AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 20, 1998
REGISTRATION NO. 333-43989
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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DA CONSULTING GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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TEXAS 7389 76-0418488
(PRIMARY STANDARD (I.R.S. EMPLOYER
(STATE OR OTHER INDUSTRIAL IDENTIFICATION
JURISDICTION OF CLASSIFICATION CODE NUMBER) NO.)
INCORPORATION OR
ORGANIZATION)

5847 SAN FELIPE ROAD, SUITE 3700 HOUSTON, TEXAS 77057(713) 361-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

---------------
MICHAEL J. MACKEY
CHIEF FINANCIAL OFFICER
DA CONSULTING GROUP, INC.
5847 SAN FELIPE ROAD, SUITE 3700
HOUSTON, TEXAS 77057
(713) 361-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:
BARRY M. ABELSON, ESQUIRE GARY W. ORLOFF, ESQUIRE
PEPPER HAMILTON LLP BRACEWELL & PATTERSON, L.L.P.
3000 TWO LOGAN SQUARE 711 LOUISIANA STREET, SUITE 2900
EIGHTEENTH AND ARCH STREETS SOUTH TOWER, PENNZOIL PLACE
PHILADELPHIA, PA 19103-2799 HOUSTON, TX 77002-2781
(215) 981-4000 (713) 223-2900

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If this form is a post-effective amendment filed pursuant to Rule 424(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SECTION 8(a), MAY DETERMINE.

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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED APRIL 20, 1998

PROSPECTUS

2,400,000 SHARES

LOGO
OF DA CONSULTING GROUP, INC. APPEARS HERE

COMMON STOCK

Of the 2,400,000 shares of Common Stock offered hereby, 1,700,000 are being
sold by DA Consulting Group, Inc. ("DACG" or the "Company") and 700,000 are
being sold by the Selling Shareholders. See "Principal and Selling
Shareholders." The Company will not receive any of the proceeds from the sale
of shares by the Selling Shareholders.

Prior to this offering, there has been no public market for the Common Stock
of the Company. It is currently anticipated that the initial public offering
price will be between $11.00 and $13.00 per share. See "Underwriting" for
information relating to the determination of the initial public offering price.
The Common Stock has been approved for quotation on the Nasdaq National Market
under the symbol "DACG."

SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OF COMMON
STOCK OFFERED HEREBY.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

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- --------------------------------------------------------------------------------

PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2)(3) SHAREHOLDERS(3)
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Per Share................... $ $ $ $
Total(3).................... $ $ $ $

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(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $1,850,000.
(3) The Company and certain Selling Shareholders of the Company have granted to
the Underwriters a 30-day option to purchase up to an aggregate of 360,000
additional shares of Common Stock solely to cover over-allotments, if any.
See "Underwriting." If all such shares are purchased, the total Price to
Public, Underwriting Discount, Proceeds to Company, and Proceeds to Selling
Shareholders will be $ , $ , $ , and $ , respectively. The
Company will not receive any of the proceeds from the sale of shares by the
Selling Shareholders.

The shares of Common Stock are offered by the several Underwriters when, as
and if delivered to and accepted by them and subject to their right to reject
orders in whole or in part. It is expected that delivery of the certificates
for the shares of Common Stock will be made on or about , 1998.

WILLIAM BLAIR & COMPANY

ROBERT W. BAIRD & CO.
INCORPORATED
PENNSYLVANIA MERCHANT GROUP LTD

THE DATE OF THIS PROSPECTUS IS , 1998

The Company intends to furnish to its shareholders annual reports containing
audited financial statements and to make available quarterly reports
containing unaudited financial statements for the first three quarters of each
year.

DA Foundation(R) and DA Team Teach(R) are registered trademarks and/or
service marks of the Company. The Company also claims common law trademark
rights in DA Consulting Group(TM), DA(TM), and the DACG logo, for which the
Company has filed applications for federal registration in the United States
Patent and Trademark Office. Furthermore, the Company claims common law
trademark rights in various other marks, including, without limitation, DA
Cornerstone(TM), DA PASSPORT(TM), and the slogan Solutions for People and
Technology(TM). All other trademarks or service marks appearing in this
Prospectus are trademarks or service marks of the companies that utilize them.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING, AND SHORT-COVERING TRANSACTIONS IN THE
COMMON STOCK AND THE IMPOSITION OF PENALTY BIDS DURING AND AFTER THE OFFERING.
SEE "UNDERWRITING."

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and the
Combined and Consolidated Financial Statements and related Notes thereto
appearing elsewhere in this Prospectus. Unless indicated otherwise, all
information contained in this Prospectus (i) assumes that the Underwriters'
over-allotment option is not exercised and (ii) reflects a 4.2-for-1 split of
the shares of Common Stock to be effected prior to the date of this Prospectus.
See "Underwriting" and "Description of Capital Stock." Unless the context
otherwise indicates, all references to the "Company" or "DACG" mean DA
Consulting Group, Inc., its predecessors, and its subsidiaries.

THE COMPANY

DA Consulting Group, Inc. is a leading international provider of end-user
support solutions to companies which are implementing enterprise resource
planning ("ERP") software systems. Through its 568 employees in 15 offices
worldwide, the Company provides customized change communications, education,
and performance support services to its clients. Since 1988, the Company has
provided services to over 275 clients, including 49 of the Fortune Global 500
and three of the Fortune Global 10. The number of clients served by the Company
has increased from 31 in 1993 to 134 in 1997. The Company's clients in 1997
included Bristol-Myers Squibb Company, Cadbury-Schweppes PLC, Compaq Computer
Corporation, Hercules, Inc., Hewlett Packard Company, and Shell Petroleum, Inc.
The Company's client base is diversified, with its largest client representing
less than 6.0% of the Company's revenue in 1997. Recognizing the global nature
of the ERP software market and the importance of being able to serve multi-
national clients, the Company has built a substantial international presence.
In addition to its four offices in the U.S., the Company also has 11 offices in
Canada, Mexico, the United Kingdom, France, South Africa, Australia, Singapore,
and Venezuela.

ERP software systems, including those offered by SAP AG ("SAP"), J.D. Edwards
& Company ("J.D. Edwards"), BAAN Company B.V. ("BAAN"), and Oracle Corporation
("Oracle"), are being implemented around the world by large and mid-size
companies that are re-engineering their businesses and enhancing their
information technology systems to remain competitive. Industry sources estimate
that the worldwide market for ERP software license fees was $5.2 billion in
1996 and is expected to grow at a compound annual rate of 30% through 2001 to
$19.0 billion. The Company believes that approximately three times the amount
of license fees is spent on systems integration and implementation services,
including end-user training and tools. In order for companies to maximize their
returns on these substantial investments, it is critical that the end-users of
these new ERP applications, whose job functions and work patterns are often
substantially changed as a result of the new technology, are provided with the
necessary training and tools to utilize these systems effectively. SAP has
recommended that 12% of the expenses budgeted by its clients for systems
integration and implementation services be dedicated to end-user training and
tools.

The Company was founded in 1984 in Houston, Texas as an end-user support
company providing documentation services to the oil and gas industry. In 1988,
the Company expanded its end-user support services to include training by
providing a support solution in connection with one of the first major English
language installations of SAP software in the world. SAP is a major
international software company and the leading vendor of ERP software for
business applications. In 1996, it is estimated that SAP represented
approximately 34% of the $5.2 billion market for ERP software applications.
Because of the substantial market opportunity represented by SAP, by 1990, the
Company had made SAP end-user support its primary focus. In 1997, revenue from
clients implementing SAP software represented 87% of the Company's billed
consulting revenue. By focusing on end-user support, the Company has been
successful in institutionalizing its knowledge base and has developed
proprietary content and reference materials, the DA Foundation(R), that are
applied in developing customized solutions for each client. The Company has
also developed DA Cornerstone(TM), its methodology for delivering consistently
high quality service to its clients. More recently, the Company has broadened
its

complement of end-user support services by also providing change communications
consulting and on-line help tools and by expanding its ERP capabilities to
include applications such as J.D. Edwards, BAAN, and Oracle.

The Company's staff has grown from 65 as of December 31, 1993 to 568 as of
December 31, 1997. When opening new offices, the Company uses core groups of
existing senior Company consultants in order to transfer its strong corporate
culture and its commitment to high quality service to new personnel in
geographically and culturally disparate locations. In addition, DACG has
developed a comprehensive series of training programs covering technical
skills, project methodologies, and management and sales techniques to
accelerate the development of its professional staff, expand their skills, and
permit them to attain increasing levels of responsibility within the
organization. The Company believes that it provides its employees with a
challenging and fulfilling work environment, a competitive compensation
structure, and broad-based equity ownership. Upon completion of this offering,
403 employees (representing approximately 70% of the Company's employees as of
December 31, 1997) will own, in the aggregate, approximately 20% of the post-
offering, fully diluted equity of the Company.

Capitalizing on the rapid growth of ERP implementations, the Company has
increased its revenue from $4.2 million in 1993 to $44.2 million in 1997,
representing a compound annual growth rate of 80.3% for the period and a 68.7%
increase in 1997. Demand for the Company's services has expanded rapidly and
the Company believes that, as companies around the world implement ERP systems
and continue to enhance their technology to remain competitive, these companies
will continue to require end-user support services. The Company's growth
strategy includes (i) continued international expansion to maximize global
market share and to serve multi-national clients, (ii) further development of
relationships with leading ERP vendors, (iii) leveraging its large blue-chip
client base, (iv) continued expansion of its consulting and sales
organizations, and (v) extensions of its service offerings.

The Company is a Texas corporation. Its executive offices are located at 5847
San Felipe Road, Suite 3700, Houston, Texas 77057 and its telephone number is
(713) 361-3000. The Company's address on the world wide web is www.dacg.com.

THE OFFERING

Shares Offered by the Company............. 1,700,000 shares
Shares Offered by the Selling
Shareholders............................. 700,000 shares
Shares Outstanding Immediately After the
Offering................................. 6,508,475 shares (1)
Use of Proceeds........................... To repay approximately $4.0 million
in debt and for general corporate
purposes, including working capital
and possible acquisitions
Proposed Nasdaq National Market Symbol.... DACG

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(1) Excludes 446,069 shares of Common Stock reserved for issuance upon the
exercise of outstanding stock options at a weighted average exercise price
of $5.91 per share (none of which are currently exercisable), 399,000
shares of Common Stock reserved for issuance upon the exercise of stock
options which will be granted as of the date of this Prospectus at the
initial public offering price per share, and 414,931 shares of Common Stock
reserved for future grants under the Company's 1997 Stock Option Plan. See
"Management--Executive Compensation" and "Management--Employee Benefit
Plans--1997 Stock Option Plan."

SUMMARY COMBINED AND CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)

YEAR ENDED YEAR ENDED
DECEMBER 31, SIX MONTHS ENDED DECEMBER 31,
-------------- --------------------------- ----------------------------
JUNE 30, DECEMBER 31,
1993 1994 1995 1995 1995 1996 1997
------ ------ ----------- --------------- ------------ ------- -------
COMBINED(1) COMBINED(1) CONSOLIDATED(1) PRO FORMA(2) CONSOLIDATED(1)

INCOME STATEMENT DATA:
Revenue................ $4,179 $7,501 $6,299 $8,319 $14,618 $26,202 $44,204
Cost of revenue........ 2,484 4,028 3,412 4,249 7,661 14,190 24,063
------ ------ ------ ------ ------- ------- -------
Gross profit........... 1,695 3,473 2,887 4,070 6,957 12,012 20,141
Selling and marketing
expense............... 84 450 407 665 1,072 1,953 3,726
Development expense.... -- -- 296 411 707 1,250 1,223
General and
administrative
expense............... 1,482 2,629 1,657 2,357 4,014 6,597 12,436
Amortization
expense(3)............ -- -- -- 230 459 274 54
Employee stock-related
charge(4)............. -- -- -- -- -- 1,858 263
------ ------ ------ ------ ------- ------- -------
Operating income....... 129 394 527 407 705 80 2,439
Other (expense) income,
net................... (22) (77) (23) (61) (84) 95 (135)
------ ------ ------ ------ ------- ------- -------
Income before taxes.... 107 317 504 346 621 175 2,304
Provision for income
taxes................. 44 119 189 228 250 141 896
------ ------ ------ ------ ------- ------- -------
Net income............. $ 63 $ 198 $ 315 $ 118 $ 371 $ 34 $ 1,408
====== ====== ====== ====== ======= ======= =======
Diluted earnings per
share(5).............. $ 0.02 $ 0.05 $ 0.08 $ 0.03 $ 0.10 $ 0.01 $ 0.28
Weighted average shares
outstanding........... 3,868 3,868 3,868 3,868 3,868 4,462 5,053
OPERATING DATA:
Number of
employees(6).......... 65 140 257 353 568
Number of clients
served................ 31 52 64 98 134
Total offices(6)....... 2 3 8 10 15
Offices outside the
U.S.(6)............... 1 2 6 8 11

DECEMBER 31, 1997
----------------------
ACTUAL AS ADJUSTED(7)
------- --------------

BALANCE SHEET DATA:
Cash and cash equivalents............................... $ 3,664 $17,319
Working capital......................................... 4,101 21,726
Total assets............................................ 20,135 33,790
Total debt.............................................. 3,970 --
Shareholders' equity.................................... 7,943 25,568

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(1) Prior to July 1995, the Company's business was operated through four
separate companies located in the United States (U.S.), the United Kingdom
(U.K.), South Africa, and Australia (the "Predecessor Companies"). All of
the Predecessor Companies were under common management. Prior to July 1995,
three of the Predecessor Companies were controlled (based upon record
ownership) by trusts, the sole beneficiaries of which were the controlling
owners of the U.S. company and their children. As a result of a stock
exchange transaction (the "Exchange Transaction") on July 1, 1995, the
Predecessor Companies became wholly-owned subsidiaries of the Company. For
accounting purposes, the acquisition of the U.S. company has been treated
as a recapitalization of the U.S. company, and the U.S. company has been
treated as the acquiror of the other three entities. As a result, the net
assets of the U.S. company were carried forward at historical basis while
the net assets of the acquired Predecessor Companies were recorded at fair
market value using the purchase method of accounting. The financial data
for the years ended December 31, 1993 and 1994 and the six months ended
June 30, 1995 represent the combined results of the Predecessor Companies
prior to the Exchange Transaction; the financial data for the six months
ended December 31, 1995 and the years ended December 31, 1996 and 1997
represent the consolidated results of the Company following the Exchange
Transaction.
(2) The 1995 pro forma results of operations represent the combined results of
the Predecessor Companies for the six months ended June 30, 1995 and the
consolidated results of the Company for the six months ended December 31,
1995, which reflect the change in basis for the combined Predecessor
Companies and amortization expense assuming the Exchange Transaction had
occurred on January 1, 1995. The 1995 pro forma financial data have been
presented since all of the entities were under common management and
operated as one company for all of the years presented, and such data
therefore represent a meaningful comparison with all of the years
presented. As a result, the pro forma 1995 results include a full year of
amortization expense in 1995 rather than the six months of amoritization
expense actually incurred by the Company in 1995.
(3) In the Exchange Transaction, as described in note 1, the net assets of the
three acquired Predecessor Companies were recorded at fair market value. As
a result, the Company recorded $485,000 of goodwill which will be amortized
over 25 years beginning July 1, 1995 and $510,000 of other intangible
assets which were fully amortized between July 1, 1995 and June 30, 1997.
(4) Represents charges for stock awarded to employees and payments in lieu
thereof. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations." No additional awards will be made by the
Company pursuant to such arrangements, which have been terminated. Any
future awards are intended to be made in the form of stock options with
exercise prices at the fair market value of the underlying stock pursuant
to the Company's 1997 Stock Option Plan and any amendments or successors
thereto.
(5) Basic and diluted earnings per share for 1997 on a pro forma basis would
have been $0.30 and $0.29, respectively, to give effect to the assumed sale
of Common Stock (at an assumed initial public offering price of $12.00 per
share, less underwriting discounts and commissions and estimated offering
expenses) to repay indebtedness and the associated reduction in interest
expense as if such repayment had occurred on January 1, 1997. Basic
earnings per share in the years ended December 31, 1993 and 1994, the six
months ended June 30, 1995 and December 31, 1995, the year ended December
31, 1995 (pro forma), and the years ended December 31, 1996 and 1997,
respectively, was $0.02, $0.05, $0.09, $0.03, $0.10, $0.01, and $0.29.
(6) At period end.
(7) Adjusted to give effect to the sale of the shares of Common Stock offered
by the Company hereby (at an assumed initial public offering price of
$12.00 per share), the application of the estimated net proceeds therefrom,
and the repayment to the Company of outstanding shareholder notes of
$503,000, upon completion of this offering. See "Use of Proceeds" and
"Certain Relationships and Related Transactions."

RISK FACTORS

In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
shares of Common Stock offered hereby. This Prospectus contains certain
forward-looking statements that involve substantial risks and uncertainties.
When used in this Prospectus, the words "anticipate," "believe," "estimate,"
"expect," and similar expressions as they relate to the Company or its
management are intended to identify such forward-looking statements. From time
to time, the Company or its representatives have made or may make forward-
looking statements, orally or in writing. Such forward-looking statements may
be included in various filings of the Company with the Securities and Exchange
Commission (the "Commission"), or in press releases or oral statements made by
or with the approval of an authorized executive officer of the Company. The
Company's actual results, performance or achievements may differ materially
from those expressed or implied by these forward-looking statements as a
result of certain factors, including those set forth below and elsewhere in
this Prospectus.

Dependence on SAP and the ERP Software Market. A substantial portion of the
Company's revenue is derived from the provision of end-user support services
in connection with ERP software implementations by the Company's clients.
Revenue from providing end-user support services to clients implementing SAP
software represented 80%, 83%, and 87% of the Company's billed consulting
revenue during the years ended December 31, 1995, 1996, and 1997,
respectively. The Company's future success in its SAP-related services depends
largely on its continued relationships with and authorizations from SAP. These
relationships and authorizations are generally subject to termination by SAP
on short notice. In addition, SAP could further modify its software in order
to make the implementation cycles for its new releases shorter and less
complicated, thereby possibly reducing the need for customized end-user
support, or SAP could increase its provision of end-user support services for
its software applications. SAP could also cease referring the Company to its
customers as a provider of end-user support services. Any one or more of these
circumstances could have a material adverse effect on the Company. The Company
is therefore dependent on the continued growth of the ERP software market and,
in particular, the continued market acceptance of SAP software. Any
deterioration in such market or market acceptance would have a material
adverse effect on the Company. The Company believes that the "Year 2000"
problem has accelerated ERP implementations as many companies are upgrading
their technology in lieu of incurring the substantial costs associated with
modifying legacy computer code. There can be no assurance that the rate of ERP
implementations will continue at the same pace after January 1, 2000. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--Market."

Management of a Geographically-Dispersed Organization. The Company currently
operates offices in nine countries on six continents. The successful operation
of such geographically dispersed offices requires considerable management and
financial resources and results in significant ongoing expense. Additionally,
expansion into new geographic regions requires significant start-up costs
which may negatively impact the Company's results of operations during periods
of such expansion. International operations and the provision of services in
foreign markets are subject to risks involving currency exchange rate
fluctuations, trade barriers, exchange controls, national and regional labor
strikes, civil disturbances and war, and increases in duties, taxes, and
governmental royalties, as well as changes in laws and policies governing
operations of foreign-based companies. There can be no assurance that such
factors will not have a material adverse effect on the Company. The Company's
growth strategy includes continued expansion of its international operations
through the addition of new offices. There can be no assurance that the
Company will be successful in opening or managing such new offices. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--Business Strategy."

Fluctuating Quarterly Results; Project Risks. The Company's operating
results have fluctuated from period to period in the past and may fluctuate
significantly in future periods. These variations result from a number of
factors, such as the number and nature of client projects commenced or
completed during a period, the timing of new office openings, the expansion of
service offerings to include support solutions for new ERP software vendors,
the utilization rates of the Company's professional staff, and the number of
business days in a particular period. It is difficult to forecast the timing
of revenue because project cycles depend on factors such as

the size and scope of assignments and circumstances specific to particular
clients or industries. The Company could fail to complete a project under the
guaranteed "not-to-exceed" or fixed fee price set forth in certain of the
Company's contracts, exposing the Company to unrecoverable budget overruns,
which could materially adversely affect the Company. Additionally, client
engagements are generally terminable with little or no notice or penalty, and
the Company's failure to meet a client's expectations could damage its
relationship with that client and cause the client to terminate the Company's
engagement. A client's unanticipated decision to terminate or postpone a
project may result in higher than expected numbers of unassigned Company
professionals or severance costs, which could materially adversely affect the
Company's results of operations and could also result in damage to the
Company's reputation, thereby adversely affecting its ability to attract
business from new or existing clients. Typically, the Company's expenses
relating to a new office will exceed for a period of time the revenues
attributable to that office. In addition, the expansion of the Company's
service offerings to include support solutions for new ERP software vendors or
upgrades of existing software requires significant up front expenses.
Accordingly, the timing and frequency of office openings and service
expansions could adversely affect the Company's results of operations. The
Company's most significant expenses relate to salaries and benefits for its
professional staff. Since these expenses are generally fixed, the Company's
results of operations in a particular period may be materially adversely
affected if revenue falls below expectations. Staff utilization rates vary
from period to period due not only to changes in the Company's volume of
business, but also to the timing of employee vacations, hiring and training,
and project terminations or postponements. In the past, the Company has
experienced some seasonality in its business, with somewhat lower levels of
revenue and profitability in the first and fourth quarters of the year. This
trend has resulted from the timing of project start-ups and completions, as
well as from reduced staff utilization due to holidays and vacations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Need to Attract and Retain Professional Employees. The Company's continued
success and future growth will depend upon its ability to attract, develop and
retain a sufficient number of highly skilled, motivated professional
employees. Competition for personnel qualified to deliver most of the
Company's services is intense, and many of the companies with which the
Company competes for qualified professionals have substantially greater
financial and other resources than the Company. Competition for qualified
personnel can be expected to increase as competition in the Company's service
offerings increases. There can be no assurance that the Company will be able
to recruit, develop, and retain a sufficient number of highly skilled,
motivated professionals to compete successfully. In addition, competition for
qualified personnel may also lead to increased costs for such personnel which
the Company may not be able to offset by increases in billing rates. The loss
of a significant number of professional personnel is likely to have a material
adverse effect on the Company, particularly its ability to complete existing
projects or secure new projects. See "Business--Recruiting and Personnel
Development."

