<PAGE> 1
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, 2000 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.)
4900 HOPYARD ROAD, SUITE 200 PLEASANTON, CALIFORNIA 94566
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (925) 251-0000
--------------
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 May 9, 2000, was 9,351,589.
* 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
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
($000'S, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 907 $ 973
Trade accounts receivable, net
of allowance for doubtful accounts
of $1,767 and $1,987 13,289 16,127
Unbilled revenue 2,136 1,591
Deferred tax asset 1,358 1,712
Income tax receivable 1,482 810
Prepaid expenses and other 1,419 1,166
Net assets of discontinued operations 4,000 4,000
-------- --------
Total current assets 24,591 26,379
PROPERTY AND EQUIPMENT 7,167 6,736
Less-accumulated depreciation (3,190) (2,720)
-------- --------
Property and equipment, net 3,977 4,016
GOODWILL 57,848 56,848
Less-accumulated amortization (2,652) (2,284)
-------- --------
Goodwill, net 55,196 54,564
OTHER 52 49
-------- --------
TOTAL ASSETS $ 83,816 $ 85,008
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit $ 4,202 $ --
Accounts payable 3,264 4,063
Acquisition payable 3,000 2,000
Restructuring reserve 1,245 1,761
Accrued salaries and other expenses 4,853 8,105
Deferred revenue 257 41
-------- --------
Total current liabilities 16,821 15,970
LINE OF CREDIT -- 8,579
OTHER LIABILITIES 62 8
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value; 35,000,000
shares authorized; 9,351,589 and 8,642,034
shares issued and outstanding 9 9
Additional paid-in capital 96,868 89,693
Common stock warrants 100 100
Accumulated other comprehensive income 151 171
Retained earnings (deficit) (30,195) (29,522)
-------- --------
Total stockholders' equity 66,933 60,451
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 83,816 $ 85,008
======== ========
</TABLE>
See notes to condensed consolidated financial statements
2
<PAGE> 3
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($000'S, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------
MARCH 31, MARCH 31,
2000 1999
---------- ----------
<S> <C> <C>
REVENUE $ 19,605 $ 25,500
COST OF REVENUE 13,252 19,736
---------- ----------
GROSS PROFIT 6,353 5,764
OPERATING EXPENSES:
Selling, general and administrative expenses 6,433 5,556
Stock compensation expense -- 401
Goodwill amortization 368 339
Depreciation and amortization 473 284
---------- ----------
Total operating expenses 7,274 6,580
LOSS FROM OPERATIONS (921) (816)
OTHER INCOME (EXPENSE) (2) (35)
INTEREST INCOME (EXPENSE) (130) 21
---------- ----------
LOSS BEFORE INCOME TAXES (1,053) (830)
INCOME TAX PROVISION (CREDIT) (380) 2
---------- ----------
LOSS FROM CONTINUING OPERATIONS (673) (832)
DISCONTINUED OPERATIONS:
Income (loss) from discontinued operations, net of tax -- 242
Loss on disposal of discontinued operations, net of tax -- --
---------- ----------
Total discontinued operations -- 242
---------- ----------
NET LOSS $ (673) $ (590)
========== ==========
NET INCOME (LOSS) PER SHARE: BASIC AND DILUTED
Continuing Operations $ (0.08) $ (0.10)
Discontinued Operations -- 0.03
---------- ----------
Net loss $ (0.08) $ (0.07)
========== ==========
SHARES OUTSTANDING: BASIC AND DILUTED 8,807,597 8,642,034
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($000'S)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------
MARCH 31, MARCH 31,
2000 1999
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (673) $ (590)
Adjustments to reconcile net loss to net cash
used in operating activities:
Effect of exchange rate on cash (20) (120)
Income from discontinued operations -- (242)
Depreciation and amortization 841 731
Change in allowance for doubtful accounts (220) 252
Compensation expense on issuance of common stock 401
Deferred taxes 354 177
Cash provided by (used in) operating activities:
Trade accounts receivable 3,058 (3,260)
Unbilled revenue (545) (2,755)
Prepaid expenses and other (256) (503)
Accounts payable (799) 431
Restructuring reserve (516) (706)
Accrued salaries and other expenses (3,198) 3,056
Income taxes receivable/payable (672) (1,053)
Deferred revenue 216 (209)
------- -------
Net cash used in operating activities (2,430) (4,390)
INVESTING ACTIVITIES:
Payments for acquisitions -- (1,593)
Additions of property and equipment, net of disposals (434) (490)
------- -------
Net cash used by investing activities (434) (2,083)
FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 7,175 --
Borrowings (repayments) under line of credit (4,377) 5,724
------- -------
Net cash provided by financing activities 2,798 5,724
NET DECREASE IN CASH (66) (749)
CASH:
Beginning of period 973 3,672
------- -------
End of period $ 907 $ 2,923
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included in the financial
statements. Operating results for the three month period ended March 31,
2000, are not necessarily indicative of the results that may be expected for
the year ending December 31, 2000. The balance sheet at December 31, 1999,
has been derived from the audited financial statements at that date but does
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. For
additional information, refer to financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for the year ended
December 31, 1999.
