisition 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 available to provide financing for acquisitions and
capital expenditures. The Credit 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 payment 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 2000 and that the outstanding
principal balance will then convert into a term loan payable over three
years, with all remaining outstanding principal and accrued and unpaid
interest due in 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.
- 10 -
<PAGE> 11
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.
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 associates will be compliant.
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 is the same as net income reported in the statements of
consolidated operations, since there were no other items of comprehensive
income for the periods presented.
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
- 11 -
<PAGE> 12
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.
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
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
3.1 -- Certificate of Incorporation, as amended (incorporated by
reference to the Company's Registration Statement on
Form S-1, Commission file No. 333-43209, Exhibit 3.1).
3.2 -- Bylaws, as amended (incorporated by reference to the Company's
Registration Statement on Form S-1, Commission file
No. 333-43209, Exhibit 3.2)
4.1 -- Specimen Common Stock Certificates (incorporated by reference
to the Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 4.1).
4.2 -- Agreement and Plan of Exchange dated December 15, 1997
among BrightStar, BITG, BITI and the holders of the
outstanding capital stock of BITG (incorporated by reference
to the Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 4.2).
4.3 -- Warrant dated as of August 14, 1997 issued to McFarland,
Grossman and Company, Inc. (incorporated by reference to the
Company's Registration Statement on Form S-1, Commission file
No. 333-43209, Exhibit 4.3).
4.4 -- Option Agreement dated as of December 16, 1997 between
BrightStar and Brewer-Gruenert Capital Advisors, LLC.
(incorporated by reference to the Company's Registration
Statement on Form S-1, Commission file No. 333-43209,
Exhibit 4.4).
10.1 -- BrightStar 1997 Long-Term Incentive Plan (incorporated by
reference to the Company's Registration Statement on Form S-1,
Commission file No. 333-43209, Exhibit 10.1).
10.2 -- Agreement and Plan of Exchange by and among BrightStar
and the holders of the outstanding capital stock of Brian
R. Blackmarr and Associates, Inc. (incorporated by reference
to the Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 10.2).
10.3 -- Agreement and Plan of Exchange by and among BrightStar
and the holders of the outstanding capital stock of
Integrated Controls, Inc. (incorporated by reference to the
Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 10.3).
10.4 -- Agreement and Plan of Exchange by and among BrightStar
and the holders of the outstanding capital stock of
Mindworks Professional Education Group, Inc. (incorporated
by reference to the Company's Registration Statement on
Form S-1, Commission file No. 333-43209, Exhibit 10.4).
10.5 -- Agreement and Plan of Exchange by and among BrightStar,
Software Consulting Services America, LLC and the holders
of the outstanding ownership interests of Software
Consulting Services America, LLC. (incorporated by reference
to the Company's Registration Statement on Form S-1,
Commission file No. 333-43209, Exhibit 10.5).
10.6 -- Agreement and Plan of Exchange by and among BrightStar
and Software Consulting Services Pty. Ltd. in its
capacity as Trustee of the Software Consulting Services
Unit Trust and the holders of all of the outstanding
ownership interests in the Software Consultants Unit
Trust(incorporated by reference to the Company's
Registration Statement on Form S-1, Commission file
No. 333-43209, Exhibit 10.6).
10.7 -- Agreement and Plan of Exchange by and among BrightStar
and the holders of the outstanding capital stock of
Software Innovators, Inc. (incorporated by reference to
the Company's Registration Statement on Form S-1,
Commission file No. 333-43209, Exhibit 10.7).
10.8 -- Agreement and Plan of Exchange by and among BrightStar
and the holder of the outstanding capital stock of Zelo
Group, Inc. and Joel Rayden (incorporated by reference
to the Company's Registration Statement on Form S-1,
Commission file No. 333-43209, Exhibit 10.8).
10.9 -- Form of Employment Agreement between BrightStar and
Marshall G. Webb, Thomas A. Hudgins and Daniel M. Cofall
(incorporated by reference to the Company's Registration
Statement on Form S-1, Commission file No. 333-43209,
Exhibit 10.9).
10.10 -- Form of Employment Agreement between Brian R. Blackmarr
and Associates, Inc. and Brian R. Blackmarr (incorporated
by reference to the Company's Registration Statement on
Form S-1, Commission file No. 333-43209, Exhibit 10.10).
10.11 -- Letter Agreement dated August 14, 1997 between BITG and
McFarland, Grossman and Company, Inc., and amended as of
March 17, 1998 (incorporated by reference to the Company's
Registration Statement on Form S-1, Commission file
No. 333-43209, Exhibit 10.11).