Substantial Competition. The market for the Company's services is highly
competitive and is subject to low barriers to entry and rapid change. The
Company faces competition for client assignments from a number of companies
having significantly greater financial, technical, and marketing resources and
greater name recognition than the Company. Principal competitors for the
Company's services include the consulting practices of the large international
accounting firms, the in-house service units of the ERP vendors, the
professional services groups of many large technology and management
consulting companies, and smaller niche service providers. Many of these
companies have substantially greater resources than the Company and also
provide implementation services needed by clients. There can be no assurance
that such competitors will not focus more on providing end-user support
services in the future. Clients may also elect to use their internal resources
to satisfy their needs for the services the Company provides. There can be no
assurance that the Company will compete successfully with existing or new
competitors or with potential clients' internal resources. The Company may
also face competition as a result of the increasing acceptance in the
workplace of computer-based training, an approach which the Company, through a
relationship with CBT Systems, Ltd. ("CBT Systems"), currently uses as one
basis for providing educational support to its clients' end-users. As
computer-based training becomes more accepted in the workplace, and the
related technology is further developed, this training approach may replace
some or all of the non-computer-based training support provided by the Company
to its clients. In addition, the growth of

computer-based training usage may encourage other competitors to enter the
market for the Company's services. One or more of these circumstances, or the
termination of the Company's relationship with CBT Systems, could have a
material adverse effect on the Company. See "Business--Competition."

Dependence on Key Personnel. The success of the Company is highly dependent
upon the efforts and abilities of Nicholas H. Marriner, its Chief Executive
Officer, Patrick J. Newton, its Chief Operating Officer, and Michael J.
Mackey, its Chief Financial Officer, as well as on its other key employees.
Each of the Company's executive officers is party to an employment agreement
with the Company containing customary noncompetition, nondisclosure, and
nonsolicitation covenants. There can be no assurance that these agreements
will prevent the loss of any of these individuals or Company business. The
loss of the services of any of these key executives could have a material
adverse effect on the Company. See "Management."

Management of Growth. The Company's rapid growth has placed significant
demands on the Company's management, administrative, operating and financial
resources, particularly given the geographically-dispersed nature of the
Company's operations. The Company's ability to manage future growth will
require the Company to continue to enhance its operating, financial, and
management information systems and to expand, develop, motivate, and manage
effectively its professional and administrative work force. If the Company is
unable to manage growth effectively, the quality of the Company's services,
its ability to retain key personnel, and its results of operations are likely
to be materially adversely affected. Should the Company acquire businesses in
the future, there can be no assurance that it will be successful in
integrating the acquired businesses into the Company's infrastructure or
retaining their key personnel. The Company's growth could be adversely
affected by client dissatisfaction, reductions in clients' spending
allocations for services the Company provides, increased competition, pricing
or labor cost pressures, and general economic trends. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business--Business Strategy."

Rapid Technological Change. The Company's future success will depend on its
ability to gain expertise in technological advances, such as the latest
releases from ERP software vendors, and to respond quickly to evolving
industry trends and client needs. The Company's efforts to gain technological
expertise and to develop new technologies require the Company to incur
significant expense. There can be no assurance that the Company will be
successful in adapting to these advances in technology or in addressing
changing client needs on a timely basis. In addition, there can be no
assurance that the services or technologies developed by others will not
significantly reduce demand for the Company's services or render the Company's
services obsolete. See "Business--Research and Development."

Limited Protection of Proprietary Expertise, Methodologies and Software. To
protect its proprietary rights, the Company relies only on a combination of
trade secret laws, employee nondisclosure policies, and third party
confidentiality agreements. There can be no assurance that the steps taken by
the Company to protect its proprietary rights will be adequate to prevent
misappropriation of such rights or that third parties will not independently
develop functionally equivalent or superior methodologies or software.
Moreover, there can be no assurance that third parties will not assert
infringement claims against the Company in the future that would result in
costly litigation or license arrangements regardless of the merits of such
claims. Additionally, because the Company's engagements are typically work-
for-hire based, the Company assigns ownership of, or grants a royalty-free
license to use, the materials the Company develops specifically for its
clients to those clients upon project completion. See "Business--Intellectual
Property and Other Proprietary Rights."

Effect of Anti-Takeover Provisions. The Company's Board of Directors has the
authority to issue preferred stock and to determine the price, rights,
conversion ratios, preferences, and privileges of that stock without further
vote or action by the holders of the Common Stock. The rights of the holders
of Common Stock will be subject to, and may be adversely affected by, the
rights, including economic rights, of the holders of any shares of preferred
stock issued in the future. Any such issuance may discourage third parties
from attempting to acquire control of the Company. Furthermore, the Company is
subject to the Business Combination Law of the Texas Business Corporation Act
("TBCA"), which prohibits the Company from engaging in a "business
combination" with an "interested shareholder" for a period of three years
after the date of the transaction in

which the person first becomes an "interested shareholder," unless the
business combination is approved in a prescribed manner. The application of
these statutes and certain other provisions of the Company's Restated Articles
of Incorporation and Restated Bylaws could have the effect of discouraging,
delaying or preventing a change of control of the Company not approved by the
Board of Directors, which could adversely affect the market price of the
Company's Common Stock. See "Description of Capital Stock."

Shares Eligible for Future Sale. Upon completion of this offering, the
Company will have outstanding 6,508,475 shares of Common Stock. The shares of
Common Stock sold in this offering (other than shares, if any, purchased by
affiliates of the Company) will be freely tradeable. Of the shares to be
outstanding upon completion of this offering, 4,108,475 shares are
"restricted," as that term is defined in the Securities Act of 1933, as
amended (the "Securities Act"). Of these restricted shares, 3,747,170 have
been held for more than one year and, as such, will be salable upon expiration
of the lock-up agreements described below, subject to certain volume and
manner of sale restrictions imposed by Rule 144 of the Securities Act. See
"Shares Eligible for Future Sale." Sales of a substantial number of shares of
Common Stock in the public market following this offering, or the perception
that such sales could occur, could adversely affect the market price for the
Company's Common Stock.

All directors, executive officers, and principal shareholders, and certain
other employees, of the Company who hold in the aggregate 3,911,258 shares of
Common Stock have agreed, subject to certain exceptions, not to sell or
otherwise dispose of any of their shares or options for a period of 180 days
after the date of this Prospectus without the prior written consent of William
Blair & Company, L.L.C. The Company has also agreed not to issue, sell, or
otherwise dispose of any of its shares or grant any options (other than
options granted or shares issued in connection with the Company's 1997 Stock
Option Plan or unregistered shares issued in connection with any acquisition)
during such 180 day period. William Blair & Company, L.L.C. may, however, in
its sole discretion and at any time without notice, release for public sale
all or any portion of the shares subject to such lock-up agreements. See
"Underwriting."

No Prior Market for Common Stock; Possible Volatility of Stock Price. Prior
to this offering, there was no public market for the Common Stock, and there
can be no assurance that an active public market for the Common Stock will
develop or be sustained after this offering. Accordingly, purchasers of the
Common Stock may experience difficulty selling or otherwise disposing of their
shares. The initial public offering price was determined by negotiations among
the Company and the Representatives of the Underwriters and may not be
indicative of market prices of the Common Stock after this offering. See
"Underwriting." The market price for the Common Stock following the offering
may be highly volatile. Prices for the Common Stock will be determined by the
marketplace and may be influenced by many factors, including the depth and
liquidity of the trading market, investor perception of the Company, and
general economic and market conditions and trends. In addition, factors such
as the Company's financial results, quarterly variations in the Company's
financial results, changes in earnings estimates by analysts, reported
earnings that vary from such estimates, press releases by the Company or
others, and developments affecting the Company, its competitors or its
industry generally may have a significant impact on the market price of the
Common Stock. Stock markets have, on occasion, experienced extreme price and
volume fluctuations which have often been unrelated to the operating
performance of the affected companies.

Dilution. Persons participating in this offering will incur immediate and
substantial dilution in the net tangible book value of their shares. To the
extent that currently outstanding options to purchase Common Stock are
exercised, there will be further dilution. See "Dilution."

Significant Unallocated Net Proceeds. A substantial portion of the
anticipated net proceeds of this offering has not been designated for specific
uses. Therefore, the Company will have broad discretion with respect to the
use of the net proceeds of this offering. See "Use of Proceeds."

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,700,000 shares of
Common Stock being offered hereby by the Company are estimated to be
approximately $17.1 million ($17.6 million if the Underwriters' over-allotment
option is exercised in full), assuming an initial public offering price of
$12.00 per share, after deducting the underwriting discount and estimated
offering expenses. The Company will use a portion of the net proceeds of the
offering to repay its approximately $4.0 million of debt presently
outstanding. The debt includes approximately $3.2 million outstanding under
the Company's $5.0 million revolving line of credit and a note for
approximately $762,000 relating to borrowings used for the purchase of
furniture and equipment. The line of credit bears interest at an annual rate
equal to the prime rate of interest plus 0.5% (or 9.0% as of the date of this
Prospectus), with interest payable monthly, and matures in November 1998. The
note bears interest at an annual rate of 9.1%, with interest and principal of
$24,000 payable monthly, and matures in November 2000. The Company will use
the remaining net proceeds (together with $503,000 in proceeds from the
repayment to the Company of outstanding shareholder notes) for working capital
to support the planned growth of its business and for other general corporate
purposes, which may include acquisitions of complementary businesses. From
time to time, the Company evaluates possible acquisitions, but it is not
currently considering any specific acquisition. The Company intends to invest
the net proceeds from this offering in short-term, interest-bearing,
investment-grade obligations pending application thereof in the manner
described above. The Company will not receive any proceeds from the sale of
shares of Common Stock by the Selling Shareholders.

DIVIDEND POLICY

Following this offering, the Company does not intend to pay cash dividends
as it intends to retain all earnings to support its planned growth. Any
payment of future dividends will depend upon the Company's results of
operations, financial condition, cash requirements, contractual restrictions
with respect to dividends, and other factors deemed relevant by the Board of
Directors of the Company.

CAPITALIZATION

The following table sets forth the short-term debt and total capitalization
of the Company as of December 31, 1997, on an actual basis and as adjusted to
reflect (i) the sale of the 1,700,000 shares of Common Stock offered hereby by
the Company (at an assumed initial public offering price of $12.00 per share)
and application of the net proceeds therefrom, after deducting the
underwriting discount and estimated offering expenses, and (ii) the proceeds
of the repayment of outstanding shareholder notes. This table should be read
in conjunction with the Company's Combined and Consolidated Financial
Statements and related Notes thereto and other financial information appearing
elsewhere in this Prospectus. See "Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."

DECEMBER 31, 1997
-------------------
ACTUAL AS ADJUSTED
------ -----------
(IN THOUSANDS)

Short-term debt:
Indebtedness for borrowed money.......................... $3,970 $ --
------ -------
Total short-term debt.................................. $3,970 $ --
====== =======
Long-term debt............................................. $ -- $ --
Shareholders' equity:
Preferred stock, $0.01 par value; 10,000,000 shares
authorized; no shares issued actual or as adjusted...... -- --
Common stock, $0.01 par value; 40,000,000 shares
authorized; 4,808,475 shares outstanding, actual;
6,508,475 shares outstanding, as adjusted(1)............ 48 65
Additional paid-in capital............................... 6,449 23,554
Retained earnings........................................ 2,099 2,099
Treasury stock, at cost; 20,716 shares................... (91) (91)
Notes receivable from shareholders....................... (503) --
Cumulative foreign currency translation adjustment....... (59) (59)
------ -------
Total shareholders' equity............................. 7,943 25,568
------ -------
Total capitalization................................. $7,943 $25,568
====== =======

- --------
(1) Excludes 446,069 shares of Common Stock reserved for issuance upon the
exercise of outstanding stock options at a weighted average exercise price
of $5.91 per share (none of which are currently exercisable), 399,000
shares of Common Stock reserved for issuance upon the exercise of stock
options which will be granted effective as of the date of this Prospectus
at the initial public offering price per share, and 414,931 shares of
Common Stock reserved for future grants under the 1997 Stock Option Plan.
See "Management--Executive Compensation" and "Management--Employee Benefit
Plans--1997 Stock Option Plan."

DILUTION

At December 31, 1997, the net tangible book value of the Company was
approximately $7.5 million, or $1.56 per share of Common Stock. Net tangible
book value per share represents the amount of the Company's total tangible
assets minus its total liabilities, divided by the number of outstanding
shares of Common Stock. After giving effect to (i) the sale by the Company of
the 1,700,000 shares of Common Stock offered hereby by the Company (assuming
an initial public offering price of $12.00 per share) and after deducting the
underwriting discount and estimated offering expenses, and (ii) the repayment
of outstanding shareholder notes, the net tangible book value of the Company
at December 31, 1997 would have been approximately $25.1 million, or $3.86 per
share. This represents an immediate increase in net tangible book value to
existing shareholders of $2.30 per share and an immediate dilution to
purchasers of Common Stock in the offering of $8.14 per share. The following
table illustrates the per share dilution:

Assumed initial public offering price........................... $12.00
Net tangible book value before this offering.................... 1.56
Increase attributable to this offering.......................... 2.30
----
Net tangible book value after this offering..................... 3.86
------
Dilution per share to new shareholders.......................... $ 8.14
======

The following table summarizes, as of December 31, 1997, the number of
shares of Common Stock purchased from the Company, the total consideration
paid and the average price paid per share by current shareholders and by the
purchasers of Common Stock in this offering, assuming an initial public
offering price of $12.00 per share, before deducting the underwriting discount
and estimated offering expenses:

TOTAL
SHARES PURCHASED CONSIDERATION AVERAGE
----------------- ------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ---------

Existing shareholders........ 4,808,475 73.9% $ 6,406,000 23.9% $1.33
New shareholders............. 1,700,000 26.1% 20,400,000 76.1% 12.00
--------- ----- ----------- -----
Total...................... 6,508,475 100.0% $26,806,000 100.0%
========= ===== =========== =====

The foregoing tables assume no exercise of options outstanding as of
December 31, 1997 to purchase an additional 446,069 shares of Common Stock at
a weighted average exercise price of $5.91 per share (none of which are
currently exercisable). To the extent these options are exercised, there will
be further dilution to new shareholders in the net tangible book value of
their shares. See "Management--Employee Benefit Plans--1997 Stock Option
Plan." In addition, the second table does not reflect the sale of 700,000
shares by Selling Shareholders in this offering. Such sales will reduce the
number of shares held by existing shareholders as of December 31, 1997 to
4,108,475, or approximately 63.1% of the total shares of Common Stock to be
outstanding after this offering, and will increase the number of shares to be
purchased by the new shareholders to 2,400,000, or 36.9% of the total shares
of Common Stock to be outstanding after this offering. See "Principal and
Selling Shareholders."

SELECTED COMBINED AND CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)

YEAR ENDED YEAR ENDED
DECEMBER 31, SIX MONTHS ENDED DECEMBER 31,
-------------- --------------------------- -----------------------------
JUNE 30, DECEMBER 31,
1993 1994 1995 1995 1995 1996 1997
------ ------ ----------- --------------- ------------- ------- -------
COMBINED(1) COMBINED(1) CONSOLIDATED(1) PRO FORMA (2) CONSOLIDATED(1)

INCOME STATEMENT DATA:
Revenue................ $4,179 $7,501 $6,299 $8,319 $14,618 $26,202 $44,204
Cost of revenue........ 2,484 4,028 3,412 4,249 7,661 14,190 24,063
------ ------ ------ ------ ------- ------- -------
Gross profit........... 1,695 3,473 2,887 4,070 6,957 12,012 20,141
Selling and marketing
expense............... 84 450 407 665 1,072 1,953 3,726
Development expense.... -- -- 296 411 707 1,250 1,223
General and
administrative
expense............... 1,482 2,629 1,657 2,357 4,014 6,597 12,436
Amortization
expense(3)............ -- -- -- 230 459 274 54
Employee stock-related
charge(4)............. -- -- -- -- -- 1,858 263
------ ------ ------ ------ ------- ------- -------
Operating income....... 129 394 527 407 705 80 2,439
Other (expense) income,
net................... (22) (77) (23) (61) (84) 95 (135)
------ ------ ------ ------ ------- ------- -------
Income before taxes.... 107 317 504 346 621 175 2,304
Provision for income
taxes................. 44 119 189 228 250 141 896
------ ------ ------ ------ ------- ------- -------
Net income............. $ 63 $ 198 $ 315 $ 118 $ 371 $ 34 $ 1,408
====== ====== ====== ====== ======= ======= =======
Basic earnings per
share(5).............. $ 0.02 $ 0.05 $ 0.09 $ 0.03 $ 0.10 $ 0.01 $ 0.29
Weighted average shares
outstanding........... 3,623 3,623 3,623 3,623 3,623 4,217 4,808
Diluted earnings per
share(5).............. $ 0.02 $ 0.05 $ 0.08 $ 0.03 $ 0.10 $ 0.01 $ 0.28
Weighted average shares
outstanding........... 3,868 3,868 3,868 3,868 3,868 4,462 5,053
BALANCE SHEET DATA:
Cash and cash
equivalents........... $ 366 $ 104 $ 585 $ 592 $ 2,199 $ 3,664
Working capital........ 201 313 315 761 1,629 4,101
Total assets........... 1,667 1,784 3,211 5,440 8,549 20,135
Total debt............. 305 205 445 562 731 3,970
Shareholders' equity... 76 258 573 1,891 3,071 7,943

- -------
(1) Prior to July 1995, the Company's business was operated through four
separate Predecessor Companies. All of the Predecessor Companies were under
common management. Prior to July 1995, three of the Predecessor Companies
were controlled (based upon record ownership) by trusts, the sole
beneficiaries of which were the controlling owners of the U.S. company and
their children. As a result of the Exchange Transaction on July 1, 1995,
the Predecessor Companies became wholly-owned subsidiaries of the Company.
For accounting purposes, the acquisition of the U.S. company has been
treated as a recapitalization, and the U.S. company has been treated as the
acquiror of the other three entities. As a result, the net assets of the
U.S. company were carried forward at historical basis while the net assets
of the acquired Predecessor Companies were recorded at fair market value
using the purchase method of accounting. The financial data for the years
ended December 31, 1993 and 1994 and the six months ended June 30, 1995
represent the combined results of the Predecessor Companies prior to the
Exchange Transaction; the financial data for the six months ended December
31, 1995 and the years ended December 31, 1996 and 1997 represent the
consolidated results of the Company following the Exchange Transaction.
(2) The 1995 pro forma results of operations represent the combined results of
the Predecessor Companies for the six months ended June 30, 1995 and the
consolidated results of the Company for the six months ended December 31,
1995, which reflect the change in basis for the combined Predecessor
Companies and amortization expense assuming the Exchange Transaction had
occurred on January 1, 1995. As a result, the pro forma 1995 results
include a full year of amortization expense in 1995 rather than the six
months of amortization expense actually incurred by the Company in 1995.
See note 3. The 1995 pro forma financial data have been presented since all
of the entities were under common management and operated as one company
for all of the years presented, and such data therefore represent a
meaningful comparison with all of the years presented.
(3) In the Exchange Transaction, as described in note 1, the net assets of the
three acquired Predecessor Companies were recorded at fair market value. As
a result, the Company recorded $485,000 of goodwill which will be amortized
over 25 years beginning July 1, 1995 and $510,000 of other intangible
assets which were fully amortized between July 1, 1995 and June 30, 1997.
(4) Represents charges for stock awarded to employees and payments in lieu
thereof. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations." No additional awards will be made by the
Company pursuant to such arrangements, which have been terminated. Any
future awards are intended to be made in the form of stock options with
exercise prices at the fair market value of the underlying stock pursuant
to the Company's 1997 Stock Option Plan and any amendments or successors
thereto.
(5) Basic and diluted earnings per share for 1997 on a pro forma basis would
have been $0.30 and $0.29, respectively, to give effect to the assumed sale
of Common Stock (at an assumed initial public offering price of $12.00 per
share, less underwriting discounts and commissions and estimated offering
expenses) to repay indebtedness and the associated reduction in interest
expense as if such repayment had occurred on January 1, 1997.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

OVERVIEW

The Company is a leading international provider of end-user support
solutions to companies which are implementing ERP software systems. The
Company addresses the growing needs of clients implementing ERP systems by
providing their employees with the necessary training and tools to utilize
these systems effectively. Since 1988, the Company has provided services to
over 275 clients in their implementations of ERP software applications.

The Company's revenue has increased from $4.2 million in 1993 to $44.2
million in 1997, representing a compound annual growth rate of 80.3% for the
period and a 68.7% increase in 1997. This growth is attributable to various
factors, including expansion of the Company's international presence through
new office openings, increases in the number of projects completed by the
Company for existing and new clients, expansion of the array of end-user
support services provided by the Company to its clients, and broadening of the
number of ERP vendors whose software implementations can be serviced by the
Company (including BAAN, J.D. Edwards, and Oracle), as well as rapid growth in
the ERP market, which has accelerated as a result of the "Year 2000" problem.
Since 1993, the Company has increased its geographic presence from one office
in the United States and one office in the United Kingdom to 15 offices
located in nine countries on six continents. The Company is currently
organized into three divisions: the Americas Division which includes its
North, South, and Central America operations; the EMEA Division which includes
its Europe, Middle East, and Africa operations; and the Asia Pacific Division
which includes its Australia, New Zealand, and Asia operations. In 1997, the
Americas, EMEA, and Asia Pacific Divisions represented 64.8%, 25.7%, and 9.5%
of revenue, respectively. The number of clients served by the Company has
increased substantially from 31 in 1993 to 134 in 1997. The Company's client
base is diversified, with no single client representing more than 6.0% of
revenues in 1997. To support its rapid growth, the Company has expanded its
staff from 65 as of December 31, 1993 to 568 as of December 31, 1997.

The Company derives a substantial portion of its revenue from fees for
professional services related to supporting end-users in the implementation of
ERP systems. Revenue from clients implementing SAP software represented 87% of
billed consulting revenue for 1997. The majority of the Company's projects
involve from three to 10 consultants, are generally completed in three months
to two years, and result in revenue from $200,000 to $1.5 million. The Company
often performs multiple projects for a client in support of a phased
implementation of the ERP software. The Company's services are generally
provided pursuant to written contracts which can be terminated by the client
with limited advance notice. In the event of such a termination by the client,
however, the client remains obligated to pay for the services rendered to the
client to the termination date. The Company generally bills its clients
monthly for the services provided by its consultants at agreed upon rates.
Where permitted, clients also are billed for reimbursement of expenses
incurred by the Company on the client's behalf. The Company provides services
to its clients primarily on a time and materials basis, although many of its
contracts contain "not-to-exceed" provisions and Company performance
obligations. The remainder of the Company's contracts are on a fixed-price
basis, representing approximately 18% of the Company's total revenue for 1997.
Revenue from time and materials engagements as well as revenue from fixed
price contracts is recognized as services are performed and the realization of
the revenue is assured. The Company also receives a small percentage of total
revenue from license fees related to computer-based training products and
other software products that are developed independently or co-developed by
the Company. The Company believes that such license fees, which are not
currently material, may increase in the future as the ERP middle market grows.