The preparation of the condensed financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date
of the condensed financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
these estimates
2. CREDIT FACILITIES
Effective March 29, 1999, the Company established a $15 million credit
facility (the "Credit Facility") with Comerica Bank. Under terms of the
agreement, the Credit Facility will be used for working capital needs,
including issuance of letters of credit, and for general corporate purposes.
Borrowings under the Credit Facility bear an interest rate of prime plus
.25%, or the Eurodollar rate plus 2.5%. The Company will pay a commitment
fee on unused amounts of the Credit Facility amounting to .375% per annum
based on the average daily amount by which the commitment amount exceeds the
principal amount outstanding during the preceding month. Interest is payable
monthly on prime rate borrowings and quarterly or at the end of the
applicable interest period for the Eurodollar rate borrowings.
The Credit Facility is secured by liens on substantially all the Company's
assets (including accounts receivable) and a pledge of all of the
outstanding capital stock of the Company's domestic operating subsidiaries.
The Credit Facility also requires that the Company 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. As of, and during the quarter ended
March 31, 2000, the Company was not in compliance with a certain financial
covenant. Comerica Bank has agreed to waive the default.
The Credit Facility contains 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. Borrowings outstanding under the
Credit Facility amounted to $4.2 million at March 31, 2000. The Credit
Facility expires on March 30, 2001.
Effective March 31, 2000, the Company established a A$3 million ($1.8 million
U.S. dollars) credit facility (the "Australian Credit Facility") with
Macquarie Bank Limited (the "Bank"). Under the terms of the agreement, the
Australian Credit Facility will be used for working capital needs and other
general corporate purposes. Borrowings under the Australian Credit Facility
bear an interest rate calculated as the aggregate of the 30 day Macquarie
Bank Bill Rate plus 3.0%. The Company's Australian subsidiary will pay a
commitment fee on unused amounts of the Australian Credit Facility amounting
to 1.0% per annum calculated daily and payable monthly based on the
difference between A$3.0 million and borrowings outstanding.
The Australian Facility is secured by liens on substantially all of the
assets of the Company's Australian subsidiary and guaranteed by the Company.
Borrowings under the Australian Facility are limited to 60% of outstanding
customer accounts receivable less than 90 days old plus 40% of unbilled
revenue. The Australian Facility requires that both the Company and its
Australian subsidiary comply with various financial covenants and reporting
requirements. This Australian Facility matures on December 31, 2004. As of
May 10, 2000 the Company had no borrowings outstanding under the Australian
Facility.
3. INCOME TAXES
The provision for income taxes for the quarter ended March 31, 2000 is based
on an estimated effective tax rate of 39%, adjusted for non-deductible
goodwill amortization. Additionally, the provision for income taxes reflects
a reduction in the deferred tax asset valuation allowance of $120,000, based
upon the estimated realization of the tax assets.
4. COMPREHENSIVE INCOME
SFAS No. 130, "Reporting Comprehensive Income," requires companies to report
and display comprehensive income and its components in the financial
statements. Comprehensive income includes all changes in equity during a
period except those resulting from investment by owners and distributions to
owners. Comprehensive income approximates net income reported for all
periods reported.
5
<PAGE> 6
5. ACQUISITION PAYABLES
On May 28, 1999, the Company purchased Integrated Systems Consultants, LLC
("ISC") pursuant to an Asset Purchase Agreement (the "Agreement"), dated as
of April 1, 1999. ISC is a provider of SAP consulting services based in
Phoenix, Arizona. The aggregate consideration for this transaction was $3.0
million; of which $500,000 was paid in cash upon closing; $1,000,000 will be
paid on June 1, 2000 in up to 255,183 shares of common stock, or a
combination of cash and stock as defined in the Agreement; $500,000 was
financed by a Convertible Subordinated Promissory Note due August 1, 2000;
and, the remaining $1,000,000 consideration will be paid under the earn out
agreement with the prior owners, as follows: $250,000 to be paid in cash by
July 1, 2000; $250,000 to be paid pursuant to a three month promissory note
bearing interest at 7.5%; and, $500,000 to be paid in shares of the Company's
common stock at market price. The Company has the option to pay 70%, or
$350,000 of the $500,000 in cash, accruing interest at a rate of 7.5%. The
Company has allocated the entire purchase price, including the amounts
payable under the earnout, and certain other acquisition costs to goodwill.
Additionally, included in acquisition payables is $500,000 due in connection
with the 1998 purchase of PROSAP Australia Pty.