10.12 -- Letter Agreement dated September 26, 1997 between BITG
and Brewer-Gruenert Capital Advisors, LLC, and amended as
of December 15, 1997 (incorporated by reference to the
Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 10.12).
10.13 -- Loan Agreement dated October 16, 1997 between BITI and
BITG (incorporated by reference to the Company's
Registration Statement on Form S-1, Commission file
No. 333-43209, Exhibit 10.13).
10.14 -- Form of Stock Repurchase Agreement between BrightStar and
Marshall G. Webb, Daniel M. Cofall, Thomas A. Hudgins,
and Michael A. Sooley (incorporated by reference to the
Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 10.14).
10.15 -- R/3 Regional Implementation Partner Agreement dated July
10, 1995 between Software Consulting Services America,
LLC and SAP America, Inc. (incorporated by reference to
the Company's Registration Statement on Form S-1,
Commission file No. 333-43209, Exhibit 10.15).
10.16 -- R/3 National Implementation Partner Agreement dated March
14, 1995 between Software Consulting Services Pty. Ltd.
and SAP Australia Pty. Ltd. (incorporated by reference
to the Company's Registration Statement on Form S-1,
Commission file No. 333-43209, Exhibit 10.16).
10.17 -- Form of Employment Agreement between Software Innovators,
Inc. and Mark D. Diggs (incorporated by reference to the
Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 10.17).
10.18 -- Form of Agreement Regarding Repurchase of Stock by and
among BrightStar, George M. Siegel, Marshall G. Webb,
Thomas A. Hudgins, Daniel M. Cofall, Mark D. Diggs,
Michael A. Sooley, Michael B. Miller, and Tarrant Hancock
(incorporated by reference to the Company's Registration
Statement on Form S-1, Commission file No. 333-43209,
Exhibit 10.18).
10.19 -- Credit Facility Commitment Letter from Banque Paribas
dated April 8, 1998 (incorporated by reference to the
Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 10.19).
27.1 -- 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.
DATE: June 1, 1998 By: /s/ MARSHALL G. WEBB
-----------------------------------
Marshall G. Webb
President and
Chief Executive Officer
DATE: June 1, 1998 By: /s/ DANIEL M. COFALL
-----------------------------------
Daniel M. Cofall
Chief Financial Officer
- 13 -
<PAGE> 14
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
3.1 -- Certificate of Incorporation, as amended (incorporated by
reference to the Company's Registration Statement on
Form S-1, Commission file No. 333-43209, Exhibit 3.1).
3.2 -- Bylaws, as amended (incorporated by reference to the Company's
Registration Statement on Form S-1, Commission file
No. 333-43209, Exhibit 3.2)
4.1 -- Specimen Common Stock Certificates (incorporated by reference
to the Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 4.1).
4.2 -- Agreement and Plan of Exchange dated December 15, 1997
among BrightStar, BITG, BITI and the holders of the
outstanding capital stock of BITG (incorporated by reference
to the Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 4.2).
4.3 -- Warrant dated as of August 14, 1997 issued to McFarland,
Grossman and Company, Inc. (incorporated by reference to the
Company's Registration Statement on Form S-1, Commission file
No. 333-43209, Exhibit 4.3).
4.4 -- Option Agreement dated as of December 16, 1997 between
BrightStar and Brewer-Gruenert Capital Advisors, LLC.
(incorporated by reference to the Company's Registration
Statement on Form S-1, Commission file No. 333-43209,
Exhibit 4.4).
10.1 -- BrightStar 1997 Long-Term Incentive Plan (incorporated by
reference to the Company's Registration Statement on Form S-1,
Commission file No. 333-43209, Exhibit 10.1).
10.2 -- Agreement and Plan of Exchange by and among BrightStar
and the holders of the outstanding capital stock of Brian
R. Blackmarr and Associates, Inc. (incorporated by reference
to the Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 10.2).
10.3 -- Agreement and Plan of Exchange by and among BrightStar
and the holders of the outstanding capital stock of
Integrated Controls, Inc. (incorporated by reference to the
Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 10.3).
10.4 -- Agreement and Plan of Exchange by and among BrightStar
and the holders of the outstanding capital stock of
Mindworks Professional Education Group, Inc. (incorporated
by reference to the Company's Registration Statement on
Form S-1, Commission file No. 333-43209, Exhibit 10.4).
10.5 -- Agreement and Plan of Exchange by and among BrightStar,
Software Consulting Services America, LLC and the holders
of the outstanding ownership interests of Software
Consulting Services America, LLC. (incorporated by reference
to the Company's Registration Statement on Form S-1,
Commission file No. 333-43209, Exhibit 10.5).