Cost of revenue includes compensation and benefits paid to the Company's
professional staff and all direct expenses of performing project work. The
Company's financial performance is highly dependent upon professional staff
billing rates, costs, and utilization rates. The Company manages these
parameters by establishing and monitoring project budgets and timetables and
tracking staffing requirements for projects in progress and anticipated
projects. Project terminations, completions, and scheduling delays may result
in periods

when consultants are not fully utilized. An unanticipated termination of a
significant project could cause the Company to experience lower staff
utilization resulting in a higher than expected number of unassigned
consultants. In addition, the establishment of new services or new offices,
employee vacations and training, and increases in the hiring of consultants
may result in periods of lower staff utilization and downward pressure on
gross margins. The Company's professional staff are generally employed on a
full-time basis, and therefore the Company incurs substantially all of its
staff-related costs even during periods of low utilization. In the past, the
Company has experienced some seasonality in its business, with somewhat lower
levels of revenue and profitability in the first and fourth quarters of the
year. This trend has resulted from the timing of project start-ups and
completions, as well as reduced utilization due to holidays and vacations.

Selling and marketing expense relates principally to compensation and
benefits paid to the Company's dedicated sales and marketing staff and all
direct costs associated with the sales process, including the costs of travel,
trade shows, marketing materials, and public relations. Development expense
consists principally of compensation costs for the Company's in-house research
and development and information technology and consulting services support
teams. These personnel focus on development of methodologies and applications
of new technologies in the end-user environment, including development of
computer-based training courseware and performance support software and
content. Development expense also includes personnel who provide technical
support for the Company's professional staff in the field. General and
administrative expense consists principally of salaries and benefits for
executive management and for accounting, administrative, human resources, and
recruiting and training staff, as well as compensation for the senior
management in each of the Company's divisions.

Prior to July 1995, the Company's business was operated through the
Predecessor Companies. All of the Predecessor Companies were under common
management. Prior to July 1995, three of the Predecessor Companies were
controlled (based upon record ownership) by trusts, the sole beneficiaries of
which were the controlling owners of the U.S. company and their children. As a
result of the Exchange Transaction on July 1, 1995, the Predecessor Companies
became wholly-owned subsidiaries of the Company. For accounting purposes, the
acquisition of the U.S. company has been treated as a recapitalization, and
the U.S. company has been treated as the acquiror of the other three entities.
As a result, the net assets of the U.S. company were carried forward at
historical basis while the net assets of the acquired Predecessor Companies
were recorded at fair market value using the purchase method of accounting.

In the Exchange Transaction, the net assets of the three acquired
Predecessor Companies were recorded at fair market value. As a result, the
Company recorded $485,000 of goodwill which will be amortized over 25 years
beginning July 1, 1995 and $510,000 of other intangible assets which were
fully amortized between July 1, 1995 and June 30, 1997.

The 1995 pro forma results of operations represent the combined results of
the Predecessor Companies for the six months ended June 30, 1995 and the
consolidated results of the Company for the six months ended December 31,
1995, which reflect the change in basis for the combined Predecessor Companies
and amortization expense assuming the Exchange Transaction had occurred on
January 1, 1995. As a result, the pro forma 1995 results include a full year
of amortization expense in 1995 rather than the six months of amortization
expense actually incurred by the Company in 1995. The 1995 pro forma results
of operations have been presented since all of the entities were under common
management and operated as one company for all of the years presented, and
such results therefore represent a meaningful comparison with all of the years
presented.

The Company incurred charges of $1.9 million and $263,000 in 1996 and 1997,
respectively, related to stock awarded to employees and payments in lieu
thereof. These charges, which had the effect of reducing net income by $1.2
million in 1996 and $163,000 in 1997, arose out of arrangements with employees
of the Company providing for the award of stock to such employees without cash
consideration. No additional awards will be made by the Company pursuant to
such arrangements, which have been terminated. Any future awards are intended
to be made in the form of stock options with exercise prices at the fair
market value of the underlying stock pursuant to the Company's 1997 Stock
Option Plan and any amendments or successors thereto.

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated certain items from
the Company's statements of income expressed as a percentage of revenue and
the percentage change in such items for the years ended December 31, 1995,
1996 and 1997 compared to the prior period. The trends illustrated in the
following table are not necessarily indicative of future results.

PERCENTAGE OF REVENUE
--------------------------
YEAR ENDED DECEMBER 31, PERCENTAGE INCREASE (DECREASE)
-------------------------- -------------------------------------
1995(1) 1996 1997 1995 TO 1996 1996 TO 1997
--------- ------- ------- --------------- ----------------

Revenue................. 100.0% 100.0% 100.0% 79.2% 68.7%
Cost of revenue......... 52.4 54.2 54.4 85.2 69.6
------- ------- -------
Gross profit............ 47.6 45.8 45.6 72.7 67.7
Selling and marketing
expense................ 7.3 7.5 8.4 82.2 90.8
Development expense..... 4.8 4.8 2.7 76.8 (2.2)
General and
administrative
expense................ 27.5 25.1 28.1 64.3 88.5
Amortization expense.... 3.2 1.0 0.1 (40.3) (80.3)
Employee stock-related
charge................. -- 7.1 0.6 nmf nmf
------- ------- -------
Operating income(2)..... 4.8 0.3 5.5 (88.7) 2,948.8
Other (expense) income,
net.................... (0.6) 0.4 (0.3) 213.1 (242.1)
------- ------- -------
Income before taxes..... 4.2 0.7 5.2 (71.8) 1,216.6
Provision for income
taxes.................. 1.7 0.5 2.0 (43.6) 535.5
------- ------- -------
Net income(2)........... 2.5% 0.2% 3.2% (90.8)% 4,041.2%
======= ======= =======

- --------
(1) Represents, on a pro forma basis, combined results of the Predecessor
Companies prior to July 1, 1995 and consolidated results of the Company
commencing July 1, 1995, and assumes the Exchange Transaction had occurred
on January 1, 1995.
(2) Exclusive of employee stock-related charges and amortization expense
related to other intangible assets, operating income and net income would
have increased 91.5% and 77.7%, respectively, in 1996 compared to 1995,
and 24.8% and 11.5%, respectively, in 1997 compared to 1996.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

Revenue. Revenue increased by $18.0 million, or 68.7%, from $26.2 million in
1996 to $44.2 million in 1997. The increase was substantially attributable to
an increase in volume of services and is to a lesser extent attributable to
rate increases. The Company experienced growth in each of its three divisions.
Revenues from the Americas Division increased by 84.2% from $15.6 million to
$28.7 million; revenue from the EMEA Division increased by 27.3% from $8.9
million to $11.3 million; and revenue from the Asia Pacific Division increased
by 142.6% from $1.7 million to $4.2 million. The Company ended the 1997 period
with 568 total employees, up from 353 employees at the beginning of the
period. In addition, the Company opened five new offices during the period,
increasing the total number of offices to 15.

Gross profit. Gross profit increased by $8.1 million, or 67.7%, from $12.0
million in 1996 to $20.1 million in 1997, and decreased slightly from 45.8% of
revenue in 1996 to 45.6% of revenue in 1997.

Selling and marketing expense. Selling and marketing expense increased by
$1.8 million, or 90.8%, from $2.0 million in 1996 to $3.7 million in 1997, and
increased as a percentage of revenue from 7.5% in 1996 to 8.4% in 1997. The
increases were primarily attributable to a substantial increase in the
Company's sales and marketing staff from 13 employees at December 31, 1996 to
23 at December 31, 1997.

Development expense. Development expense decreased by $27,000, or 2.2%, from
$1.3 million in 1996 to $1.2 million in 1997, and decreased as a percentage of
revenue from 4.8% in 1996 to 2.7% in 1997. The decreases were primarily
attributable to the reduction of certain in-house software development
expenses in 1997

as a result of the Company's relationship with CBT Systems. This relationship
enables the Company to outsource to CBT Systems the primary responsibility for
developing SAP-related computer based training software. Payments received for
the sale of this software, net of any royalty due CBT Systems, are recorded as
product revenue. The Company expects that development expense will increase
both in dollars spent and as a percent of revenue in the future as the Company
continues to expand its service offerings. See "Business--Business Strategy."

General and administrative expense. General and administrative expense
increased by $5.8 million, or 88.5%, from $6.6 million in 1996 to $12.4
million in 1997, and increased as a percentage of revenue from 25.1% in 1996
to 28.1% in 1997. The increases were primarily attributable to substantial
expenditures in building the administrative infrastructure of the Company to
support future growth. Of these expenditures, approximately 60% related to
increases in the Company's management and administrative staff (including the
hiring of a chief financial officer, corporate controller, and executive vice
president for human resources and the appointment of an executive vice
president for research and development and five members of senior divisional
management) and the balance related to information technology infrastructure
investments and increased occupancy costs related to the expansion of existing
office space and the establishment of new offices.

Amortization expense. Amortization expense decreased by $220,000, or 80.3%,
from $274,000 in 1996 to $54,000 in 1997, and decreased as a percentage of
revenue from 1.0% in 1996 to 0.1% in 1997. The decrease reflected the
completion by June 30, 1997 of the amortization of other intangible assets
created as a result of the Exchange Transaction on July 1, 1995.

Employee stock-related charge. The Company incurred charges of $1.9 million
and $263,000 in 1996 and 1997, respectively, related to stock awarded to
employees and payments in lieu thereof. These charges had the effect of
reducing net income by $1.2 million in 1996 and $163,000 in 1997.

Operating income. Operating income increased by $2.4 million, from $80,000
in 1996 to $2.4 million in 1997. Exclusive of the non-recurring charges for
other intangible asset amortization and for compensation charges related to
stock awarded to employees and payments in lieu thereof, operating income
increased by $544,000, or 24.8%, from $2.2 million in 1996 to $2.7 million in
1997 and decreased as a percentage of revenue from 8.4% in 1996 to 6.2% in
1997.

Other income (expense), net. Other income (expense) decreased from income of
$95,000 in 1996 to expense of $135,000 in 1997. This change reflects increased
borrowings to support the Company's growth in 1997.

Provision for income taxes. The Company's effective tax rate decreased from
80.6% in 1996 to 38.9% in 1997, primarily due to the higher level of non-
deductible amortization expense in 1996 than in 1997. Exclusive of the non-
recurring charges for other intangible asset amortization and for compensation
charges related to stock awarded to employees and payments in lieu thereof,
the effective tax rates would have been 37.0% in 1996, and 38.3% in 1997.

Net income. Net income was $1.4 million in 1997 compared to $34,000 in 1996.
Exclusive of the non-recurring charges for other intangible asset amortization
and for compensation charges related to stock awarded to employees and
payments in lieu thereof, net income would have been $1.6 million in 1997 and
$1.4 million in 1996, or $0.32 per share in both 1996 and 1997 on a diluted
basis.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO PRO FORMA DECEMBER 31, 1995

Revenue. Revenue increased by $11.6 million, or 79.2%, from $14.6 million in
1995 to $26.2 million in 1996. This increase was substantially attributable to
an increase in volume of services provided and clients serviced. The Company
experienced growth in each of its three divisions. Revenue from the Americas
Division increased by 74.4% from $8.9 million to $15.6 million; revenue from
the EMEA Division increased by 64.9% from $5.4 million to $8.9 million; and
revenue from the Asia Pacific Division increased by 494.8% from $291,000 to
$1.7 million. The Company ended 1996 with 353 total employees, up from 257
employees at the beginning of 1996. In addition, the Company opened two new
offices during 1996, increasing the total number of offices to 10.

Gross profit. Gross profit increased by $5.1 million, or 72.7%, from $7.0
million in 1995 to $12.0 million in 1996 and decreased as a percentage of
revenue from 47.6% in 1995 to 45.8% in 1996. The decrease in gross margin
related to increases in compensation to the Company's professional staff,
partially offset by higher billing rates on new business.

Selling and marketing expense. Selling and marketing expense increased by
$881,000, or 82.2%, from $1.1 million in 1995 to $2.0 million for 1996 and
increased as a percentage of revenue from 7.3% in 1995 to 7.5% in 1996. The
growth in these expenses was primarily attributable to an increase in the
Company's sales and marketing staff.

Development expense. Development expense increased by $543,000, or 76.8%,
from $707,000 for 1995 to $1.3 million for 1996 and remained constant as a
percentage of revenue at 4.8%. The increase in these expenses was related
principally to increases in the Company's development staff and related
expenses.

General and administrative expense. General and administrative expense
increased by $2.6 million, or 64.3%, from $4.0 million in 1995 to $6.6 million
in 1996, and decreased as a percentage of revenue from 27.5% in 1995 to 25.1%
in 1996. The growth in these expenses was primarily attributable to increased
administrative staff, including additions to human resources, recruiting, and
training personnel. The decreases in these expenditures as a percentage of
revenue reflected spreading these costs over a larger base of revenue.

Amortization expense. Amortization expense decreased by $185,000, or 40.3%,
from $459,000 in 1995 to $274,000 in 1996, and decreased as a percentage of
revenue from 3.1% in 1995 to 1.0% in 1996. The decrease in amortization
expense for 1996 was the result of the completion of amortization of certain
of the other intangible assets created as a result of the Exchange
Transaction.

Employee stock-related charge. In 1996, the Company incurred a charge of
$1.9 million related to stock awarded to employees and payments in lieu
thereof.

Operating income. Operating income decreased by $625,000, or 88.7%, from
$705,000 in 1995 to $80,000 in 1996. Exclusive of the non-recurring charges
for other intangible asset amortization and for compensation charges related
to stock awarded to employees and payments in lieu thereof, operating income
increased by $1.1 million, or 91.5%, from $1.1 million in 1995 to $2.2 million
in 1996, and increased as a percentage of revenue from 7.8% in 1995 to 8.4% in
1996.

Other income (expense), net. Other income (expense) increased from expense
of $84,000 for 1995 to income of $95,000 for 1996, as a result of
miscellaneous non-operational charges such as interest income.

Provision for income taxes. The Company's effective tax rate increased from
40.3% in 1995 to 80.6% in 1996, principally due to the effect of non-
deductible amortization expense. Exclusive of the non-recurring charges for
other intangible asset amortization and for compensation charges related to
stock awarded to employees and payments in lieu thereof, the effective tax
rate would have been 39.3% in 1995 and 37.0% in 1996.

Net income. Net income was $34,000 in 1996 compared to $371,000 in 1995.
Exclusive of the non-recurring charges for other intangible asset amortization
and for compensation charges related to stock awarded to employees and
payments in lieu thereof, net income would have been $1.4 million in 1996 and
$644,000 in 1995, or $0.32 per share in 1996 and $0.17 per share in 1995 on a
diluted basis.

QUARTERLY OPERATING RESULTS

The following tables set forth unaudited income statement data for each of
the eight quarters in the period beginning January 1, 1996 and ending December
31, 1997, as well as the percentage of the Company's total revenue represented
by each item. In management's opinion, this unaudited information has been
prepared on a basis consistent with the Company's audited annual financial
statements and includes all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the information for the
quarters presented, when read in conjunction with the Financial Statements and
related Notes thereto included elsewhere in this Prospectus. The operating
results for any quarter are not necessarily indicative of results for any
future period. See "Risk Factors--Fluctuating Quarterly Results; Project
Risks."

THREE MONTH PERIOD ENDED
-----------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1996 1996 1996 1996 1997 1997 1997 1997
--------- -------- --------- -------- --------- -------- --------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

INCOME STATEMENT DATA:
Revenue................ $5,677 $6,363 $6,999 $7,163 $8,084 $9,897 $12,075 $14,148
Cost of revenue........ 3,218 3,335 3,666 3,971 4,553 5,609 6,540 7,361
------ ------ ------ ------ ------ ------ ------- -------
Gross profit........... 2,459 3,028 3,333 3,192 3,531 4,288 5,535 6,787
Selling and marketing
expense............... 234 501 593 625 724 898 956 1,148
Development expense.... 182 353 391 324 245 250 341 387
General and
administrative
expense............... 1,331 1,514 1,776 1,976 2,354 2,558 3,450 4,074
Amortization expense... 114 115 22 23 22 22 5 5
Employee stock-related
charge................ -- -- 898 960 -- -- -- 263
------ ------ ------ ------ ------ ------ ------- -------
Operating income
(loss)................ 598 545 (347) (716) 186 560 783 910
Other income (expense),
net................... (24) 37 51 31 (2) (33) (28) (72)
------ ------ ------ ------ ------ ------ ------- -------
Income (loss) before
taxes................. 574 582 (296) (685) 184 527 755 838
Provision (benefit) for
income taxes.......... 250 257 (109) (257) 78 209 288 321
------ ------ ------ ------ ------ ------ ------- -------
Net (loss) income(1)... $ 324 $ 325 $ (187) $ (428) $ 106 $ 318 $ 467 $ 517
====== ====== ====== ====== ====== ====== ======= =======
Basic earnings (loss)
per share............. $ 0.08 $ 0.08 $(0.04) $(0.09) $ 0.02 $ 0.07 $ 0.10 $ 0.11
Weighted average shares
outstanding........... 3,859 3,943 4,282 4,787 4,808 4,808 4,808 4,808
Diluted earnings (loss)
per share............. $ 0.08 $ 0.08 $(0.04) $(0.09) $ 0.02 $ 0.06 $ 0.09 $ 0.10
Weighted average shares
outstanding........... 4,103 4,188 4,527 5,032 5,053 5,053 5,053 5,053

AS A PERCENTAGE OF REVENUE
-----------------------------------------------------------------------------

Revenue................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue........ 56.7 52.4 52.4 55.4 56.3 56.7 54.2 52.0
------ ------ ------ ------ ------ ------ ------- -------
Gross profit........... 43.3 47.6 47.6 44.6 43.7 43.3 45.8 48.0
Selling and marketing
expense............... 4.1 7.9 8.5 8.8 9.0 9.1 7.9 8.1
Development expense.... 3.2 5.5 5.6 4.5 3.0 2.5 2.8 2.8
General and
administrative
expense............... 23.5 23.8 25.4 27.6 29.1 25.9 28.6 28.8
Amortization expense... 2.0 1.8 0.3 0.3 0.3 0.2 0.0 0.0
Employee stock-related
charge................ -- -- 12.8 13.4 0.0 0.0 0.0 1.9
------ ------ ------ ------ ------ ------ ------- -------
Operating income
(loss)................ 10.5 8.6 (5.0) (10.0) 2.3 5.6 6.5 6.4
Other income (expense),
net................... (0.4) 0.6 0.7 0.5 0.0 (0.3) (0.2) (0.5)
------ ------ ------ ------ ------ ------ ------- -------
Income (loss) before
taxes................. 10.1 9.2 (4.3) (9.5) 2.3 5.3 6.3 5.9
Provision (benefit) for
income taxes.......... 4.4 4.1 (1.6) (3.5) 1.0 2.1 2.4 2.3
------ ------ ------ ------ ------ ------ ------- -------
Net income (loss)...... 5.7% 5.1% (2.7)% (6.0)% 1.3% 3.2% 3.9% 3.6%
====== ====== ====== ====== ====== ====== ======= =======

- --------
(1) Exclusive of the amortization expense related to other intangible assets
and employee stock-related charges, net income for the eight quarters
ended December 31, 1997 would have been $433,000, $435,000, $387,000,
$186,000, $123,000, $336,000, $467,000 and $680,000, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company has financed its operations and growth with
cash flow from operations, supplemented by the issuance of Common Stock and by
short-term borrowings under its revolving bank line of credit and from
shareholders.

The Company's cash and cash equivalents were $592,000 as of December 31,
1995, $2.2 million as of December 31, 1996 and $3.7 million as of December 31,
1997. The Company's working capital was $761,000 as of December 31, 1995, $1.6
million as of December 31, 1996 and $4.1 million as of December 31, 1997.

The Company's operating activities used cash of $2.4 million in 1997,
compared with providing cash of $1.9 million in 1996. The use of cash from
operations in 1997 primarily resulted from an increase in receivables. The
increase is primarily attributable to revenue growth in addition to a modest
increase in the collection period. The proceeds from the Company's revolving
line of credit were used to fund the working capital needs of the Company. The
Company's operating activities provided cash of $1.9 million in 1996 compared
to $479,000 in 1995. The increase in cash provided by operations in 1996
resulted from higher net income and an increase in the Company's payables.

The Company's investing activities used cash of $2.0 million in 1997
compared to $709,000 in 1996 and $264,000 in 1995. These increases in the use
of cash from investing activities resulted from increased purchases of
computer and office equipment and leasehold improvements related to expansion
of the Company's business and the support of new office openings.

The Company's financing activities provided cash of $5.9 million for 1997
and $372,000 for 1996. The increase in cash from financing activities in 1997
resulted from private placements of shares of common stock in February and
December 1997 and borrowings from the revolving line of credit. The Company's
financing activities generated cash of $372,000 in 1996 and $350,000 in 1995.
The cash generated from financing activities resulted from funds borrowed from
shareholders, under the revolving line of credit and the issuance of stock.

The Company has a $5.0 million revolving line of credit with a commercial
bank, which bears interest at the prime rate of interest plus 0.5% (9.0% as of
December 31, 1997) and is secured by the Company's accounts receivable
generated from its North American operations. The Company's credit agreement
contains customary financial and other covenants with which the Company is
currently in compliance. The Company utilizes this line of credit, which
matures in November 1998, to finance a portion of its working capital needs.
There was a $3.2 million outstanding balance on December 31, 1997.
Additionally in 1997, the Company borrowed approximately $762,000 to be used
for the purchase of furniture and equipment. This borrowing is evidenced by a
note which bears interest at an annual rate of 9.1%, with interest payable
monthly. It is anticipated that a portion of the net proceeds of this offering
will be used to repay the balance on the debt outstanding as of the date of
the completion of this offering.

During 1998, the Company expects to make approximately $2.0 million in
capital expenditures primarily for office furniture, computer and office
equipment, and leasehold improvements to support the anticipated growth in its
professional and administrative staff. Capital expenditures in 1997 were $2.0
million.

The Company believes the net proceeds from this offering, together with its
current cash balances, cash provided by future operations, and its revolving
line of credit, will be sufficient to meet the Company's working capital and
cash needs for at least the next 12 months.