6. RECENT SALES OF UNREGISTERED SECURITIES
On March 10, 2000, pursuant to an agreement with Strong River Investments,
Inc. and Montrose Investments Ltd. (collectively, the "Purchasers"), the
Company sold to the Purchasers 709,555 shares of the Company's common stock
(the "Shares") for $7.5 million, or $10.57 per share (the "Transaction"). Net
proceeds to the Company amounted to $7.175 million after related issuance
costs. Proceeds were applied to the Company's borrowings under its Credit
Facility. In connection the purchase of the Shares, the Company issued two
warrants to the Purchasers. One warrant has a five-year term during which
the Purchasers may purchase up to 157,500 shares of the Company's common
stock at a price of $12.00 per share. The second warrant covers an adjustable
amount of shares of the Company's common stock at an adjustable exercise
price, based on the market price of the Company's common stock during three
(3) separate periods of thirty-one (31) trading days commencing 270 calendar
days after the date of the Transaction. The Company also issued to Wharton
Capital Partners Ltd. ("Wharton"), as compensation for Wharton's services in
completing the Transaction, a warrant which has a five-year term during which
Wharton may purchase up to 45,000 shares of the Company's common stock at a
price of $12.00 per share. The Company anticipates registering the Shares
sold to the Purchaser in May 2000. The Company and the Purchaser further
agreed that the Company will sell and the Purchaser will purchase up to an
additional $7.5 million worth of the Company's common stock six months
following the Transaction subject to certain conditions.
7. CONTINGENT LIABILITY
Under the terms of the acquisition of Cogent Technologies, LLC ("Cogent"),
the Company is required, as additional consideration for the acquisition, to
make an additional cash payment of up to $0.5 million and issue additional
shares of the Company's common stock to the prior owners based upon an
earn-out calculation. Amounts potentially due under the terms of the earnout
agreement are currently in dispute between the Company and the prior owners.
The additional purchase consideration will be recorded as goodwill upon
transfer.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION - BrightStar Information Technology Group, Inc. ("BrightStar"
or the "Company") is a leading e-business solutions and application service
provider (ASP) to Global 2000 companies and public sector organizations.
BrightStar's rapidly deployed solutions for e-commerce, supply chain
management (SCM), customer relationship management (CRM), enterprise
resource planning (ERP), corporate portal and application outsourcing help
companies transform themselves into successful e-businesses and achieve a
competitive advantage by delivering superior service to their customers
while improving operational efficiencies.
Services are generally performed at clients' locations and also at the
Company's facilities. The Company may assume responsibility for project
management and bill the client on a time and material or fixed fee basis.
6
<PAGE> 7
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
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 effect of changes in estimates to
complete fixed fee contracts; 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 consists primarily 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, and (v) recruiting.
RESULTS OF OPERATIONS
Revenue decreased $5.9 million or 23% from the first quarter of 1999 as a
result of the Company's efforts to reorganize its service offerings
consistent with its focus on becoming an e-business and application service
provider, transition of its sales force in the fourth quarter of 1999 and
continuing through the first quarter of 2000 and the ongoing effect of
reduced demand for IT services due to Year 2000 issues.
Gross profit as a percentage of revenue for the three months ended March 31,
2000 and 1999, was 32.4% and 22.6%, respectively. The improvement in gross
profit percentage resulted from the 1999 completion of two fixed bid
engagements which had an adverse effect on margins in 1999, combined with
improved utilization of revenue generating personnel and slightly higher
average billing rates.
The increase in selling, general and administrative expenses reflects the
Company's ongoing investment in building its internal infrastructure and
field sales force.
Stock compensation is a non-cash expense item related to the issuance of
stock to certain Founders as a part of the Company's IPO in 1998. This amount
was amortized over a period of 12 months through April 1999.
Goodwill amortization relates to goodwill acquired in conjunction with the
IPO and subsequent acquisitions.
Income taxes are based on the Company's estimated annual tax rate of 39%,
adjusted for non-deductible goodwill amortization and stock compensation
expense. Additionally, during the first quarter of 2000, the Company reduced
the deferred tax asset valuation allowance by $120,000 based upon estimated
realization of the underlying deferred tax assets.
LIQUIDITY AND CAPITAL RESOURCES
Effective March 29, 1999, the Company established a $15 million credit
facility (the "Credit Facility") with Comerica Bank. Under the terms of the
agreement, the Credit Facility will be used for working capital needs,
including issuance of letters of credit, and for general corporate purposes.
Borrowings under the Credit Facility bear an interest rate of prime plus
.25%, or the Eurodollar rate plus 2.5%. The Company will pay a commitment
fee on unused amounts of the Credit Facility amounting to a .375% per annum
based on the average daily amount by which the commitment amount exceeds the
principal amount outstanding during the preceding month. Interest is payable
monthly on prime rate borrowings and quarterly or at the end of the
applicable interest period for the Eurodollar rate borrowings.