10.6 -- Agreement and Plan of Exchange by and among BrightStar
and Software Consulting Services Pty. Ltd. in its
capacity as Trustee of the Software Consulting Services
Unit Trust and the holders of all of the outstanding
ownership interests in the Software Consultants Unit
Trust(incorporated by reference to the Company's
Registration Statement on Form S-1, Commission file
No. 333-43209, Exhibit 10.6).
10.7 -- Agreement and Plan of Exchange by and among BrightStar
and the holders of the outstanding capital stock of
Software Innovators, Inc. (incorporated by reference to
the Company's Registration Statement on Form S-1,
Commission file No. 333-43209, Exhibit 10.7).
10.8 -- Agreement and Plan of Exchange by and among BrightStar
and the holder of the outstanding capital stock of Zelo
Group, Inc. and Joel Rayden (incorporated by reference
to the Company's Registration Statement on Form S-1,
Commission file No. 333-43209, Exhibit 10.8).
10.9 -- Form of Employment Agreement between BrightStar and
Marshall G. Webb, Thomas A. Hudgins and Daniel M. Cofall
(incorporated by reference to the Company's Registration
Statement on Form S-1, Commission file No. 333-43209,
Exhibit 10.9).
10.10 -- Form of Employment Agreement between Brian R. Blackmarr
and Associates, Inc. and Brian R. Blackmarr (incorporated
by reference to the Company's Registration Statement on
Form S-1, Commission file No. 333-43209, Exhibit 10.10).
10.11 -- Letter Agreement dated August 14, 1997 between BITG and
McFarland, Grossman and Company, Inc., and amended as of
March 17, 1998 (incorporated by reference to the Company's
Registration Statement on Form S-1, Commission file
No. 333-43209, Exhibit 10.11).
10.12 -- Letter Agreement dated September 26, 1997 between BITG
and Brewer-Gruenert Capital Advisors, LLC, and amended as
of December 15, 1997 (incorporated by reference to the
Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 10.12).
10.13 -- Loan Agreement dated October 16, 1997 between BITI and
BITG (incorporated by reference to the Company's
Registration Statement on Form S-1, Commission file
No. 333-43209, Exhibit 10.13).
10.14 -- Form of Stock Repurchase Agreement between BrightStar and
Marshall G. Webb, Daniel M. Cofall, Thomas A. Hudgins,
and Michael A. Sooley (incorporated by reference to the
Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 10.14).
10.15 -- R/3 Regional Implementation Partner Agreement dated July
10, 1995 between Software Consulting Services America,
LLC and SAP America, Inc. (incorporated by reference to
the Company's Registration Statement on Form S-1,
Commission file No. 333-43209, Exhibit 10.15).
10.16 -- R/3 National Implementation Partner Agreement dated March
14, 1995 between Software Consulting Services Pty. Ltd.
and SAP Australia Pty. Ltd. (incorporated by reference
to the Company's Registration Statement on Form S-1,
Commission file No. 333-43209, Exhibit 10.16).
10.17 -- Form of Employment Agreement between Software Innovators,
Inc. and Mark D. Diggs (incorporated by reference to the
Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 10.17).
<PAGE> 15
10.18 -- Form of Agreement Regarding Repurchase of Stock by and
among BrightStar, George M. Siegel, Marshall G. Webb,
Thomas A. Hudgins, Daniel M. Cofall, Mark D. Diggs,
Michael A. Sooley, Michael B. Miller, and Tarrant Hancock
(incorporated by reference to the Company's Registration
Statement on Form S-1, Commission file No. 333-43209,
Exhibit 10.18).
10.19 -- Credit Facility Commitment Letter from Banque Paribas
dated April 8, 1998 (incorporated by reference to the
Company's Registration Statement on Form S-1, Commission
file No. 333-43209, Exhibit 10.19).
27.1 -- Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 64,051
<SECURITIES> 0
<RECEIVABLES> 4,987,267
<ALLOWANCES> 224,632
<INVENTORY> 0
<CURRENT-ASSETS> 5,752,450
<PP&E> 974,393
<DEPRECIATION> 735,630
<TOTAL-ASSETS> 6,096,324
<CURRENT-LIABILITIES> 5,172,297
<BONDS> 0
0
0
<COMMON> 318,068
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,096,324
<SALES> 5,108,881
<TOTAL-REVENUES> 5,108,881
<CGS> 4,177,123
<TOTAL-COSTS> 4,177,123
<OTHER-EXPENSES> 525,384
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,299
<INCOME-PRETAX> 375,127
<INCOME-TAX> 95,800
<INCOME-CONTINUING> 279,327
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 279,327
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