The Company capitalizes software development costs beginning when product
technological feasibility is established and concluding when the product is
ready for general release. At such time, software development costs are
amortized on the straight-line basis over a maximum of three years or the
expected life of the product, whichever is less. The Company capitalized
approximately $141,000 of software development costs relating to computer-
based training software development and its commencement of the development of
packaged consulting applications during 1997, and did not recognize any
associated amortization expense during the period. Research costs related to
software development are expensed as incurred.

Because the Company has been and is currently able to match the local
currency component of client engagements to the amount of operating costs
transacted in local currency, the Company has not needed to and does not
currently hedge against currency fluctuations.

EFFECTS OF INFLATION

Inflation has not had a significant effect on the Company's business during
the past three years. The Company cannot predict what effect, if any,
inflation may have on its future results of operations.

OTHER MATTERS

The Company is in the process of implementing new financial and reporting
computer systems. The first phase of implementation was completed in the first
quarter of 1997 for the Company's Americas Division. The remaining divisions
of the Company are scheduled for implementation over the next year. The new
system will be year 2000 compliant. Additionally, the Company is in the
process of identifying any current suppliers who are not prepared to offer
assurance that their systems will be year 2000 compliant. The cost of
achieving year 2000 compliance is not expected to have a materially adverse
effect on the consolidated financial position or results of operations of the
Company.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS
No. 130"), SFAS No. 130 establishes standards for reporting and presentation
of comprehensive income and its components. Comprehensive income is defined as
the change in equity of a business enterprise during a period from
transactions and other events and circumstances from nonowner sources and
includes all changes in equity during a period except those resulting from
investments by owners and distributions to owners. SFAS No. 130 is effective
for both interim and annual periods beginning after December 15, 1997.
Adoption of this statement will not have a material impact on the consolidated
financial statements of the Company.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information ("SFAS No. 131"). SFAS No. 131 establishes
standards for reporting information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders. SFAS No. 131 is effective for fiscal years beginning after
December 15, 1997. Adoption is not recognized for interim periods in the
initial year of application. Adoption of this statement will not have a
material impact on the consolidated financial statements of the Company.

BUSINESS

The Company is a leading international provider of end-user support
solutions to companies which are implementing ERP software systems. Through
its 568 employees in 15 offices worldwide, the Company provides customized
change communications, education, and performance support services to clients.
Since 1988, the Company has provided services to over 275 clients, including
49 of the Fortune Global 500 and three of the Fortune Global 10. The number of
clients served by the Company has increased from 31 in 1993 to 134 in 1997.
The Company's clients in 1997 included Bristol-Myers Squibb Company, Cadbury-
Schweppes PLC, Compaq Computer Corporation, Hercules, Inc., Hewlett Packard
Company, and Shell Petroleum, Inc. The Company's client base is diversified,
with its largest client representing less than 6.0% of the Company's revenue
in 1997. Recognizing the global nature of the ERP software market and the
importance of being able to serve multi-national clients, the Company has
built a substantial international presence. In addition to its four offices in
the U.S., the Company also has 11 offices in Canada, Mexico, the United
Kingdom, France, South Africa, Australia, Singapore, and Venezuela.

The Company was founded in 1984 in Houston, Texas as an end-user support
company providing documentation services to the oil and gas industry. In 1988,
the Company expanded its end-user support services to include training by
providing a support solution in connection with one of the first major English
language installations of SAP software in the world. Because of the
substantial market opportunity represented by SAP, by 1990, the Company had
made SAP end-user support its primary focus. In 1997, revenue from clients
implementing SAP software represented 87% of the Company's billed consulting
revenue. By focusing on end-user support, the Company has been successful in
institutionalizing its knowledge base, and has developed content and reference
materials, the DA Foundation, that are applied in developing customized
solutions for each client. The Company has also developed DA Cornerstone, the
Company's methodology for delivering consistently high quality service to its
clients. More recently, the Company has broadened its complement of end-user
support services by also providing change communications consulting and on-
line help tools and by expanding its ERP capabilities to include applications
such as J.D. Edwards, BAAN, and Oracle.

MARKET

Many large and mid-sized businesses face a rapidly changing business
environment, intense global competition, and accelerating technological
change. To remain competitive, such businesses continually seek to improve the
quality of products and services, lower costs, enhance employee efficiency,
and increase value to customers. Businesses are implementing and utilizing
advanced information technology solutions that enable them to redesign their
business processes in such areas as product development, service delivery,
manufacturing, human resources, finance, and accounting. A central element of
this redesigning process for many companies is the replacement of legacy
systems with ERP software applications which offer the increased functionality
and flexibility which is critical to the competitive needs of businesses.
These information technology conversions are being further accelerated by the
"Year 2000" problem, which is causing many companies, as well as governmental
agencies, educational institutions, and non-profit organizations, to upgrade
their technology in lieu of incurring the substantial cost associated with
modifying legacy computer code. As a result of these factors, the market for
ERP software applications is experiencing rapid growth.

Industry sources estimate that the worldwide market for ERP software license
fees was $5.2 billion in 1996 and is expected to grow at a compound annual
rate of 30% through 2001 to $19.0 billion. The ERP software market leader is
SAP, a German company with a 1996 market share estimated to have been
approximately 34%. The next largest ERP software providers are Oracle, J.D.
Edwards, Peoplesoft, Inc. and BAAN, which, combined, had a 1996 market share
estimated to have been approximately 28%. In addition to the expenditures for
software license fees, it is estimated by industry sources that an additional
three times that amount is spent on systems integration and implementation
services. In certain cases, these services are provided by the ERP software
developers, but in most cases they are provided by third party service
providers, including information technology consulting firms and the large
international accounting firms.

Because of the substantial effect technology changes have on workers' job
functions, companies are increasingly recognizing the importance of providing
their end-users, which include personnel and management across all business
functions, with the training and tools necessary to utilize these newly
implemented systems effectively. While it is a relatively small cost component
of the overall ERP implementation, such training and tools are critical
factors in companies achieving the expected returns on these substantial
information technology investments. SAP has recommended that 12% of the
expenses budgeted by its clients for systems integration and implementation
services be dedicated to end-user training and tools. The Company believes
that the percentage of expenditures is moving closer over time to the level
recommended by SAP as clients increasingly recognize the importance of end-
user support.

The global market for end-user performance support services for ERP
implementations is large and highly fragmented. Providers include large
international systems integrators which are focused principally on systems
integration and implementation, but also provide end-user support as a
secondary service. In addition, there are a large number of smaller
organizations which specialize in ERP support services, generally serving a
limited geographic area and having a smaller base of technical and managerial
resources. The Company believes that as companies implementing ERP software
increasingly recognize the importance of end-user performance support services
to the success of their ERP implementations, service providers having the
dedicated resources and specialized skills to deliver these services
effectively and consistently across a broad geographic area will be well
positioned to gain an increasing share of this large and growing market.

BUSINESS STRATEGY

The Company's goal is to be the worldwide leader in ERP end-user support
solutions by providing services to clients in all major countries and
languages. The Company's business strategy to achieve this goal includes the
following key components:

Focus Exclusively on End-user Support Services for ERP
Implementations. Since 1988, the Company has provided end-user support
services in connection with ERP software implementations for over 275 clients
in more than 30 countries. With 425 professional staff operating from 15
offices on six continents, the Company believes that it is the largest
international company exclusively focused on providing such services. The
Company believes that end-user performance is the single most important factor
enabling a business enterprise to realize the benefits of the substantial
investments made in ERP software. The Company believes that its substantial
expertise, experience, and exclusive focus on providing these services enhance
its competitive position and will allow it to continue to benefit from the
rapid growth in the market for its services.

Expand Extensive International Presence. Since 1993, when the Company had
two offices in the United States and one office in the United Kingdom, the
Company has expanded its presence to 15 offices located in nine countries
across North America, South America, Australia, Asia, Europe, and Africa. The
Company initially enters a new geographic market using its mobile consulting
staff to serve the specific needs of a current client. When justified by
ongoing market demand, the Company will establish a new office which it builds
predominantly with DACG-trained local professionals after initially using
senior Company consultants. The Company believes that its ability to provide
consistently high-quality support services internationally is an important
factor in attracting multinational clients with requirements for the Company's
services across diverse geographic locations. The Company intends to continue
to open new offices in strategically important locations with particular near-
term focus on expanding its presence in the United States, Latin America, and
Asia. See "--Company Organization and Project Management and Methodology" and
"--Facilities."

Maintain and Establish Strong Relationships with ERP Software Vendors. In
1988, the Company provided performance support services for one of the first
English language implementations of SAP software in the world. Since that
time, the Company has provided support solutions to more than 175 clients
installing SAP, while expanding its range of services to support
implementations of several of the other leading ERP applications

developers, including J.D. Edwards (1996), Oracle (1996), and BAAN (1997).
Because the quality of end-user performance support can substantially impact
the success of an ERP installation, SAP has developed its own list of a
limited number of preferred or qualified service providers. DACG is recognized
by SAP as a National Implementation Partner in the United States, Australia,
New Zealand, and South Africa. The Company believes that this status is
important in enabling it to receive referrals from SAP for new business
opportunities. The Company intends to continue to expand and develop new and
existing relationships with ERP application vendors and to develop its service
capabilities to support additional ERP applications. See "--Sales and
Marketing."

Leverage Large, Diversified, Blue-Chip Client Base. Since 1993, the Company
has provided services to 49 of the Fortune Global 500 companies (including
three of the top ten) as well as many other large companies worldwide. This
blue-chip client base provides the Company with substantial credibility when
soliciting business from potential new customers and has proven to be an
important source of referrals. In addition, these customers often have
geographically dispersed organizations with large numbers of end-users
requiring performance support services and staged multi-year ERP
implementation cycles, thereby providing the Company with a source of follow-
on revenue opportunities. The Company's client base is diversified in that the
ten largest clients, in the aggregate, accounted for approximately 34% of the
Company's revenue in 1997, respectively. The Company's largest client
accounted for less than 6.0% of the Company's revenue in 1997. See "--
Clients."

Expand Consulting and Sales Organizations. The Company's professional staff
has grown from 40 as of December 31, 1993 to over 425 as of December 31, 1997
and its full-time sales staff has grown from two as of December 31, 1993 to 20
as of December 31, 1997. The Company intends to continue to expand and refine
its recruiting process to attract the best available consulting and sales
staff. When opening new offices, the Company uses core groups of existing
senior Company consultants in order to transfer its strong corporate culture
and its commitment to high quality service to new personnel in geographically
and culturally disparate locations. In addition, DACG has developed a
comprehensive series of training programs covering technical skills, project
methodologies, and management and sales techniques to accelerate the
development of its professional staff, expand their skills, and permit them to
attain increasing levels of responsibility within the organization. The
Company believes that its success in providing its employees with a
challenging and fulfilling work environment, a competitive compensation
structure, and broad-based equity ownership will help it achieve this
expansion. See "--Recruiting and Personnel Development."

Extend Service Offerings. The Company has a significant commitment to
continual expansion of its service offerings. Research and development are
focused on three main areas: (1) the development of technology-based solutions
that allow the Company's consultants to generate improved efficiencies as they
develop end-user support solutions for clients; (2) the development of tools
and content specific to the ERP applications produced by all of the major ERP
vendors; and (3) the development of service solutions for areas complementary
to existing businesses such as the development of intranet-based solutions for
the delivery of end-user support services that support the Company's clients'
needs for education and performance support beyond their ERP systems. The
Company considers that its proprietary toolset and its relationship with CBT
Systems to develop computer-based training titles are important means of
gaining market share in the growing ERP middle market.

SERVICES

The Company delivers end-user support solutions designed to maximize the
return on clients' ERP investments while taking into account each client's
individual needs, resources, and requirements. ERP software has a significant
direct impact on the working patterns of a corporation which must be managed
in relation to both implementation of the software and support of that
software over time. The Company performs a thorough review of the procedures
and jobs which ERP end-users will need to perform and uses this information to
develop the requisite end-user support solution for the client. Such solutions
utilize the Company's proprietary methodology, DA Cornerstone, in the delivery
of services consisting of change communications, education, and performance
support programs developed by the Company.

From an initial focus on SAP end-user support, DACG has applied its skill
set to other ERP technologies such as J.D. Edwards, BAAN, and Oracle,
resulting in a portable cross industry, cross technology expertise. See "--
Company Organization and Project Management and Methodology."

Change Communications

Clients managing their business on ERP systems commit themselves to long-
term change. Client end-users are affected by this change, seeing it on the
desktop in the form of new software functionality and in day-to-day business
activities in the form of new procedures and policies. Typical approaches to
managing this change focus on establishing executive management support. The
Company believes, however, that the key to successful ERP implementations is
ensuring the support of end-users because their effective utilization of
technology is critical to the success of ERP investments. Accordingly, the
Company's change communications programs are focused on the end-user. Common
change communications deliverables provided by the Company to its clients
include kick-off meetings and speeches, facilitated collaborative work groups,
multimedia presentations, video presentations, and newsletters. These
deliverables, in addition to providing critical information, also serve to
minimize a client's business disruption by preparing end-users for the impact
of ERP-related changes.

The business goals that drive the implementation of ERP software as
identified by client executive management are used as the starting point for
the development of change communications programs. An analysis is conducted
that determines how the enterprise-wide issues presented by client management
will impact each end-user's daily work routine. These issues are identified
through the Company's use of facilitated collaborative workshops where the
Company's staff work with client end-users to identify areas of greatest
concern. Based on this review, a specific change communications program is
developed for each segment of the end-user audience. This program ensures the
progressive delivery of messages that start with the basic corporate message
and then address issues that are specific to segments (such as the accounts
receivable department) of the client's organization.

Education

The Company develops educational programs specific to each client's needs,
taking into account the client's infrastructure and resources, the scope of
the client's ERP system, and the client's language and cultural needs. In
order to influence the way an end-user works and optimizes his or her
utilization of a new system, educational programs are developed that focus on
specific end-user job responsibilities, as well as on the overall business
processes that impact the end-user. In developing educational content for a
client, the Company utilizes its DA Foundation library which contains training
content that addresses job roles and processes common to ERP software.

The Company consults with the client to determine the appropriate media to
use for delivering the educational content: instructor-led training; computer-
based training; and/or distance learning. Virtually all the Company's clients
utilize instructor-led training courses, which the Company customizes to meet
the particular client's specifications and needs.

Many companies, particularly those with large and geographically dispersed
operations, find computer-based training to be an effective education delivery
method from the standpoint of both cost and time. The Company believes that an
integrated curriculum of instructor-led and computer-based training courses
represents the optimal end-user education solution. The Company offers both
custom and standardized computer-based training modules, utilizing the
resources of the DA Foundation library. The Company has developed the
standardized courseware under a co-development agreement with CBT Systems, one
of the largest companies specializing in computer-based training development
and distribution worldwide. Under the agreement, the Company and CBT Systems
are jointly developing, in conjunction with SAP, a series of 20 computer-based
training courses. The agreement does not require the Company to provide cash,
but does require the Company to provide subject matter experts to assist CBT
Systems with the development of SAP-related computer-based training software.
As of December 31, 1997, 12 of these titles had been released; the remaining
eight are

scheduled to be released over the next six months. The Company considers the
development of computer-based training titles to be an important means of
gaining market share in the growing ERP middle market as standardized
computer-based courses represent a less expensive means of training for
clients that do not require a customized solution.

The Company also uses distance learning as a method to distribute
educational content within client organizations. Distance learning solutions
are most often utilized by companies with large remote user audiences and
significant information technology infrastructures because they involve
distributing content by using wide area networks, corporate intranets, and
video conferencing technology.

Performance Support

A critical component of the Company's end-user support solution is the
documentation of ERP processes which affect end-users. This documentation is
designed to assist workers in performing their jobs following training. In
utilizing a new system, end-users of technology frequently encounter
situations in which they require assistance. In order to limit workers'
downtime and provide workers with easy access to assistance, paper-based and
on-line references containing relevant policies, processes, and procedures are
often the most effective aids. In coordination with the design of educational
programs, the Company works with each client to assess the ongoing
documentation and performance support needs of the particular audience of end-
users. Utilizing the DA Foundation, the Company then develops support content
for the client, creating a clearly defined set of policies, processes, and
procedures relating the particular ERP software application.

Based upon the client's information technology infrastructure, budget, and
timing needs, the appropriate media for performance support is determined.
Hard copy performance support can be delivered by quick reference guides and
printed documentation. This type of performance support solution is most often
used by those clients who have limited time frames in which to develop an end-
user support solution. These clients can migrate to a more technologically
advanced solution at a later date. More sophisticated performance support
solutions can be delivered through the client's corporate intranet, where DACG
will design and maintain a repository of the end-user support deliverables.

DACG's most sophisticated performance support solution is an electronic
performance support system ("EPSS") which provides comprehensive end-user
support on demand at the desktop so that end-users can minimize interruptions
in seeking help or information relating to a job task. End-users can access
the EPSS from their own desktop and find the answers to the questions they
have about a particular task. Building a comprehensive EPSS solution can be
challenging and costly. To simplify its development, the Company has created a
proprietary software technology, DA PASSPORT. DA PASSPORT is context
sensitive, which means it can track the location of the client end-users in
the client's ERP system, in order to provide support based on the particular
application being run, thereby allowing the Company to create customized ERP
end-user support accessible at a transactional or task level. The Company can
link system task, business procedure, training, and computer-based training
files to ERP transactions using the DA PASSPORT technology, providing
sophisticated support to end-users. A DA PASSPORT solution is typically
recommended to those clients that already have existing corporate intranets,
although the Company can consult with a client to construct a corporate
intranet site if required.

The support content ultimately developed for each of the Company's clients
is used to regularly update and expand the DA Foundation library. For example,
although the Company currently utilizes DA PASSPORT on SAP applications only,
as it expands its service offerings to include support for other ERP vendors'
software, it will be able to utilize the DA Foundation library as the basis
for expanding DA PASSPORT to provide performance support content for such
other software applications.

Representative Engagements

While each client project is different, the following case studies
illustrate the range of support solution services the Company has provided to
its clients.

Cadbury-Schweppes PLC ("Cadbury"). United Kingdom-based Cadbury, the third
largest soft drink vendor in the world, decided to replace its legacy computer
systems with "Year 2000" compliant SAP ERP software. Starting with an initial
engagement with Cadbury's subsidiary, Mott's Inc., the Company utilized 10
consultants over the course of eight months to develop a full suite of change
communication, education, and performance support deliverables for Mott's
Canadian SAP roll-out. Following successful delivery of this solution, the
Company was retained by Mott's to deliver end-user support services for Mott's
United States SAP roll-out. These engagements were supported by the Company's
North America Mobile Group. During this period, Cadbury acquired Dr
Pepper/Seven Up, Inc. and began to implement SAP within this organization from
Dr Pepper's base in Dallas. DACG was again retained to deliver end-user
support services for this SAP installation. This engagement was supported by
the Company's Dallas branch and its North America Mobile Group.

Hercules, Incorporated ("Hercules"). DACG was initially engaged in 1993 by
Hercules, a U.S.-based global manufacturer of chemical and pharmaceutical
products, to deliver an end-user support solution in support of Hercules'
implementation of SAP. Hercules had more than 2,000 employees entering
transactions and accessing data on its SAP system. As part of its investment
in technology, Hercules planned to utilize intranet and internet sites to
provide it with a competitive advantage. On the basis of the Company's
understanding of web technologies and Hercules' business, DACG was selected to
assist Hercules in assessing tangible benefits it could derive from
internet/intranet technology. DACG analyzed the means by which Hercules could
deploy web technology through the internet and a corporate intranet to
facilitate employee communication, improve information management, and enhance
product marketing. The Company then provided its consulting services to assist
in the design and implementation of Hercules' intranet and internet sites.
Both the internet and intranet sites were functional within four to five
months from the project start date and Hercules successfully achieved its
objectives. This project demonstrated DACG's ability to capitalize on its
expertise in ERP software applications to provide ERP-related intranet
services.

Cultor Food Science ("Cultor"). A subsidiary of Finland-based Cultor Ltd.,
U.S.-based Cultor Food Science is a worldwide leader in providing food
processors with innovative food ingredients, bulking agents, flavorings, and
food protectants. In order to support its aggressive growth plans and customer
support initiatives, Cultor purchased SAP R/3 applications. Because of the
urgency of its needs, Cultor agreed to become a pilot client for Accelerated
SAP ("ASAP"), allotting only six months to have the new systems operational.
With only three months remaining before implementation, Cultor recognized its
need for outside expertise in training. Using its existing content and its
consulting tool set, DACG successfully developed an end-user support solution
that met the requirements of SAP's ASAP methodology and Cultor's need for
rapid delivery of end-user support. The Company's consultants provided
education and performance support deliverables to cover a wide range of Cultor
business processes, including financial accounting and control, materials
management, sales and distribution, production planning, plant maintenance,
asset management, and quality management. The Company's DA Cornerstone
methodology facilitated a smooth and efficient implementation of the SAP
applications within the client's deadline.

Cabletron Systems, Incorporated ("Cabletron"). U.S.-based Cabletron is a
worldwide leader in providing high performance intranet and internet
solutions, including LAN and WAN switches, and network management software.
DACG was engaged by Cabletron in 1996 to support Cabletron's implementation of
SAP software. The Company developed an end-user support solution covering a
wide range of Cabletron processes, including financial accounting, purchasing,
inventory management, production planning, and sales and delivery processing.
The Company was responsible for the development of an end-user support
solution for 1,100 end-users located across the United States. Delivery of
change communications to Cabletron's staff was a critical component in
preparing end-users for use of the SAP system as all 1,100 end-users were
trained in a one month period prior to Cabletron's commencing use of the
system.

PetroFina SA ("PetroFina"). Brussels-based PetroFina is a leading
international oil and petrochemical firm employing over 13,000 people. Having
worked on the development of an R/2 end-user support solution for

PetroFina since 1994, DACG was selected to provide end-user support services
to PetroFina for its R/3 roll out in 1996. The Company developed an end-user
support solution that covered a wide range of PetroFina's business processes,
supported over 50 end-user job profiles, and was delivered in a number of
languages. Through the delivery of a train-the-trainer program, the design of
all training curricula, the building of an on-line performance support
solution, and the delivery of the foregoing in multiple languages, the Company
ensured the successful roll-out of PetroFina's information technology
investment across Europe. DACG was retained by PetroFina on the basis of its
solid European presence, its proven ability to deliver international end-user
support solutions, and its multi-cultural and multilingual consulting
capabilities.

CLIENTS

The Company provides its support solution services around the world to large
and mid-sized companies, many of which have information intensive,
multinational operations. The Company has provided services to more than 200
clients, including many of the world's leading corporations, in a broad range
of industries such as oil and gas, technology, pharmaceutical and chemicals,
utilities, and telecommunications, consumer products, and manufacturing. The
following is a representative list of the Company's clients served during
1997.