7
<PAGE> 8
The Credit Facility is secured by liens on substantially all the Company's
assets (including accounts receivable) and a pledge of all of the
outstanding capital stock of the Company's domestic operating subsidiaries.
The Credit Facility also requires that the Company 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. As of, and during the quarter ended
March 31, 2000, the Company was not in compliance with a certain financial
covenant. Comerica Bank has agreed to waive the default. The Credit Facility
contains 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 Credit Facility expires on March 30, 2001.
Effective March 31, 2000, the Company established a A$3 million ($1.8 million
U.S. dollars) credit facility (the "Australian Credit Facility") with
Macquarie Bank Limited. Under the terms of the agreement, the Australian
Credit Facility will be used for working capital needs and other general
corporate purposes. Borrowings under the Australian Credit Facility bear an
interest rate calculated as the aggregate of the 30 day Macquarie Bank Bill
Rate (the"Rate") plus 3.00 percent. The Company's Australian subsidiary
will pay a commitment fee on unused amounts of the Australian Credit
Facility amounting to 1.0% per annum calculated daily and payable monthly
based on the difference between the A$3.0 million and borrowings outstanding.
The Australian Facility is secured by liens on substantially all of the
assets of the Company's Australian subsidiary and is guaranteed by the
Company. Borrowings under the Australian Facility are limited to 60% of
outstanding customer accounts receivable less than 90 days old plus 40% of
unbilled revenue. The Australian Facility requires that both the Company and
its Australian subsidiary to comply with various financial covenants and
reporting requirements. This Australian Facility matures on December 31,
2004. As of May 10, 2000 the Company had no borrowings outstanding under the
Australian Facility.
On March 10, 2000, pursuant to an agreement with Strong River Investments,
Inc. and Montrose Investments Ltd. (collectively the "Purchasers"), the
Company sold to the Purchasers 709,555 shares of the Company's common stock
for $7.5 million or $10.57 per share. Net proceeds to the Company amounted
to $7.2 million after related issuance costs. The Company expects to
register the common shares sold to the Purchasers in May 2000. The
Company and the Purchasers further agreed that the Company will sell and the
Purchaser will purchase up to an additional $7.5 million worth of the
Company's common stock six months following the initial transaction, subject
to certain conditions.
During the first quarter of 2000, the Company repaid $4.4 million of amounts
due under its Credit Facility, financed $2.4 million of additional working
capital requirements and $0.4 million of equipment additions using proceeds
from the issuance of stock.
The Company is required to make payments in 2000 amounting to $3.0 million
related to a prior acquisition. The Company has the option to issue common
stock to satisfy up to $1.5 million of the amounts due. In addition, the
Company expects to make payments of up to $0.5 million and issue additional
shares of the Company's common stock to the prior owners of Cogent
related to earn out agreements. The Company expects that a significant
portion of the total amounts due will be satisfied upon the issuance of
common stock.
The Company intends to continue 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 under its Credit Facilities.
The Company believes that cash flow from operations, borrowings under Credit
Facilities, and expected proceeds from the issuance of stock will be
sufficient to fund its requirements over the next twelve months.
8
<PAGE> 9
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.
PART II - OTHER INFORMATION
ITEM 1. Legal proceedings
The Company is not involved in any legal proceedings that the Company
believes could have a material adverse effect on the Company.
ITEM 3. Defaults upon Senior Securities
See Note 2 to the Condensed Consolidated Financial Statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
The Company filed a current report on Form 8-K on January 14, 2000 which
disclosed that the Company engaged Grant Thornton LLP as its independent
accountants effective January 10, 2000.
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 there
unto duly authorized.
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
Date: May 15, 2000. BY: /s/ Michael A. Ober
-----------------------------------------
Michael A. Ober
Chief Executive Officer
BY: /s/ Donald W. Rowley
-----------------------------------------
Donald W. Rowley
Chief Financial Officer
9
<PAGE> 10
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 907
<SECURITIES> 0
<RECEIVABLES> 13,289
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 24,591
<PP&E> 7,167
<DEPRECIATION> 3,180
<TOTAL-ASSETS> 83,816
<CURRENT-LIABILITIES> 16,821
<BONDS> 0
0
0
<COMMON> 9
<OTHER-SE> 66,924
<TOTAL-LIABILITY-AND-EQUITY> 83,816
<SALES> 19,605
<TOTAL-REVENUES> 19,605
<CGS> 13,252
<TOTAL-COSTS> 13,252
<OTHER-EXPENSES> 7,274
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 132
<INCOME-PRETAX> (1,053)
<INCOME-TAX> (380)
<INCOME-CONTINUING> (673)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (673)
<EPS-BASIC> (.08)
<EPS-DILUTED> (.08)
</TABLE>