Adgas Compaq Computer Corporation Occidental Chemical
Corporation
AlliedSignal Inc. Dealer Solutions LLC
PetroFina SA
Amerada Hess Corporation Deere & Company
Public Service Electric
AMP Inc. Exxon Company & Gas (PSEG)

Berlex Laboratories, Hercules, Inc. South Africa Post Office
Inc.
Hewlett-Packard Service Corporation
Bristol-Myers Squibb Company International
Company
Kimball International Shell Petroleum Inc.
Browning-Ferris
Industries M/A-COM Solvay America Inc.

Cabletron Systems, Inc. Mobil Oil Corporation Swift & Co.

Cadbury-Schweppes PLC Montell USA Inc. Tenneco Packaging, Inc.

Chiron Diagnostics Woodside Offshore
Petroleum

The Company's ten largest clients, in the aggregate, accounted for
approximately 59%, 53%, and 34% of its revenue in 1995, 1996, and 1997,
respectively. No single client of the Company accounted for more than 6.0% of
the Company's revenue in 1997. In 1995, one client, for which the Company
provided services on multiple projects for numerous client subsidiaries,
represented 17.7% of the Company's revenue for that year.

COMPANY ORGANIZATION AND PROJECT MANAGEMENT AND METHODOLOGY

Organization

The Company divides its organization into three operating divisions: the
Americas Division, which includes its North, South, and Central America
operations (comprised of a total of seven offices); the EMEA Division, which
includes its Europe, Middle East, and Africa operations (comprised of a total
of five offices); and the Asia Pacific Division, which includes its Australia,
New Zealand and Asia operations (comprised of a total of three offices). Each
division is headed by a member of the Company's management and is further
divided into regions which are generally headed by a Company vice president.
Regions are divided into branches, with each branch generally organized into
five tiers: consultants; project leaders; project managers; operations
managers; and branch managers.

Specifically defined responsibilities, communicated through formal training
programs and review processes, exist at each level, providing the Company's
employees with clearly defined roles and accountability for

implementing and effectuating end-user support solutions world-wide. The
operations manager, a designated senior individual with extensive project
management experience, has primary responsibility for defining the scope of
the engagement and satisfying client expectations regarding this scope. The
operations manager also has responsibility for managing resource availability
of staff from within the Company's organization and for managing project
costs. The project manager has responsibility for the execution of the planned
project and the production of all deliverables within budget and on-time. The
project manager oversees project staffing and works with the operations
manager to locate additional Company resources if required. Company-wide
executive management, strategic planning, and financial administration are
conducted from the Company's corporate headquarters in Houston, Texas.

Project Methodology and Management

The Company's DA Cornerstone project management methodology is a key
component in its delivery of quality end-user support solutions to its
clients. DA Cornerstone is DACG's comprehensive six phase, end-user support
methodology that addresses key end-user support program deliverables,
activities, and milestones throughout the life cycle of an ERP implementation.
Each phase has associated tools that facilitate the completion of that phase's
activities and deliverables.

DA Cornerstone phases include:

Analyze: The operations manager, together with the project manager or
leader, analyzes the client needs, resources, and
requirements. Once this process is complete, the Company
submits to the client an end-user support strategy document
comprised of change communication, education, and performance
support strategies and deliverables for its approval.

Prototype and Design:
Once the change communication, education, and performance
support strategies are approved, the project manager or
leader, with the support of the operations manager, designs
deliverables and sets up appropriate development strategies
for the support solution. The client must approve the end-user
support program design.

Develop: The entire project team executes the change communications,
education, and performance support development strategies, and
submits all deliverables for frequent internal and client
review.

Implement: The entire project team delivers the change communication,
education program, and performance support to the end-users.

Evaluate: The operations manager and the project manager evaluate the
effectiveness of the end-user support program using
appropriate tools.

Support: The operations manager and the project manager set up the post
implementation, long- term maintenance strategy for the end-
user support program.

The Company's project staff develops each end-user support component through
an iterative draft and review process that directly involves client end-users
in the development of content specific to their needs. This review process
typically consists of three stages and has quality control steps embedded in
each stage as formal checkpoints. These checkpoints are intended to ensure
that the client is satisfied with the deliverables, that the content is
accurate and adheres to the Company's own standards, and that the project is
delivered in a cost-effective and timely manner. The success of a given
project engagement from a cost, time, and client satisfaction standpoint is
the responsibility of the assigned operations and project managers.

SALES AND MARKETING

The Company generates business through a field sales force which sells
directly and pursues client and vendor referrals and trade show leads. In
addition, the Company co-markets, in the form of joint sales calls and
marketing materials, with ERP vendors and CBT Systems.

The Company's direct sales efforts are performed worldwide by its 20 full-
time sales personnel, each of whom has either a branch territory or regional
focus. The sales personnel generate leads from several sources, including
referrals from the Company's existing clients and from attendance at industry
trade shows. Among its sales and marketing efforts, the Company's sales force
has presented the Company's expertise at SAPPHIRE, the annual SAP America
conference for SAP service providers and end-users. Other shows at which the
Company participates and has an opportunity to demonstrate its expertise
include: SAP conferences in the United States (ASUG, the Americas SAP User
Group), South Africa (SAPHILA), Latin America (SAP Universe), Europe,
Australia, and Singapore; J.D. Edwards conferences (Focus and User Group); and
BAAN world conferences. The Company also uses internet-based marketing, direct
mail, advertising in trade magazines, road show events, and networking through
regional business communities to generate potential sources for new business.

The Company's strategic business alliances, including those which the
Company maintains with SAP, J.D. Edwards, and CBT Systems, are a source of
generating new business. DACG is recognized by each of SAP, Oracle, and J.D.
Edwards as a preferred or qualified provider of end-user support services. As
part of its overall relations with SAP, the Company has SAP National
Implementation Partner status in the United States, Australia, New Zealand,
and South Africa. This status allows for participation in SAP's partner
program and exhibitor attendance at SAP conferences. In addition, the Company
develops and delivers to potential clients joint proposals with certain of
these business alliance partners, with the proposals covering software
applications, software implementation services, and end-user support
solutions. The Company has been successful in obtaining new business through
these joint proposals.

The Company's services require a substantial financial commitment by clients
and, therefore, typically involve a long sales cycle. Once a lead is
generated, the Company endeavors to understand quickly the potential client's
business needs and objectives in order to develop the appropriate solution and
bid accordingly. The Company's operations and project managers are involved
throughout the sales cycle to ensure mutual understanding of client goals,
including time to completion and technological requirements. Sales cycles for
end-user support solution projects typically range from one to six months from
the time the Company initially meets with a prospective client until the
client decides whether to authorize commencement of an engagement. The
retention of the Company typically occurs at the beginning of the
design/prototype stage of the software implementation.

RECRUITING AND PERSONNEL DEVELOPMENT

As of December 31, 1997, DACG's personnel consisted of 568 employees, 425 of
which were professional staff, 23 of which were sales and marketing staff, 23
of which were research and development staff, and 97 of which were
administrative staff. The Company believes that its success depends in large
part on its attracting, retaining, and motivating talented, creative, and
professional employees at all levels. The Company seeks to hire personnel with
prior consulting experience in ERP end-user education programs, education
professionals with a background in information technology, and information
technology professionals with experience with education or communication
programs. Strong project management, analytical and communications skills and
meaningful international experience are also considered. Recruiting is
coordinated company-wide through the Company's human resources department.

Training and mentoring are integral parts of the Company's staff development
program. The Company's training programs ensure that its professional staff
understands the impact of technology on people, is able to communicate
effectively at all levels within a client organization, and has the ability to
communicate with its clients' technical, business, and management staff in
order to gain an understanding of client end-user support requirements.
Ongoing training includes a blend of in-house and external training. In-house
training includes basic ERP training, more detailed ERP software education,
project management, consultancy skills, and leadership training. The use of DA
Foundation materials and the application of performance support technologies
such as DA PASSPORT are also covered. In addition, all consultants are
required to attend a DA Cornerstone

methodology training program, and to be approved for its use before being
assigned to any consulting project. External training programs focus on
project and time management skills.

The Company believes that its culture is central to its ability to attract
and retain highly skilled and motivated professionals. Extensive technical,
management, and sales training enable DACG professionals to expand their
skills and attain increasing levels of responsibility within the organization.
The Company attracts and motivates its professional and administrative staff
by offering competitive packages of base and incentive compensation and
benefits. All professional staff members are eligible for bonuses. The Company
appreciates the importance of recognition and a promotion track for its
administrative staff and fully integrates this staff into the conduct of its
business. All of the Company's employees are eligible to receive stock options
and after the completion of this offering, 403 employees (representing
approximately 70% of the Company's employees as of December 31, 1997) will
own, in the aggregate, approximately 20% of the post-offering, fully diluted
equity of the Company. See "Management--1997 Stock Option Plan."

RESEARCH AND DEVELOPMENT

DACG established a research and development department in 1995 to support
and maintain its end-user support content and consulting methodologies. This
division, which consisted of 23 persons as of December 31, 1997, is
responsible for developing and maintaining DA PASSPORT, DA Foundation, and the
Company's consulting methodologies, including the development of the Company's
proprietary toolset used for the rapid deployment of end-user support
solutions. The division is also responsible for developing computer-based
training in cooperation with CBT Systems.

The Company's research and development department continually applies
technology developments to the Company's content and tools. As technology has
advanced, DACG has kept pace with this development, expanding its deliverables
from traditional hard copy materials and instructor led training to include
on-line documentation, multimedia training, EPSS, and web-based education and
performance support solutions. The division works directly with the Company's
human resources department to ensure that the Company's consultants are
trained to support each new release of the consulting methodologies. The
Company considers research and development as a key to the expansion of its
service offerings and plans to increase its expenditures in this area in 1998.

COMPETITION

The global market for end-user performance support services for ERP
implementations is large and highly fragmented and is subject to low barriers
to entry and rapid change. Providers include large international systems
integrators, such as the consulting practices of the large international
accounting firms, which are focused principally on systems integration and
implementation but also provide end-user support as a secondary service. In
addition, the Company competes with the professional services groups of many
large technology and management consulting companies and a large number of
smaller organizations which specialize in ERP support services, generally
serving a limited geographic area and having a smaller base of technical and
managerial resources. In addition, clients may elect to use internal resources
to satisfy their needs for the services the Company provides. The Company
faces competition for client assignments from a number of companies having
significantly greater financial, technical, and marketing resources and
greater name recognition than the Company. The Company believes that the key
competitive factors forming the basis upon which these companies compete are
experience, reputation, industry focus, international presence, service
offerings, and price relative to the value of the services provided. The
Company believes that it competes effectively and will continue to compete
effectively with respect to each of these factors both in the United States
and internationally.

FACILITIES

Currently, the Company maintains 15 offices on six continents. The Company's
headquarters is at 5847 San Felipe Road, Suite 3700, Houston, Texas, where it
leases approximately 20,000 square feet of space. This

lease expires in June 2004. The Company also maintains domestic offices in the
metropolitan areas of Boston, Dallas, and Philadelphia, and foreign offices in
Toronto, Mexico City, London, Paris, Melbourne, Sydney, Durban, Johannesburg,
Cape Town, Singapore, and Caracas. Each of these offices is located near one
or more significant clients of the Company, and, except for Durban, have terms
which will expire in between one and seven years (exclusive of renewal options
exercisable by the Company). The Company's strategy is to locate offices in
areas where it has significant client work. All of the Company's offices are
electronically linked together and have access to all of the Company's
capabilities and core consulting tools. From time to time, the Company uses
office space provided at client sites to facilitate performance of its
services and maximize client contact. Where the Company operates in a country
without an established office, operations are handled on a mobile basis with
corporate support being delivered from one of its regional centers in Houston,
London, Sydney, or Johannesburg. The Company believes that its facilities are
adequate for its current needs and that additional facilities can be leased to
meet future needs.

INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS

The Company relies upon a combination of nondisclosure and other contractual
arrangements and trade secret laws to protect its proprietary rights. The
Company generally enters into confidentiality agreements with its key
employees and clients, thereby seeking to limit distribution of proprietary
information. There can be no assurance that the steps taken by the Company in
this regard will be adequate to deter misappropriation of proprietary
information or that the Company will be able to detect unauthorized use of and
take appropriate steps to enforce its intellectual property rights. Software
developed and other materials prepared by the Company in connection with
client engagements are usually assigned to the Company's clients following the
termination of the engagement. The Company retains the right to use the
general know-how developed by the Company in the course of the engagement, and
this accumulated knowledge is the basis for the DA Foundation. The Company
also retains all rights to certain of its proprietary methodologies and
software (such as DA PASSPORT and computer-based training software), the
benefit of which the Company provides to the client by royalty-free license.

DA Foundation and DA Team Teach are registered trademarks and/or service
marks of the Company. The Company also claims common law trademark rights in
DA Consulting Group, DA, and the DA logo, for which the Company has filed
applications for federal registration in the United States Patent and
Trademark Office. Furthermore, the Company claims common law trademark rights
in various other marks, including DA Cornerstone, DA PASSPORT, and the slogan
Solutions for People and Technology, but has not decided at present to file
applications for trademark registration for any of these other marks. The
Company holds no patents. The Company has registered the copyright in the
computer programs titled "DA Basic Skills Training for SAP R/3" and "DA Basic
Skills Training for SAP R/3 v2.0 US." The Company also claims the copyright in
numerous other works and may elect to register such copyrights on a case-by-
case basis.

LEGAL PROCEEDINGS

From time to time, the Company is a party to routine litigation in the
ordinary course of business. The Company is not currently a party to any
material pending legal proceedings.

MANAGEMENT

The following table sets forth information regarding the executive officers
and directors of the Company:

EXECUTIVE OFFICERS AND DIRECTORS: AGE POSITION
- --------------------------------- --- --------

Nicholas H. Marriner....... 55 President, Chief Executive Officer, and Director
Patrick J. Newton.......... 31 Chief Operating Officer
Michael J. Mackey.......... 40 Chief Financial Officer, Executive Vice
President, Finance and Administration,
Treasurer, and Secretary
Lisa L. Costello........... 28 Executive Vice President, Research and
Development
Eric J. Fernette........... 41 Executive Vice President, Human Resources
Virginia L. Pierpont....... 56 Director and Chair of the Board
Nigel W.E. Curlet.......... 52 Director
Gunther E.A. Fritze........ 61 Director
Richard W. Thatcher, Jr. .. 58 Director

EXECUTIVE OFFICERS AND DIRECTORS

Nicholas H. Marriner joined the Company in 1991 as its Financial Director
and in 1993 became the Company's Chief Executive Officer. Until June 1996, Mr.
Marriner was also a partner in Clark Whitehill Josolyne, an accounting firm
which until December 1997 provided accounting services to the Company. See
"Certain Relationships and Related Transactions." Mr. Marriner attended Leeds
University and is a Fellow of the Institute for Chartered Accountants in the
United Kingdom. Mr. Marriner is married to Ms. Pierpont.

Patrick J. Newton joined DACG in London in 1991 as a consultant. He was
promoted to Branch Manager of the Mobile Group in July 1995, to Vice President
of the Mobile Group in January 1996, to President of the Americas Division in
July 1996, and to Chief Operating Officer in January 1997. As Chief Operating
Officer, he is responsible for the worldwide operations of the Company. Mr.
Newton received his B.A. from Oxford University.

Michael J. Mackey joined the Company in February 1997 as its Chief Financial
Officer and is primarily responsible for the finance and administrative
functions of the Company. Prior to joining the Company, from 1990 to 1996, Mr.
Mackey was employed by Global Software, Inc., a technology company with
consulting and products divisions, most recently as its Chief Financial
Officer. Mr. Mackey received his B.S. from the University of Florida and his
MBA from the University of Central Florida and is a Certified Public
Accountant.

Lisa L. Costello joined DACG as a consultant in February 1993. She assumed
the position of Operations Manager of the Americas Division Mobile Group in
January 1996, and in July 1996 she was promoted to Director of Research and
Development for DACG's Americas Division. In January 1997, she was promoted to
Vice President and, in August 1997, to Executive Vice President, Research and
Development, with responsibility for research and development worldwide. Prior
to joining the Company, from June 1991 to January 1993, Ms. Costello was a
technical writer with Software Interfaces, Inc. Ms. Costello received her B.A.
from the University of St. Thomas, Houston.

Eric J. Fernette joined the Company as Executive Vice President, Human
Resources in July 1997. Prior to joining the Company, from 1987 to 1997, Mr.
Fernette was employed by Compaq North America in various capacities, most
recently as Director of Human Resources, North America Division. From 1979 to
1987, Mr. Fernette was a Human Resources Manager with ITT. Mr. Fernette
received his B.S. from Arizona State University.

Virginia L. Pierpont founded DACG as a sole proprietorship in 1984,
incorporated the business in 1987, and opened its United Kingdom operation in
1988. Ms. Pierpont was the Chief Executive Officer of the Company from 1984 to
1993 and has been Chair of the Board since December 1996. Ms. Pierpont
received her B.A. from Boston University. Ms. Pierpont is married to Mr.
Marriner.

Nigel W.E. Curlet has served as a director since December 1996. Since 1976,
he has been employed in various capacities by Shell Chemical Company and is
currently its Manager of Business Process Design. Mr. Curlet's prior
management roles at Shell were in its information technology, research and
development, and operations and strategic planning departments. He received
his B.S. from Birmingham University and his S.C.D. from Massachusetts
Institute of Technology.

Gunther E.A. Fritze has served as a director since December 1996. Since
1962, he has been employed in various capacities by Bank of Boston and is
currently its Manager, Finance Companies. He received his B.A. from Harvard
College and his MBA from Harvard Business School.

Richard W. Thatcher, Jr. has served as a director since December 1996. Since
1992, he has been Senior Vice President in the investment banking department
of Pennsylvania Merchant Group Ltd, one of the Representatives of the
Underwriters. He received his B.S. in engineering and his MBA from Cornell
University.

The Restated Articles provide for the Board of Directors to be divided into
three classes serving staggered three-year terms. The term of office of the
first class of directors, consisting of Messrs. Curlet and Fritze, will expire
at the 1999 annual meeting of shareholders, the term of office of the second
class, consisting of Ms. Pierpont and Mr. Thatcher, will expire at the 2000
annual meeting of shareholders, and the term of office of the third class,
consisting of Mr. Marriner, will expire at the 2001 annual meeting of
shareholders. At each annual meeting of shareholders, the class of directors
to be elected at such meeting will be elected for a three-year term, and the
directors in the two other classes will continue in office.

DIRECTOR COMPENSATION

Directors who are not employees of the Company are paid a fee of $1,250 for
each board and committee meeting attended in person and all directors are
reimbursed for travel expenses as incurred.

BOARD COMMITTEES

Concurrent with the completion of this offering, the Board of Directors will
establish an Audit Committee, the initial members of which will be Messrs.
Curlet, Fritze, and Thatcher, and a Compensation Committee, the initial
members of which will be Ms. Pierpont and Messrs. Curlet and Fritze. The Audit
Committee will review the qualifications of the Company's independent
auditors, make recommendations to the Board of Directors regarding the
selection of independent auditors, review the scope, fees and results of any
audit, and review non-audit services and related fees provided by the
independent auditors.

The Compensation Committee will be responsible for determining compensation
for the executive officers of the Company, including bonuses and benefits, and
will administer the Company's compensation programs, including the Company's
1997 Stock Option Plan.

The Board of Directors does not have a nominating committee. The selection
of nominees for the Board of Directors is made by the entire Board of
Directors. The Board of Directors may from time to time establish other
committees to facilitate the management of the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

Prior to this offering, the Company has had no separate Compensation
Committee or other committee performing equivalent functions. As a result,
compensation matters were performed by the Board of Directors or senior
management of the Company. A majority of the directors expected to serve on
the Compensation Committee will be non-employee directors of the Company. No
director or executive officer of the Company is a director or executive
officer of any other corporation that has a director or executive officer who
is also a director of the Company.

EXECUTIVE COMPENSATION

Summary Compensation

The following table sets forth, as to the Chief Executive Officer and the
only other executive officers whose annual salary and bonus exceeded $100,000
in 1997 (collectively, the "Named Executive Officers"), information with
respect to annual and long-term compensation earned during the last three
fiscal years:

SUMMARY COMPENSATION TABLE

LONG TERM
COMPENSATION
AWARDS
------------
NUMBER OF
ANNUAL COMPENSATION(1) SHARES
----------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(2) BONUS OPTIONS COMPENSATION(3)
- --------------------------- ---- --------- -------- ------------ ---------------

Nicholas H. Marriner...... 1997 $270,000 $205,878 -- $ 7,919
President and Chief 1996 $180,000 $129,600 -- $ 9,885
Executive Officer 1995 $149,386 $ 38,820 -- $ 9,772
Patrick J. Newton......... 1997 $210,000 $ 95,317 8,400 --
Chief Operating Officer 1996 $125,000 $125,000 -- $291,960
1995 $ 78,209 -- -- --
Michael J. Mackey(4)...... 1997 $142,083 $ 35,805 63,000 $ 4,354
Chief Financial Officer, 1996 -- -- -- --
Executive Vice President, 1995 -- -- -- --
Finance and
Administration,
Treasurer, and Secretary
Lisa L. Costello.......... 1997 $113,927 $ 56,000 21,000 $ 7,657
Executive Vice President, 1996 $ 97,200 $ 32,500 -- $ 300
Research and Development 1995 $ 52,731 -- -- $ 2,100
Eric J. Fernette(5)....... 1997 $ 48,159 $ 20,000 25,200 --
Executive Vice President, 1996 -- -- -- --
Human Resources 1995 -- -- -- --

- --------
(1) All figures converted to U.S. dollars based upon the exchange rate at the
end of the applicable fiscal year.
(2) Salary includes amounts deferred, if any, pursuant to the Company's 401(k)
plan.
(3) Amounts include compensation expense attributed to employee stock awards,
employer 401(k) contributions and Company perquisites. All $291,960 of Mr.
Newton's other compensation represents shares of Common Stock awarded to
him without cash consideration.
(4) Mr. Mackey became Chief Financial Officer on February 1, 1997 at a base
annual salary of $155,000. Options with respect to 63,000 shares of Common
Stock were granted to Mr. Mackey on February 1, 1997.
(5) Mr. Fernette became Executive Vice President, Human Resources on July 28,
1997 at a base annual salary of $115,000. Options with respect to 25,200
shares of Common Stock were granted to Mr. Fernette on August 1, 1997.

Employment Agreements

The Company has entered into employment agreements with the Named Executive
Officers effective January 1, 1998, the initial terms of which expire on
December 31, 1998. The initial base annual salaries under the employment
agreements of the Named Executive Officers are $432,000 for Mr. Marriner,
$306,000 for Mr. Newton, $169,200 for Mr. Mackey, $144,000 for Ms. Costello,
and $144,000 for Mr. Fernette. The base annual salary of each of the Named
Executive Officers is subject to increases periodically at the discretion of
the Board of Directors, and each Named Executive Officer may receive an annual
bonus as determined by the Board of Directors. Each of the employment
agreements provides for customary benefits, including life, health and
disability insurance and 401(k) plan participation. Each of the employment
agreements further provides that if

the employee is terminated without cause, such employee is entitled to
severance pay of up to 18 months base salary, bonus, and benefits. In the
event such employee is terminated in connection with a change in control (as
defined therein), Mr. Fernette and Ms. Costello would be entitled to receive
one year's base salary and benefits and 100% of any bonus paid with respect to
the calendar year immediately preceding termination, and Messrs. Mariner,
Newton, and Mackey would be entitled to receive two years' base salary and
benefits and 200% of any bonus paid with respect to the calendar year
immediately preceding termination.

Key Man Insurance

Messrs. Marriner, Newton, and Mackey are key employees of the Company and
the contribution of each of them to the Company has been and will continue to
be a significant factor in the Company's future success. The loss of any of
them could adversely affect the Company's business and results of operations.
The Company maintains, and is the beneficiary of, "key man" life insurance
policies on the lives of Messrs. Marriner, Newton, and Mackey each in the face
amount of $1.0 million.

Option Grants

The following table sets forth information regarding options to purchase
shares of Common Stock granted to the Named Executive Officers during 1997.

OPTION GRANTS DURING 1997

POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(2)
------------------------------------------------- -------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED EXERCISE PRICE EXPIRATION
NAME GRANTED TO EMPLOYEES PER SHARE(1) DATE 5% 10%
- ---- ---------- ------------ -------------- ---------- -------- ----------

Nicholas H. Marriner.... -- -- -- -- -- --
Patrick J. Newton....... 8,400 1.7% $5.71 1/31/2007 $116,193 $ 213,449
Michael J. Mackey....... 63,000 13.2 5.71 1/31/2007 871,444 1,600,869
Lisa L. Costello........ 21,000 4.4 5.71 1/31/2007 290,481 533,623
Eric J. Fernette........ 25,200 5.2 6.55 7/31/2007 327,578 619,348

- --------
(1) The exercise price equaled the fair market value of a share of Common
Stock on the date of grant as determined by the Board of Directors. The
exercise price is payable in cash or by delivery of shares of Common Stock
having a fair market value equal to the exercise price of the options
exercised. All options vest in one-third installments on the second,
third, and fourth anniversaries of the date of grant.
(2) The assumed annual rates of appreciation of 5% and 10% would result in the
price of a share of Common Stock increasing to $19.55 and $31.12,
respectively, from the assumed initial public offering price of $12.00 per
share, during the 10 year term of the options. The vesting of unvested
options may be accelerated at any time by the Company. The 5% and 10%
assumed annual rates of stock price appreciation used to calculate
potential gains to optionees are mandated by the rules of the Commission.
The potential realizable value does not represent the Company's prediction
of its stock price performance. There can be no assurance that the stock
price will actually appreciate over the 10 year option term at the assumed
5% and 10% levels or at any other level.

Option Exercises and Holdings

The following table sets forth information concerning the number and value
of unexercised options to purchase shares of Common Stock held by the Named
Executive Officers as of December 31, 1997. No Named Executive Officer
exercised any options to purchase shares of Common Stock during 1997.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
SHARES EXERCISABLE/ IN-THE-
ACQUIRED UNEXERCISABLE MONEY
UPON VALUE OPTIONS AT OPTIONS AT
NAME EXERCISE REALIZED YEAR-END(1) YEAR-END(2)
- ---- -------- -------- ------------- -----------

Nicholas H. Marriner................ -- -- -- --
Patrick J. Newton................... -- -- 8,400 $ 52,800
Michael J. Mackey................... -- -- 63,000 396,000
Lisa L. Costello.................... -- -- 21,000 132,000
Eric J. Fernette.................... -- -- 25,200 137,400

- --------
(1) All options were unexercisable on December 31, 1997.
(2) Value is based on the $12.00 per share assumed initial public offering
price less the per share exercise price.

EMPLOYEE BENEFIT PLANS

1997 Stock Option Plan

The Company adopted its 1997 Stock Option Plan effective February 1, 1997
and amended and restated this plan in March 1998 (as amended and restated, the
"Stock Option Plan"). The Company believes that the Stock Option Plan will
promote the long-term growth and profitability of the Company by providing key
people associated with the Company with incentives to improve shareholder
value and to contribute to the growth and financial success of the Company.
Moreover, the Company believes that the Stock Option Plan will help the
Company to attract, retain, and reward the best available persons for
positions of substantial responsibility.

The Stock Option Plan has been administered by the Board of Directors and
will be administered by the Board's Compensation Committee after the
completion of this offering. The Board of Directors has exclusive authority:
(i) to grant Awards (as defined below) under the Stock Option Plan; (ii) to
make all interpretations and determinations affecting the Stock Option Plan;
and (iii) to determine the individuals to whom Awards are granted, the amount
of such Awards, any applicable vesting schedule, and any other terms of an
Award.

Participation in the Stock Option Plan is limited to employees and members
of the Board of Directors of the Company or any of its subsidiaries, as well
as independent contractors and consultants of the Company (the
"Participants"). Awards under the Stock Option Plan may be in the form of
incentive stock options ("ISOs") that meet the requirements of Section 422 of
the Internal Revenue Code or "nonqualified" stock options ("NQSOs")
(collectively, "Awards"). ISOs may only be granted to individuals who are
employees of the Company at the date of grant. All options vest in one-third
installments on the second, third and fourth anniversaries of the date of
grant, unless otherwise specified in the terms of an individual Award. Awards
under the Stock Option Plan are not transferable by the Participants, except
upon death. If any Award issued under the Stock Option Plan expires or becomes
unexercisable for any reason without having been exercised in full, or if
shares issued pursuant to an Award are subsequently repurchased by the
Company, the unpurchased or repurchased shares will again become available for
future Awards under the Stock Option Plan.

The Stock Option Plan provides for the grant of stock options to purchase up
to an aggregate of 1,260,000 shares of Common Stock. In the event of any stock
split, reverse stock split, stock dividend, recapitalization,
reclassification, merger, consolidation, exchange of shares, offering of
rights to purchase shares of Common

Stock at a price substantially below fair market value, or other similar
event, appropriate proportional adjustments may be made to the number of
shares reserved for issuance under the Stock Option Plan and the number, kind,
and price of shares covered by outstanding Awards. The Stock Option Plan also
provides for the ability of the Board or the Compensation Committee to
accelerate the vesting of all unvested options, to accelerate the expiration
date of all options, whether or not vested, or to take certain other actions
upon the occurrence of a "Change of Control," as such term is defined in the
Stock Option Plan. Stock options may not be exercised more than 10 years after
the date of grant (five years after the date of grant with respect to an ISO
granted to any person who owns stock of the Company possessing 10% or more of
the total voting power of all the Company's stock at the time of the grant).

The Board has the discretion to award stock options to Participants as
either ISOs (employees only) or as NQSOs. Stock options awarded to
Participants who are not employees will be NQSOs. The exercise price of an ISO
must be not less than the fair market value of the Common Stock on the date
the option is granted (110% of fair market value with respect to an ISO
granted to any person who owns stock of the Company possessing 10% or more of
the total voting power of all the Company's stock at the time of the grant),
and is payable upon the exercise of the option. Although the exercise price of
an NQSO may be less than the fair market value of the Common Stock on the date
the option is granted, the Board does not intend to grant NQSOs at less than
fair market value. The number of shares covered by ISOs granted to any
optionee is limited such that the aggregate fair market value of stock
(determined as of the date of the grant) with respect to which ISOs are
exercisable for the first time by such optionee in any calendar year may not
exceed $100,000. The excess options, if any, will be treated as NQSOs.

If an optionee's service with the Company ceases for any reason other than
death, disability, or termination for cause, unless otherwise specified in the
terms of an individual option agreement, any option exercisable on the date of
such termination generally may be exercised for a period of three months from
the date of such termination or until the expiration of the stated term of the
option, whichever period is shorter. In the event of termination of service by
reason of death or disability, unless otherwise specified in the terms of an
individual option agreement, any option exercisable at the date of such
termination generally may be exercised for a period of one year from the date
of termination or until the expiration of the stated term of the option,
whichever period is shorter. If an optionee's service is terminated for cause,
any option not exercised prior to the date of such termination shall be
forfeited.

As of December 31, 1997, options to purchase an aggregate of 446,069 shares
of Common Stock were outstanding under the Stock Option Plan at a weighted
average exercise price of $5.91 per share (none of which are currently
exercisable), including options to purchase the following number of shares
held by the following directors and executive officers: Mr. Newton (8,400
shares); Mr. Mackey (63,000 shares); Ms. Costello (21,000 shares); Mr.
Fernette (25,200 shares); Mr. Curlet (12,600 shares); Mr. Fritze (12,600
shares); and Mr. Thatcher (12,600 shares). In addition, the Company expects to
grant to employees, as of the date of this Prospectus, options to purchase an
aggregate of 399,000 shares of Common Stock under the Stock Option Plan at an
exercise price equal to the initial public offering price per share, including
options to purchase the following number of shares to the following executive
officers: Mr. Newton (42,000 shares); Mr. Mackey (42,000 shares); Ms. Costello
(21,000 shares); and Mr. Fernette (4,200 shares).

401(k) Plan

The Company sponsors a 401(k) profit sharing plan (the "401(k) Plan") which
covers substantially all of its U.S. employees. Employees are eligible to
participate after completing three months of service. The 401(k) Plan provides
for elective contributions by employees up to the maximum limit allowed by the
Internal Revenue Code. The Company currently matches 50% of the amount
deferred by participants, on deferral amounts up to 7.5% of compensation.
Although the Company has not made any profit sharing contributions, the 401(k)
Plan permits the Company to make a discretionary profit sharing contribution
which, if made, is allocated to the accounts of participants who have been
credited with 1,000 hours of service during a plan year and who are

employed on the last day of a plan year. The Company made matching
contributions equal to $0.06 in 1995 and $0.50 in 1996 and 1997 for each
dollar contributed to the 401(k) Plan, subject to the limits noted above, by
employees. An employee is fully vested in the matching contributions after six
years of employment, or earlier upon attainment of appropriate retirement age,
upon retirement due to disability, or upon death. The Company made
contributions to the 401(k) Plan aggregating approximately $9,000, $92,000,
and $224,000 during the years ended December 31, 1995, 1996 and 1997
respectively. Payment of benefits is generally made in the form of a single
lump sum or in installments. The Company sponsors similar plans in Canada,
South Africa, and the United Kingdom, pursuant to which employees may defer
specified percentages of compensation which the Company matches at a rate of
50-100% on the first 3-5% of compensation deferred. The Company made matching
contributions of approximately $74,000 in 1997.

Deferred Compensation Plan

On February 25, 1998, the Company adopted a non-qualified deferred
compensation plan (the "Deferred Compensation Plan"), pursuant to which
certain executive employees may defer the receipt of compensation on a pre-tax
basis. The Company will match such deferrals, at a rate of $0.50 on each
dollar deferred, on deferral amounts up to and including 7.5 percent of each
participant's compensation, less any match provided under the Company's 401(k)
and Profit Sharing Plan. Participants' deferrals and matching contributions
will not be segregated from the Company's general assets and will be payable
upon any termination of employment.

Incentive Compensation and Profit Sharing Policies

The Company has implemented incentive compensation and profit sharing
policies which cover substantially all salaried employees. Employees in
positions at project manager or below, as well as administrative staff, are
eligible for discretionary profit sharing payments. Each employee's profit
sharing payment is based on a formula and is contingent upon his or her level
of salary and length of service. Employees in positions at project manager or
above are eligible for incentive compensation payments based on satisfaction
of applicable performance criteria. The Company approved and recognized
incentive compensation and profit sharing payments aggregating $650,000,
$1,258,000, and $1,994,000 for the years ended December 31, 1995, 1996, and
1997, respectively. The Company sponsors a profit sharing plan in the United
Kingdom, pursuant to which 9% of net revenues are paid to employees on a
partially tax-deferred basis. The Company made payments pursuant to this plan
aggregating $98,000 and $93,000 in 1995 and 1996, respectively.

Prior Plan and Awards

The Company adopted a stock plan in 1996 which allowed certain employees to
purchase shares of Common Stock at fair market value on such date. An
aggregate of 121,065 shares were purchased pursuant to this plan. No
additional shares will be granted or sold under this plan as it has been
terminated. In addition, the Company awarded 464,848 shares of Common Stock to
certain key employees in 1996. No cash consideration was paid for such shares.
See "Certain Relationships and Related Transactions."

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During 1995, 1996, and 1997, the Company paid $160,000, $100,000, and
$100,000, respectively, for accounting services provided by Clark Whitehill
Josolyne, an accounting firm of which Nicholas H. Marriner, the President and
Chief Executive Officer of the Company, was a partner until June 1996.

In October 1997, the Company entered into a contract with Richard W.
Thatcher, Jr., a director of the Company and Senior Vice President in the
investment banking department of Pennsylvania Merchant Group Ltd, one of the
Representatives of the Underwriters, pursuant to which Mr. Thatcher provides
certain financial advisory services to the Company in exchange for a monthly
retainer of $5,000 and payment of certain fees in the event of the successful
completion of an acquisition or merger. The Company believes that these
consulting services, which will continue through December 1998, are being
provided by Mr. Thatcher at a fair market rate.

As of January 1, 1995, the Company owed Mr. Marriner and Virginia L.
Pierpont, Chair of the Board of Directors of the Company, approximately
$280,000 in respect of loans and other advances from Mr. Marriner and Ms.
Pierpont to the Company. During 1995, additional loans and other advances were
made. These amounts were payable on demand and interest was accrued at a
discretionary variable rate (approximately 16% per year). As of December 31,
1995 and 1996, the Company's indebtedness to these principals amounted to
$312,000 and $356,000, respectively. Interest expense related to the Company's
indebtedness to these principals amounted to $45,000 and $53,000 for the years
ended December 31, 1995 and 1996, respectively. In March 1997, the Company
repaid the outstanding balance of this indebtedness.

In June 1996, the Company loaned Cynthia Gibson, a Selling Shareholder, and
a trust for the benefit of Piero Granelli, another Selling Shareholder, an
aggregate of $413,000, all of the proceeds of which such Selling Shareholders
used in connection with their purchase of 361,200 shares of Common Stock for
an aggregate purchase price of $459,000. In July 1997, the Company loaned
Michael J. Mackey, the Chief Financial Officer of the Company, $89,640, all of
the proceeds of which Mr. Mackey used in connection with his purchase of
17,430 shares of Common Stock for a purchase price of $99,600. Mr. Mackey's
loan bears interest at the prime rate of interest plus 0.25% per year and
matures June 30, 2001, subject to mandatory prepayment upon the completion of
this offering. In December 1997, Mr. Mackey purchased 7,560 shares of Common
Stock for $49,500. All of the foregoing loans will be repaid to the Company
upon completion of this offering.

In June 1996, Ms. Pierpont contributed 1,170,448 shares of Common Stock to
the capital of the Company at cost, a portion of which shares were issued by
the Company to employees. In September 1996, the Company awarded 151,200
shares of Common Stock to Patrick J. Newton, Chief Operating Officer of the
Company, and in December 1997, Mr. Newton purchased 7,560 shares of Common
Stock for $49,500. In January 1997, Mr. Thatcher purchased 42,000 shares of
Common Stock of the Company for $240,000, and in December 1997, Mr. Thatcher
purchased 15,120 shares of Common Stock for $99,000. In January 1997, Gunther
E.A. Fritze, a director of the Company, purchased 6,300 shares of Common Stock
for $36,000, and in December, 1997 Mr. Fritze purchased 21,000 shares of
Common Stock for $137,500. In December 1997, Eric J. Fernette, the Executive
Vice President, Human Resources of the Company, purchased 30,240 shares of
Common Stock for $198,000. In January 1997, Margaret Rather Curlet, wife of
Nigel W.E. Curlet, a director of the Company, purchased 3,570 shares of Common
Stock for $20,400, and on December 1997, Ms. Curlet purchased 7,560 shares of
Common Stock for $49,500. The price paid for the above-mentioned purchases
represented the fair value of the purchased shares as determined by the Board
of Directors as of the dates of each such purchase.

In June 1994, Ms. Pierpont, Mr. Marriner, and two trusts (the beneficiaries
of which include Ms. Pierpont and members of her family) purchased 42, 42, and
41,916 shares, respectively, of Common Stock of the Company (which shares were
cancelled in connection with the Exchange Transaction) in exchange for cash
payments of $1, $1, and $998, respectively. In the Exchange Transaction in
July 1995, Ms. Pierpont, Mr. Marriner, the two foregoing trusts and a third
trust the beneficiaries of which include Ms. Pierpont and members of her
family, and Ms. Pierpont's mother acquired 1,816,038, 166,614, 2,216,718, and
630 shares, respectively, of Common Stock of the Company in exchange for
shares of the Predecessor Companies which are now

subsidiaries of the Company. In January 1996, Mr. Marriner acquired 235,200
shares of Common Stock of the Company in exchange for shares of a company
which is now a subsidiary of the Company. Ms. Pierpont and Mr. Marriner may be
considered promoters of the Company. See "Management" and "Principal and
Selling Shareholders."

Until December 31, 1997, the Company leased a facility in Leeds, England
from Mr. Marriner and office space in Johannesburg, South Africa from an
entity of which Mr. Marriner and Mr. Granelli are owners. The aggregate rental
paid by the Company for these properties was $38,000 for 1995, $38,000 for
1996, and $28,000 for 1997, which the Company believes reflected fair market
rental rates.

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth information, as of the date of this
Prospectus, with respect to the beneficial ownership of the Common Stock
(including shares issuable upon the exercise of outstanding options that are
exercisable as of the date of this Prospectus or within 60 days hereafter) by:
(i) each person who owns beneficially more than 5% of the Common Stock; (ii)
each director of the Company; (iii) the Chief Executive Officer and each of
the Named Executive Officers of the Company; (iv) all directors and executive
officers as a group; and (v) the Selling Shareholders. Unless otherwise
indicated, each named person exercises sole voting and investment power.

BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
OF COMMON STOCK OF COMMON STOCK
PRIOR TO THIS OFFERING NUMBER OF AFTER THIS OFFERING
-------------------------SHARES BEING -----------------------
NAME OF BENEFICIAL OWNER SHARES PERCENT OFFERED SHARES PERCENT
- ------------------------ ------------- ----------------------- ------------ ----------

EXECUTIVE OFFICERS AND
DIRECTORS
Nicholas H.
Marriner(1)............ 401,814 8.4% -- 401,814 6.2%
Patrick J. Newton....... 158,760 3.3% 60,480 98,280 1.5%
Michael J. Mackey(1).... 24,990 * -- 24,990 *
Lisa L. Costello........ 4,200 * -- 4,200 *
Eric J. Fernette........ 30,240 * -- 30,240 *
Nigel W.E. Curlet(2).... 11,130 * -- 11,130 *
Gunther E.A. Fritze(3).. 27,300 * -- 27,300 *
Richard W. Thatcher,
Jr..................... 57,120 1.2% -- 57,120 *
Virginia L. Pierpont.... 540,821 11.2% 150,004 390,817 6.0%
OTHER SHAREHOLDERS
Amicable Discretionary
Trust(1)(4)(5)(7)...... 956,592 19.9% 154,192 802,400 12.3%
Worcester Discretionary
Trust(4)(6)(7)......... 631,092 13.1% -- 631,092 9.7%
Woodbourne Discretionary
Trust(4)(6)(7)......... 629,034 13.1% -- 629,034 9.7%
Piero Granelli
(1)(4)(8).............. 217,048 4.5% 91,724 125,324 1.9%
Alison Smith(1)......... 189,000 3.9% 147,000 42,000 *
Cynthia Gibson.......... 176,400 3.7% 96,600 79,800 1.2%
Peter Johann van der
Westhuizen(1)(9)....... 92,400 1.9% -- 92,400 1.4%
All directors and
executive officers as a
group
(9 individuals)........ 1,256,375 26.1% 210,484 1,045,891 16.1%

- -------
* Less than 1%
(1) Does not include shares of Common Stock which may be sold pursuant to the
Underwriters' over-allotment option. If the Underwriters' over-allotment
option is exercised in full, Mr. Marriner, the Amicable Discretionary
Trust, Ms. Smith, Mr. Mackey, a trust of which Mr. Granelli is the sole
beneficiary, and a trust of which Mr. van der Westhuizen is a named
beneficiary intend to sell 31,814, 109,200, 37,800, 4,200, 88,200, and
46,200 shares of Common Stock, respectively, pursuant thereto.
(2) Consists of shares (as to which Mr. Curlet disclaims beneficial ownership)
owned by Mr. Curlet's spouse.

(3) Includes 12,600 shares owned by Mr. Fritze's children.

(4) John Andrew Cowan and Roger Geoffrey Barrs are the co-trustees of each of
these trusts. Messrs. Cowan and Barrs are also trustees of the David
Michael Payne Settlement (which beneficially owns 184,800 shares of Common
Stock), the sole beneficiary of which is Piero Granelli, a former employee
of the Company and a Selling Shareholder.

(5) The beneficiaries under this trust include Ms. Pierpont, her children and
grandchildren, the spouses and children of any of the beneficiaries, and
any other persons or class of persons named by the trustees. As of the
date of this Prospectus, no other persons or classes of persons have been
so named.

(6) The beneficiaries under these trusts include Ms. Pierpont, her children,
the spouses and children of any of the beneficiaries, and any other
persons or class of persons named by the trustees. As of the date of this
Prospectus, no other persons or classes of persons have been so named.

(7) The trustees of each of these trusts have the authority to appoint all or
any part of the capital and income of the trust for one or more of the
beneficiaries and in such names and proportions and at such time as such
trustees shall determine.

(8) Includes 184,800 shares owned by the David Michael Payne Settlement, a
trust a named beneficiary of which is Mr. Granelli.

(9) Includes 92,400 shares owned by the JVDW Family Trust, a trust of which
Mr. van der Westhuizen is a named beneficiary.

DESCRIPTION OF CAPITAL STOCK

As of the date of this Prospectus, the authorized capital stock of the
Company consists of 40,000,000 shares of Common Stock, par value $0.01 per
share, of which 6,508,475 shares will be outstanding immediately following
this offering, and 10,000,000 shares of Preferred Stock, par value $0.01 per
share (the "Preferred Stock"), of which no shares will be outstanding
immediately following this offering. The following summary of the Company's
capital stock is qualified in its entirety by reference to the Company's
Amended and Restated Articles of Incorporation (the "Restated Articles") and
its Restated Bylaws (the "Bylaws"), each of which is filed as an exhibit to
the Registration Statement of which this Prospectus is a part.

COMMON STOCK

Voting Rights. Holders of Common Stock are entitled to one vote for each
share on all matters on which shareholders generally are entitled to vote,
including elections of directors. The Restated Articles provide that there
shall be no cumulative voting for the election of directors. Holders of Common
Stock have no preemptive subscription, redemption, or conversion rights.

Dividends. Subject to the preferential rights of any outstanding Preferred
Stock that may be created by the Board of Directors under the Restated
Articles, dividends may be paid to holders of Common Stock when, as and if
declared by the Board of Directors out of funds legally available for such
purpose. The declaration and payment of dividends on Common Stock could be
restricted by the terms of any Preferred Stock issued or any credit agreements
to which the Company may become a party. Under the TBCA, dividends may be paid
by the Company out of "surplus" (as defined under Article 1.02 of the TBCA)
or, if there is no surplus, out of net profits for the fiscal year in which
the dividends are declared and/or the preceding fiscal year. The Company does
not intend to pay dividends at the present time. See "Dividend Policy."

Liquidation. In the event of the dissolution or winding up of the Company,
after payment or provision for payment of debts and other liabilities of the
Company and any other series or class of the Company's stock hereafter issued
that ranks senior as to liquidation rights to the Common Stock, the holders of
Common Stock will be entitled to receive pro rata all remaining assets of the
Company available to such holders. All outstanding shares of Common Stock are,
and the shares of Common Stock to be sold by the Company in this offering will
be, duly and validly issued, fully paid, and nonassessable.

PREFERRED STOCK

The Board of Directors may from time to time authorize the issuance of one
or more classes or series of Preferred Stock without shareholder approval.
Subject to the provisions of the Restated Articles and limitations prescribed
by law, the Board of Directors is authorized to adopt resolutions to issue the
shares, establish the number of shares, change the number of shares
constituting any series, and provide or change the voting powers,
designations, preferences, and relative, participating, optional or other
special rights, qualifications, limitations or restrictions on shares of
Preferred Stock, including dividend rights (including whether dividends are
cumulative), dividend rates, terms of redemption (including sinking fund
provisions), redemption prices, conversion rights, and liquidation
preferences, in each case without any action or vote by the shareholders. The
Company has no current plans to issue any shares of Preferred Stock of any
class or series.

One of the effects of undesignated Preferred Stock may be to enable the
Board of Directors to discourage an attempt to obtain control of the Company
by means of a tender offer, proxy contest, merger or otherwise, and thereby
protect the Company's management. The issuance of Preferred Stock pursuant to
the Board of Directors' authority described above may adversely affect the
rights of the holders of Common Stock. For example, Preferred Stock issued by
the Company may rank prior to the Common Stock as to dividend rights,
liquidation

preference or both, may have full or limited voting rights, and may be
convertible into shares of Common Stock. Accordingly, the issuance of shares
of Preferred Stock may discourage bids for the Common Stock or may otherwise
adversely affect the trading price of the Common Stock.

CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK

Under the Restated Articles, upon completion of this offering (assuming the
Underwriters' over-allotment option is not exercised and excluding an
aggregate of 1,260,000 shares reserved for issuance under the Stock Option
Plan), there will be 33,491,525 shares of Common Stock and 10,000,000 shares
of Preferred Stock available for future issuance without shareholder approval.
These additional shares may be utilized for a variety of corporate purposes,
including future public offerings to raise additional capital or facilitate
acquisitions. The Company does not currently have any plans to issue
additional shares of Common Stock or Preferred Stock (other than shares of
Common Stock issuable under the Stock Option Plan).

SPECIAL PROVISIONS OF THE RESTATED ARTICLES, THE BYLAWS AND TEXAS LAW

The Texas Miscellaneous Corporation Laws Act (the "Texas Miscellaneous
Laws") authorizes corporations to limit or eliminate the personal liability of
directors to corporations and their shareholders for monetary damages for
breach of their fiduciary duty as directors except for liability of a director
resulting from (i) a breach of such director's duty of loyalty to the
corporation or its shareholders, (ii) an act or omission that is not in good
faith or that involves intentional misconduct or a knowing violation of laws,
(iii) a transaction from which the director received an improper personal
benefit, or (iv) an act or omission for which the liability of the director is
expressly provided by an applicable statute. The Restated Articles limit the
liability of directors of the Company (in their capacity as directors but not
in their capacity as officers) to the Company or its shareholders to the
fullest extent permitted by the Texas Miscellaneous Laws. The inclusion of
this provision in the Restated Articles may reduce the likelihood of
derivative litigation against directors and may discourage or deter
shareholders from suing directors for breach of their duty of care, even
though such an action, if successful, might otherwise benefit the Company and
its shareholders. The inclusion of such provisions in the Restated Articles
together with a provision requiring the Company to indemnify its directors,
officers, and certain other individuals against certain liabilities, is
intended to enable the Company to attract qualified persons to serve as
directors who might otherwise be reluctant to do so. The Commission has taken
the position that personal liability of directors for violations of the
federal securities laws cannot be limited and that indemnification by the
issuer for such violations is unenforceable.

Under the TBCA, the board of directors of a corporation has the power to
amend and repeal the corporation's bylaws unless the corporation's articles of
incorporation reserve the power exclusively to the shareholders or a
particular bylaw expressly provides that the board of directors may not amend
or repeal the bylaw. The Restated Articles give the Board of Directors the
power to amend and repeal the Company's Bylaws. The Company's Bylaws also
provide that the number of directors shall be fixed from time to time by
resolution of the Board of Directors. These provisions, in addition to the
existence of authorized but unissued capital stock, may have the effect,
either alone or in combination with each other, of discouraging an acquisition
of the Company deemed undesirable by the Board of Directors.

STATUTORY BUSINESS COMBINATION PROVISION

The Company is subject to Part 13 of the TBCA ("Part 13") which, with
certain exceptions, prohibits a Texas corporation from engaging in a "business
combination" (as defined in Part 13) with any shareholder who is a beneficial
owner of 20% or more of the corporation's outstanding stock for a period of
three years after such shareholder's acquisition of a 20% ownership, unless
(i) the board of directors of the corporation approves the transaction or the
shareholder's acquisition of shares prior to the acquisition or (ii) two-
thirds of the unaffiliated shareholders of the corporation approve the
transaction at a shareholders' meeting. Shares that are issuable, but have not
yet been issued, pursuant to options, conversion or exchange rights, or other
agreements are not considered outstanding for purposes of Part 13.

CLASSIFIED BOARD OF DIRECTORS

The Restated Articles provide for the Board of Directors to be divided into
three classes serving staggered three-year terms. The term of office of the
first class of directors will expire at the 1999 annual meeting of
shareholders, the term of office of the second class will expire at the 2000
annual meeting of shareholders, and the term of office of the third class will
expire at the 2001 annual meeting of shareholders. At each annual meeting of
shareholders, the class of directors to be elected at such meeting will be
elected for a three-year term, and the directors in the other two classes will
continue in office. The staggered terms for directors may affect the
shareholders' ability to change control of the Company even if a change of
control were in the shareholders' interests.

SHAREHOLDER ACTION

If provided for in the articles of incorporation, the TBCA permits
shareholder action without a meeting, without prior notice, and without a
vote, upon the written consent of less than all of the holders of outstanding
stock. The Restated Articles allow shareholder action without a meeting in
accordance with the TBCA. The Bylaws provide that special meetings of the
shareholders may be called only by the President, Chairman of the Board, a
majority of the Board of Directors, or the holders of at least 50% of all
shares entitled to vote at the proposed meeting. This provision of the Bylaws
could have the effect of delaying, deferring, or preventing a change of
control of the Company even if a change of control were in the shareholders'
interests.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is American Stock
Transfer and Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have outstanding
6,508,475 shares of Common Stock (6,551,061 shares if the Underwriters'
overallotment option is exercised in full). Sales of a substantial number of
shares of Common Stock in the public market following this offering, or the
perception that such sales could occur, could adversely affect the market
price for the Company's Common Stock.

The 446,069 shares reserved for issuance upon exercise of options
outstanding on December 31, 1997, the 399,000 shares to be reserved for
issuance upon options expected to be granted upon completion of this offering,
and the 414,931 shares reserved for issuance upon exercise of future grants
under the Company's Stock Option Plan will be registered under the Securities
Act after 90 days from the completion of this offering. Other than shares
subject to the lock-up agreements, shares registered under the Securities Act
will be freely transferable upon issuance unless acquired by affiliates of the
Company. See "Management--Employee Benefit Plans."

All directors, executive officers, and principal shareholders, and certain
other employees, of the Company who hold in the aggregate 3,911,258 shares of
Common Stock have agreed not to sell, offer to sell, or otherwise dispose of
or transfer any of their shares or options (except in the case of bona fide
gifts to immediate family members of such persons who agree to be bound by
such restrictions, or to trusts for the benefit thereof, the trustees of which
agree to be so bound) for a period of 180 days after the date of this
Prospectus without the prior written consent of William Blair & Company,
L.L.C. The Company has also agreed not to issue, sell, offer to sell, contract
to sell, or otherwise dispose of or transfer any of its shares or grant any
options (other than options granted or shares issued in connection with the
Company's 1997 Stock Option Plan or unregistered shares issued in connection
with any acquisition) during such 180 day period. William Blair & Company,
L.L.C. may, however, in its sole discretion and at any time without notice,
release for public sale all or any portion of the shares subject to such lock-
up agreements. See "Underwriting."

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) is entitled to sell restricted shares if at least
one year has passed since the later of the time such shares were acquired from
the Company or any affiliate of the Company. Rule 144 provides, however, that
within any three-month period such person may only sell up to the greater of:
(i) 1% of the then outstanding shares of the Common Stock (approximately
65,100 shares immediately following this offering); or (ii) the average weekly
reported trading volume in the Common Stock during the four calendar weeks
immediately preceding the date on which notice of the sale is filed with the
Commission. Sales under Rule 144 are also subject to certain manner-of-sale
provisions and notice requirements and to the availability of current public
information about the Company. All shares held by persons who are deemed to be
affiliates of the Company are subject to the volume limitations and other
requirements of Rule 144 regardless of how long the shares have been owned or
how they were acquired. Restricted shares held by non-affiliates of the
Company for more than two years can be sold without limitation under Rule 144.
Of the shares to be outstanding upon completion of this offering, 4,108,475
shares are "restricted," as that term is defined in the Securities Act. Of
these restricted shares, 3,747,170 have been held for more than one year and,
as such, will be salable upon expiration of the lock-up agreements described
above, subject to certain volume and manner of sale restrictions under Rule
144 of the Securities Act.

Prior to this offering, there was no public market for the Common Stock, and
no prediction can be made as to the effect, if any, that future sales of
Common Stock or the availability of shares of Common Stock for future sale
will have on the market price of the Common Stock prevailing from time to
time. Sales of substantial amounts of Common Stock following this offering, or
the perception that such sales could occur, could adversely affect prevailing
market prices of the Common Stock as well as impair the Company's ability to
raise capital through an offering of its equity securities.

UNDERWRITING

The several Underwriters named below (the "Underwriters"), for which William
Blair & Company, L.L.C., Robert W. Baird & Co. Incorporated, and Pennsylvania
Merchant Group Ltd are acting as representatives (the "Representatives"), have
severally agreed, subject to the terms and conditions set forth in the
Underwriting Agreement by and among the Company and the Underwriters (the
"Underwriting Agreement"), to purchase from the Company, and the Company has
agreed to sell to each of the Underwriters, the respective number of shares of
Common Stock set forth opposite each Underwriter's name in the table below.

NUMBER OF
UNDERWRITERS SHARES
- ------------ ---------

William Blair & Company, L.L.C. ......................................
Robert W. Baird & Co. Incorporated....................................
Pennsylvania Merchant Group Ltd.......................................
---------
Total............................................................... 2,400,000
=========

In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Common Stock
being sold pursuant to the Underwriting Agreement if any of the Common Stock
being sold pursuant to the Underwriting Agreement (excluding shares covered by
the over-allotment option granted therein) is purchased. In the event of a
default by any Underwriter, the Underwriting Agreement provides that, in
certain circumstances, the purchase commitments of the non-defaulting
Underwriters shall be increased or the Underwriting Agreement may be
terminated.

The Representatives have advised the Company that the Underwriters propose
to offer the Common Stock to the public initially at the public offering price
set forth on the cover page of this Prospectus and to selected dealers at such
price less a concession of not more than $ per share. The Underwriters may
allow, and such dealers may re-allow, a concession not in excess of $ per
share to certain other dealers. After commencement of the initial public
offering, the public offering price, and other selling terms may be changed by
the Representatives.

The Company, certain of the Selling Shareholders, and certain other
shareholders of the Company have granted to the Underwriters an option,
exercisable within 30 days after the date of this Prospectus, to purchase up
to an aggregate of 360,000 additional shares of Common Stock (42,586 from the
Company and 317,414 from such shareholders), to cover over-allotments, at the
same price per share to be paid by the Underwriters for the other shares
offered hereby. If the Underwriters purchase any such additional shares
pursuant to this option, each of the Underwriters will be committed to
purchase such additional shares in approximately the same proportion as set
forth in the table above. If less than all of such additional shares are
purchased, the Underwriters will purchase such shares from the Company and the
shareholders, pro rata. The Underwriters may exercise the option only for the
purpose of covering over-allotments, if any, made in connection with the
distribution of the shares of Common Stock offered hereby.

All directors, executive officers, and principal shareholders, and certain
other employees, of the Company who hold in the aggregate 3,911,258 shares of
Common Stock and the Company have agreed that for a period of 180 days after
the date of this Prospectus, without the prior written consent of William
Blair & Company, L.L.C., they will not, directly or indirectly, offer, sell,
contract to sell, grant any option to purchase, or otherwise dispose of or
transfer any Common Stock or securities convertible or exchangeable into, or
exercisable for, Common Stock (except in the case of bona fide gifts to
immediate family members of such persons who agree to be bound by such
restrictions, or to trusts for the benefit thereof, the trustees of which
agree to be so bound). In considering a request for its consent to a sale or
transfer within the 180-day period, William Blair & Company, L.L.C. will take
into account various factors, including, but not limited to, the number of
shares requested to be sold, the anticipated manner and timing of sale, the
potential impact of the sale on the market for the Common Stock, and

market conditions generally. The Company may grant options and issue Common
Stock under the Stock Option Plan and issue unregistered shares in connection
with any acquisition during the lock-up period. The Company also has agreed
not to file or cause to be filed any registration statement with the
Commission related to shares issuable under the Stock Option Plan for a period
of 90 days after completion of this offering.

The Company and the Selling Shareholders have agreed to indemnify the
Underwriters and their controlling persons against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
the Underwriters may be required to make in respect thereof.

The Representatives have informed the Company that the Underwriters will not
confirm, without client authorization, sales to their client accounts as to
which they have discretionary authority.

Prior to this offering, there was no public market for the Common Stock of
the Company. Consequently, the initial public offering price for the Common
Stock was determined by negotiations among the Company and the
Representatives. Among the factors which were considered in such negotiations
were the prevailing market conditions, the results of operations of the
Company in recent periods, the market capitalizations and stages of
development, and recent market prices of securities, of other companies which
the Company and the Representatives believed to be comparable to the Company,
estimates of the business potential of the Company, the present state of the
Company's development, the general condition of the securities markets at the
time of this offering, and other factors which were deemed relevant. There can
be no assurance that an active trading market will develop for the Common
Stock or that the Common Stock will trade in the public market subsequent to
this offering at or above the initial public offering price.

During and after this offering, the Underwriters may purchase and sell the
Common Stock in the open market in order to facilitate this offering.
Specifically, the Underwriters may over-allot or otherwise create a short
position in the Common Stock for their own account by selling more shares of
Common Stock than have been sold to them by the Company and the Selling
Shareholder pursuant to the Underwriting Agreement. The Underwriters may elect
to cover any such short position by purchasing shares of Common Stock in the
open market or by exercising the over-allotment option granted to them by the
Company and the Selling Shareholders. The Underwriters also may impose a
penalty bid, whereby selling concessions allowed to syndicate members or other
broker-dealers in respect of shares of Common Stock sold in this offering for
their account may be reclaimed by the syndicate if such shares are repurchased
by the syndicate in stabilizing or covering transactions.

The activities described above may stabilize, maintain, or otherwise affect
the market price of the Common Stock and make such price higher than it might
otherwise be in the open market. The imposition of a penalty bid may also
affect the price of the Common Stock to the extent that it discourages resales
thereof. These activities, if commenced, may be discontinued at any time
without notice and may be effected on the Nasdaq Stock Market or otherwise.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to whether the Underwriters will engage in such transactions or
choose to discontinue any transactions engaged in or the direction or
magnitude of any effect that such transactions may have on the price of the
Common Stock.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Pepper Hamilton LLP. Certain matters will be passed
upon for the Underwriters by Bracewell & Patterson, L.L.P.

EXPERTS

The consolidated balance sheets as of December 31, 1996 and 1997 and the
combined or consolidated statements of income, shareholders' equity, and cash
flows for the six months ended June 30, 1995 and December 31, 1995 and for the
years ended December 31, 1996 and 1997, included in this Prospectus, have been
included

herein in reliance on the report of Coopers & Lybrand L.L.P. ("Coopers &
Lybrand"), independent accountants, given on the authority of that firm as
experts in accounting and auditing.

Melton & Melton L.L.P. ("Melton & Melton") served as the independent
accountants for the Company for the year ended December 31, 1995. The Company
elected to engage Coopers & Lybrand to audit the Consolidated Financial
Statements of the Company for the year ended December 31, 1996 and,
accordingly, effective November 4, 1996 the engagement of Melton & Melton as
the independent accounting firm for the Company was discontinued. Neither the
report of Melton & Melton on the consolidated financial statements of the
Company as of December 31, 1995 and the year then ended nor the report of
Coopers & Lybrand on the combined or consolidated financial statements of the
Company as of December 31, 1996 and 1997 and for the three years in the period
ended December 31, 1997 contained an adverse opinion or a disclaimer of
opinion, and neither was qualified or modified as to uncertainty, audit scope
or accounting principle. In the Company's opinion, there did not occur, during
the year ended December 31, 1995 or any subsequent interim period prior to
November 4, 1996, any "reportable events" between the Company and Melton &
Melton within the meaning of the rules promulgated by the Commission. In
addition, during the years ended December 31, 1995 and 1996 and during any
subsequent interim period prior to November 4, 1996, there were no
disagreements between the Company and Melton & Melton on any matters of
accounting principles or practices, financial statement disclosure, or
auditing scope or procedure.

The Company has received a letter from Melton & Melton stating that it
agrees with the statements made by the Company in the second and third
paragraphs of this "Experts" section.

During the years ended December 31, 1995 and during any subsequent interim
period prior to November 4, 1996, Coopers & Lybrand was not consulted by the
Company on the application of accounting principles to a specified
transaction, either completed or proposed, or on the type of audit opinion
that might be rendered on the financial statements of the Company.

ADDITIONAL INFORMATION

The Company is not currently subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a result
of this offering, the Company will be required to file reports and other
information with the Commission pursuant to the informational requirements of
the Exchange Act.

The Company has filed with the Commission, in Washington, D.C., a
Registration Statement on Form S-1 (which term encompasses any and all
amendments thereto) under the Securities Act with respect to the shares of
Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
Common Stock offered hereby, reference is made to the Registration Statement
and the exhibits and schedules filed therewith. Statements contained in this
Prospectus as to the contents of any contract or any other document referred
to are not necessarily complete, and in each instance reference is made to the
copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. A copy of the Registration Statement, and the exhibits and
schedules thereto, may be inspected without charge at the public reference
facilities maintained by the Commission in Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located
at Seven World Trade Center, New York, New York 10048 and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661, and copies of all or
any part of the Registration Statement may be obtained from the Commission
upon payment of a prescribed fee. This information is also available from the
Commission's Internet web site at http://www.sec.gov. The Registration
Statement, including all exhibits thereto and amendments thereof, will be
filed with the Commission through EDGAR.

DA CONSULTING GROUP, INC.

INDEX TO FINANCIAL STATEMENTS

PAGE
----

Report of Independent Accountants......................................... F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997.............. F-3
Combined and Consolidated Statements of Income for the six months ended
June 30, 1995 and December 31, 1995 and for the years ended December 31,
1996 and 1997............................................................ F-4
Combined and Consolidated Statement of Shareholders' Equity for the six
months ended June 30, 1995 and December 31, 1995 and for the years ended
December 31, 1996 and 1997............................................... F-5
Combined and Consolidated Statements of Cash Flows for the six months
ended June 30, 1995 and December 31, 1995 and for the years ended
December 31, 1996 and 1997............................................... F-6
Notes to Combined and Consolidated Financial Statements................... F-7

F-1

REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors and Shareholders
DA Consulting Group, Inc.

We have audited the accompanying consolidated balance sheets of DA
Consulting Group, Inc. (the "Company") as of December 31, 1996 and 1997, and
the related combined or consolidated statements of income, shareholders'
equity and cash flows for the six months ended June 30, 1995 and December 31,
1995 and for the years ended December 31, 1996 and 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

As discussed in Notes 1 and 9 to the financial statements, prior to July 1,
1995 the Company's business was operated through four separate companies (the
"Predecessor Companies") under common management. On July 1, 1995, the
Predecessor Companies became wholly-owned subsidiaries of the Company in a
stock exchange transaction (the "Exchange Transaction") accounted for as a
purchase. Accordingly, the financial statements of the Company for the six
months ended June 30, 1995 and December 31, 1995 are presented on a combined
and consolidated basis, respectively, and are not comparable.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company
as of December 31, 1996 and 1997, and the combined or consolidated results of
its operations and its cash flows for the six months ended June 30, 1995 and
December 31, 1995, respectively, and for the years ended December 31, 1996 and
1997, in conformity with generally accepted accounting principles.

Houston, Texas Coopers & Lybrand L.L.P.
February 19, 1998

except for Note 16 as
to which the date is
April 20, 1998

F-2

DA CONSULTING GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

DECEMBER 31,
---------------
1996 1997
------ -------
ASSETS
------

Current assets:
Cash and cash equivalents........................................ $2,199 $ 3,664
Accounts receivable:
Trade, net..................................................... 4,444 10,934
Other.......................................................... 63 800
Unbilled revenue................................................. -- 645
Prepaid expenses and other current assets........................ 401 250
------ -------
Total current assets......................................... 7,107 16,293
Property and equipment, net...................................... 951 2,507
Other assets..................................................... -- 898
Intangible assets, net........................................... 491 437
------ -------
Total assets............................................... $8,549 $20,135
====== =======

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

Current liabilities:
Revolving line of credit......................................... $ 375 $ 3,208
Note payable..................................................... -- 762
Notes payable to shareholders.................................... 356 --
Accounts payable................................................. 1,741 1,841
Accrued expenses................................................. 2,534 5,517
Deferred income.................................................. -- 312
Income taxes payable............................................. 261 333
Deferred income taxes............................................ 211 219
------ -------
Total current liabilities.................................... 5,478 12,192
------ -------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $0.01 par value: 10,000,000 shares authorized... -- --
Common stock, $0.01 par value: 40,000,000 shares authorized;
4,435,200 and 4,829,191 shares issued and 4,213,650 and
4,808,475 shares outstanding.................................... 44 48
Additional paid-in capital....................................... 2,787 6,449
Retained earnings................................................ 691 2,099
Treasury stock, at cost: 221,550 and 20,716 shares............... (5) (91)
Notes receivable from shareholders............................... (413) (503)
Cumulative foreign currency translation adjustment............... (33) (59)
------ -------
Total shareholders' equity................................... 3,071 7,943
------ -------
Total liabilities and shareholders' equity................. $8,549 $20,135
====== =======

The accompanying notes are an integral part of the combined and consolidated
financial statements.

F-3

DA CONSULTING GROUP, INC.

COMBINED AND CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

YEAR ENDED
SIX MONTHS ENDED DECEMBER 31,
--------------------- ----------------
JUNE 30, DECEMBER 31,
1995 1995 1996 1997
-------- ------------ ------- -------
COMBINED CONSOLIDATED CONSOLIDATED

Revenue................................ $6,299 $8,319 $26,202 $44,204
Cost of revenue........................ 3,412 4,249 14,190 24,063
------ ------ ------- -------
Gross profit......................... 2,887 4,070 12,012 20,141
Selling and marketing expense.......... 407 665 1,953 3,726
Development expense.................... 296 411 1,250 1,223
General and administrative expense..... 1,657 2,357 6,597 12,436
Amortization expense................... -- 230 274 54
Employee stock-related charge.......... -- -- 1,858 263
------ ------ ------- -------
Operating income..................... 527 407 80 2,439
Interest (expense) income, net......... 5 (31) (37) 30
Other (expense) income, net............ (28) (30) 132 (165)
------ ------ ------- -------
Income before taxes.................. 504 346 175 2,304
------ ------ ------- -------
Provision for income taxes:
Current provision.................... 98 119 281 888
Deferred provision (benefit)......... 91 109 (140) 8
------ ------ ------- -------
Provision for income taxes......... 189 228 141 896
------ ------ ------- -------
Net income......................... $ 315 $ 118 $ 34 $ 1,408
====== ====== ======= =======
Basic earnings per share............... $ 0.09 $ 0.03 $ 0.01 $ 0.29
Weighted average shares outstanding.... 3,623 3,623 4,217 4,808
Diluted earnings per share............. $ 0.08 $ 0.03 $ 0.01 $ 0.28
Weighted average shares outstanding.... 3,868 3,868 4,462 5,053

The accompanying notes are an integral part of the combined and consolidated
financial statements.

F-4

DA CONSULTING GROUP, INC.

COMBINED AND CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

(IN THOUSANDS)

CUMULATIVE
COMMON TREASURY NOTES FOREIGN
STOCK ADDITIONAL STOCK RECEIVABLE CURRENCY TOTAL
----------- PAID-IN RETAINED ------------ FROM TRANSLATION SHAREHOLDERS'
NUMBER PAR CAPITAL EARNINGS NUMBER COST STOCKHOLDERS ADJUSTMENT EQUITY
------ ---- ---------- -------- ------ ---- ------------ ----------- -------------

BALANCE AS OF DECEMBER
31, 1994--COMBINED..... 2,621 $ 26 -- $ 232 -- -- -- -- $ 258
Net income............. -- -- -- 315 -- -- -- -- 315
----- ---- ------- ------ ----- ---- ----- ---- ------
BALANCE AS OF JUNE 30,
1995--COMBINED......... 2,621 26 -- 547 -- -- -- -- 573
Shares issued in stock
exchange transaction.. 1,579 16 $ 1,269 -- -- -- -- -- 1,285
Net income............. -- -- -- 118 -- -- -- -- 118
Cash dividends paid.... -- -- -- (8) -- -- -- -- (8)
Foreign currency
translation
adjustment............ -- -- -- -- -- -- -- $(77) (77)
----- ---- ------- ------ ----- ---- ----- ---- ------
BALANCE AS OF DECEMBER
31, 1995--
CONSOLIDATED........... 4,200 42 1,269 657 -- -- -- (77) 1,891
Stock contribution..... -- -- 28 -- 1,170 $(28) -- -- --
Issuance of common
stock................. 235 2 1,490 -- (949) 23 $(413) -- 1,102
Net income............. -- -- -- 34 -- -- -- -- 34
Foreign currency
translation
adjustment............ -- -- -- -- -- -- -- 44 44
----- ---- ------- ------ ----- ---- ----- ---- ------
BALANCE AS OF DECEMBER
31, 1996--
CONSOLIDATED........... 4,435 44 2,787 691 221 (5) (413) (33) 3,071
Issuance of common
stock................. 394 4 3,662 -- (218) 5 (90) -- 3,581
Employee stock
repurchases........... -- -- -- -- 18 (91) -- -- (91)
Net income............. -- -- -- 1,408 -- -- -- -- 1,408
Foreign currency
translation
adjustment............ -- -- -- -- -- -- -- (26) (26)
----- ---- ------- ------ ----- ---- ----- ---- ------
BALANCE AS OF DECEMBER
31, 1997--
CONSOLIDATED........... 4,829 $ 48 $ 6,449 $2,099 21 $(91) $(503) $(59) $7,943
===== ==== ======= ====== ===== ==== ===== ==== ======

The accompanying notes are an integral part of the combined and consolidated
financial statements.

F-5

DA CONSULTING GROUP INC.

COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

YEAR ENDED
SIX MONTHS ENDED DECEMBER 31,
--------------------- --------------
JUNE 30, DECEMBER 31,
1995 1995 1996 1997
-------- ------------ ------ ------
COMBINED CONSOLIDATED CONSOLIDATED

Cash flows from operating activities:
Net income............................ $ 315 $ 118 $ 34 $1,408
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization....... 43 276 395 453
Deferred income taxes............... 99 101 (140) 8
Stock awarded to employees.......... -- -- 898 --
Changes in operating assets and
liabilities:
Increase in accounts receivable
and unbilled revenue............. (866) (1,334) (861) (7,872)
(Increase) decrease in prepaid
expenses and other current
assets........................... (12) (16) (328) 151
Increase in other assets.......... -- -- -- (45)
Increase in accounts payable and
accrued liabilities.............. 614 900 1,919 3,083
Increase in deferred income....... -- -- -- 312
Increase (decrease) in income
taxes payable.................... 159 82 (17) 72
------ ------ ------ ------
Total adjustments............... 37 9 1,866 (3,838)
------ ------ ------ ------
Net cash provided by (used in)
operating activities........... 352 127 1,900 (2,430)
------ ------ ------ ------
Cash flows from investing activities:
Proceeds from sale of property and
equipment............................ -- -- 17 --
Purchases of property and equipment... (111) (153) (726) (1,955)
------ ------ ------ ------
Net cash used in investing
activities..................... (111) (153) (709) (1,955)
------ ------ ------ ------
Cash flows from financing activities:
Net proceeds from revolving line of
credit............................... -- 150 125 2,833
Net proceeds from note payable........ -- -- -- 762
Net proceeds from (repayments of)
notes payable to shareholders........ 240 (32) 43 (356)
Issuance of stock..................... -- -- 204 3,581
Employee stock repurchases............ -- -- -- (91)
Dividends paid........................ -- (8) -- --
Deferred offering costs............... -- -- -- (853)
------ ------ ------ ------
Net cash provided by financing
activities..................... 240 110 372 5,876
------ ------ ------ ------
Effect of changes in foreign currency
exchange rate on cash and cash
equivalents............................ -- (77) 44 (26)
------ ------ ------ ------
Increase in cash and cash
equivalents.................... 481 7 1,607 1,465
Cash and cash equivalents at beginning
of period.............................. 104 585 592 2,199
------ ------ ------ ------
Cash and cash equivalents at end of
period................................. $ 585 $ 592 $2,199 $3,664
====== ====== ====== ======

The accompanying notes are an integral part of the combined and consolidated
financial statements.

F-6

DA CONSULTING GROUP, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

DA Consulting Group, Inc. (the "Company") is a leading international
provider of end-user support solutions to companies which are implementing
enterprise resource planning software systems.

Prior to July 1995, the Company's business was operated through four
separate companies located in the United States (U.S.), the United Kingdom
(U.K.), South Africa, and Australia (the "Predecessor Companies"). All of the
Predecessor Companies were under common management. Prior to July 1995, three
of the Predecessor Companies were controlled (based upon record ownership) by
trusts, the sole beneficiaries of which were the controlling owners of the
U.S. company and their children. As a result of a stock exchange transaction
(the "Exchange Transaction") in July 1995, the Predecessor Companies became
wholly-owned subsidiaries of the Company. The Exchange Transaction consisted
of the issuance of 4,200,000 shares of common stock of the Company in exchange
for the outstanding common stock of the Predecessor Companies. For accounting
purposes, the acquisition of the U.S. company has been treated as a
recapitalization and the U.S. company has been treated as the acquiror of the
other three entities; and, as a result, the net assets of the U.S. company
were carried forward at historical basis while the net assets of the acquired
Predecessor Companies were recorded at fair market value using the purchase
method of accounting (see Note 9). The combined results of the Predecessor
Companies are presented for the six months ended June 30, 1995. The
consolidated results of the Company for the six months ended December 31, 1995
reflect the change in basis for the Predecessor Companies and amortization
since the Exchange Transaction.

All material intercompany balances and transactions have been eliminated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management Estimates

The preparation of 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
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.

Property and Equipment

Property and equipment are stated at cost. Expenditures for substantial
renewals and betterments are capitalized, while repairs and maintenance are
charged to expense as incurred. Assets are depreciated or amortized using the
straight-line method for financial reporting purposes and accelerated methods
for tax purposes over their estimated useful lives ranging from three to seven
years. Gains or losses from disposals of property and equipment are reflected
in income.

Software Development Costs

The Company capitalizes software development costs beginning when product
technological feasibility is established and concluding when the product is
ready for general release. At such time, software development costs are
amortized on the straight-line basis over a maximum of three years or the
expected life of the product, whichever is less. The Company capitalized
software development costs amounting to $141,000 during the year ended
December 31, 1997, which have been included in property and equipment, net.
Research costs related to software development are expensed as incurred.

F-7

DA CONSULTING GROUP, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Deferred Offering Costs

Deferred offering costs primarily represent professional fees incurred
through December 31, 1997 in conjunction with the Company's planned initial
public offering ("IPO") of shares of its common stock and, for financial
reporting purposes, will be netted against the offering proceeds upon
completion of the IPO. As of December 31, 1997, $853,000 of deferred offering
costs have been included in other assets.

Intangible Assets

Goodwill represents the cost in excess of fair value of the net assets of
the Predecessor Companies deemed to have been acquired in the Exchange
Transaction and is being amortized using the straight-line method over 25
years. Other intangible assets arising out of the Exchange Transaction were
amortized using the straight-line method over 12 to 24 months.

Income Taxes

The Company recognizes deferred income taxes for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred income taxes are determined based on
the difference between the financial statement carrying amounts and tax basis
of assets and liabilities using enacted tax rates in effect in the years in
which the differences are expected to reverse.

Prior to January 1, 1997, the Company recognized income for U.S. federal
income tax purposes on a cash basis.

Foreign Currency Translation

For the Company's foreign subsidiaries, the local currency is the functional
currency. Assets and liabilities are translated at year-end exchange rates,
and related revenue and expenses are translated at the average exchange rates
in effect during the period. Resulting translation adjustments are recorded as
a separate component in shareholders' equity.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of cash and cash equivalents, and trade
accounts receivable. The Company maintains cash deposits with several major
financial institutions, which from time to time, may exceed federally insured
limits. Management periodically assesses the financial condition of the
financial institutions and believes that any possible credit risk is minimal.
The Company performs ongoing credit evaluations of its clients and generally
does not require collateral for services. Bad debts have not been significant
in relation to the volume of revenue.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable,
revolving line of credit, notes payable to shareholders and accounts payable
approximate fair values due to the short-term nature of these instruments. The
estimated fair values of these instruments have been determined by the Company
using available market information.

Revenue Recognition

The majority of the Company's contracts with clients are based on time and
expenses incurred with the remainder of the revenue generated from fixed price
contracts. Accordingly, service revenue under both types of contracts is
recognized as services are performed and the realization of the revenue is
assured. Contract costs

F-8

DA CONSULTING GROUP, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
include direct labor costs and reimbursable expenses, and those indirect costs
related to contract performance such as indirect labor. Selling, general and
administrative costs are charged to expense as incurred. Provisions for
estimated losses on uncompleted contracts are made in the period in which such
losses are determined. Changes in job performance, job conditions and
estimated profitability may result in revisions to costs and income and are
recognized in the period in which the revisions are determined. Unbilled
revenue represents the revenue earned in excess of amounts billed and deferred
income represents billings in excess of revenue earned. Service revenue
includes reimbursable expenses directly incurred in providing services to
clients. Revenue attributable to reimbursable expenses amounted to $151,000,
$192,000, $1,664,000, and $3,680,000 for the six months ended June 30, 1995
and December 31, 1995 and for the years ended December 31, 1996 and 1997,
respectively. The Company recognizes product revenue upon shipment of the
product to the client.

Significant Clients

No individual client accounted for more than 10% of consolidated revenue for
any period presented except for one client, which in the aggregate accounted
for 18% of revenue for the six months ended June 30, 1995 and December 31,
1995.

Segment Information

The Company operates within one industry segment.

Earnings Per Share

Basic earnings per share has been computed based on the weighted average
number of common shares outstanding during the applicable period. Diluted
earnings per share includes the number of shares issuable upon exercise of
stock options, less the number of shares that could have been repurchased with
the exercise proceeds, using the treasury stock method.

Accounting for Stock Options

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," which sets forth accounting and disclosure requirements for
stock option and other stock-based compensation plans. The new statement
encourages, but does not require, companies to record stock-based compensation
expense using a fair-value method, rather than the intrinsic-value method
prescribed by Accounting Principles Board ("APB") Opinion No. 25. The Company
has adopted only the disclosure requirements of SFAS No. 123 and has elected
to continue to record stock-based compensation expense using the intrinsic-
value approach prescribed by APB No. 25. Accordingly, the Company computes
compensation cost as the amount by which the fair market price of the
Company's common stock exceeds the exercise price on the date of grant. The
amount of compensation cost, if any, is charged to income over the vesting
period.

Other Matters

F-9

DA CONSULTING GROUP, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information ("SFAS No. 131"). SFAS No. 131 establishes
standards for reporting information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders. SFAS No. 131 is effective for fiscal years beginning after
December 15, 1997. Adoption is not recognized for interim periods in the
initial year of application. Adoption of this statement will not have material
impact on the consolidated financial statements of the Company.

Reclassifications

Certain amounts previously reported have been reclassified to conform to
current period presentation with no effect on the Company's financial
position, results of operations, or cash flows.

3. PROPERTY AND EQUIPMENT, NET

The components of property and equipment were as follows (in thousands):

DECEMBER 31,
--------------
1996 1997
------ ------

Computer equipment and software.............................. $1,031 $2,045
Automobiles.................................................. 120 74
Furniture and fixtures....................................... 156 894
Leasehold improvements....................................... -- 108
Development costs............................................ -- 141
------ ------
Property and equipment..................................... 1,307 3,262
Less accumulated depreciation and amortization............... (356) (755)
------ ------
Property and equipment, net................................ $ 951 $2,507
====== ======

4. INDEBTEDNESS FOR BORROWED MONEY

Revolving Line of Credit

During 1996, the Company entered into a credit facility with a financial
institution with a maximum credit limit of $1,000,000, which expired in March
1997. In March 1997 and September 1997, the Company amended and renewed the
credit facility increasing the available line from $1,000,000 to $3,500,000
and $5,000,000, respectively. Interest is payable monthly at prime plus 0.5%
per year (9.0% at December 31, 1997). The credit facility matures in June 1998
and is collateralized by the accounts receivable of the Company's North
American operations. The balance outstanding on the line of credit at December
31, 1996 and 1997 was $375,000 and $3,208,000, respectively.

Note Payable

In 1997, the Company borrowed approximately $762,000 for the purchase of
furniture and equipment. The borrowing bears an annual interest rate of 9.1%,
with interest and principal of approximately $24,000, payable monthly and
matures in November 2000. The borrowing is collateralized by the furniture and
fixtures.

Total interest expense for all indebtedness for each of the six months ended
June 30, 1995 and December 31, 1995 amounted to $35,500, and for the years
ended December 31, 1996 and 1997 amounted to $78,000 and $196,000,
respectively.

F-10

DA CONSULTING GROUP, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. NOTES PAYABLE TO SHAREHOLDERS

During 1995, the Company executed several notes payable agreements with two
shareholders of the Company. These notes are payable on demand and interest is
accrued at a discretionary variable rate (approximately 16% per year). As of
December 31, 1996, notes payable to shareholders amounted to $356,000.
Interest expense related to these notes amounted to $22,500 for each of the
six months ended June 30, 1995 and December 31, 1995 and $56,000 for the year
ended December 31, 1996, respectively. In March 1997, the Company repaid the
outstanding balances of the notes payable to shareholders.

6. ACCRUED EXPENSES

The components of accrued expenses were as follows (in thousands):

DECEMBER 31,
-------------
1996 1997
------ ------

Compensation and related expenses............................. $2,204 $2,077
Bonuses....................................................... -- 1,241
Professional fees............................................. 66 1,084
Vacation...................................................... 75 328
Other taxes................................................... -- 272
Other......................................................... 189 515
------ ------
Accrued expenses............................................ $2,534 $5,517
====== ======

7. INCOME TAXES

The following is a summary of the significant components of the Company's
deferred income taxes (in thousands):

DECEMBER
31,
---------
1996 1997
---- ----

Deferred tax assets:
Net operating loss carryforwards................................ $340 $ --
Deferred compensation........................................... 305 305
Accrued expenses................................................ -- 157
Other........................................................... -- 12
---- ----
Net deferred tax assets....................................... 645 474
---- ----
Deferred tax liabilities:
Cash to accrual timing differences.............................. 728 583
Property, plant and equipment................................... 32 110
Other........................................................... 96 --
---- ----
Deferred tax liabilities...................................... 856 693
---- ----
Deferred income taxes......................................... $211 $219
==== ====

F-11

DA CONSULTING GROUP, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The components of the Company's provision for income taxes were as follows
(in thousands):

YEAR ENDED
SIX MONTHS ENDED DECEMBER 31,
--------------------- --------------
JUNE 30, DECEMBER 31,
1995 1995 1996 1997
-------- ------------ ------ ------
COMBINED CONSOLIDATED

U.S. federal and state:
Current provision..................... $ 22 $ 24 -- $ 652
Deferred (benefit) provision.......... 109 117 $ (260) 110
---- ---- ------ -----
131 141 (260) 762
---- ---- ------ -----
Foreign:
Current provision..................... 68 103 281 236
Deferred (benefit) provision.......... (10) (16) 120 (102)
---- ---- ------ -----
58 87 401 134
---- ---- ------ -----
Provision for income taxes.......... $189 $228 $ 141 $ 896
==== ==== ====== =====

The difference between the effective federal income tax rate reflected in
the provision for income taxes, and the federal income tax rate are summarized
as follows:

YEAR
ENDED
DECEMBER
SIX MONTHS ENDED 31,
--------------------- ----------
JUNE 30, DECEMBER 31,
1995 1995 1996 1997
-------- ------------ ---- ----
COMBINED CONSOLIDATED

U.S. statutory rate........................ 34.0% 34.0% 34.0% 34.0%
Amortization of intangible assets.......... -- 27.5 49.2 0.9
State and local............................ 3.0 3.0 2.9 3.0
Foreign.................................... 0.3 0.1 (8.5) (1.8)
Other...................................... 0.2 1.3 3.0 2.8
---- ---- ---- ----
Effective tax rate....................... 37.5% 65.9% 80.6% 38.9%
==== ==== ==== ====

Applicable U.S. income taxes have not been provided on $1,618,000 of
undistributed earnings of the Company's foreign subsidiaries as of December
31, 1997. The Company considers such earnings to be permanently invested
outside the U.S. The earnings could be subject to U.S. income tax if
distributed to the Company as dividends or otherwise. The Company anticipates
that foreign tax credits would substantially reduce the amount of U.S. income
tax payable if these earnings were repatriated.

8. STOCK-BASED COMPENSATION PLANS

Stock Options

Effective February 1, 1997, the Company adopted its 1997 Stock Option Plan
(the "Option Plan"), a stock-based incentive compensation plan which is
described below. Under the Option Plan, the Company is authorized to issue
1,260,000 shares of common stock pursuant to "awards" granted in the form of
incentive stock options (intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended) and non-qualified stock options not intended
to qualify under Section 422. Awards may be granted to selected employees,
directors, independent contractors, and consultants of the Company or any
subsidiary. Stock options granted have contractual terms of 10 years. Unless
otherwise specified in the terms of an award, all options vest on a graded

F-12

DA CONSULTING GROUP, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
schedule, 33% per year for 3 years, beginning on the second anniversary of the
date of grant. Options granted under the Option Plan are at prices equal to
the fair market value of the stock on the date of the grant, as determined by
the Company's Board of Directors. To date no stock options have been granted
to independent contractors and consultants of the Company. To the extent that
stock options were granted to these parties the Company would recognize
compensation expense equal to the difference between the fair market value of
the stock options granted and the consideration given, if any, for such
options.

The following table sets forth pertinent information regarding stock option
transactions and stock option prices during the year ended December 31, 1997:

NUMBER OF SHARES OF WEIGHTED AVERAGE
UNDERLYING OPTIONS EXERCISE PRICES
------------------- ----------------

Outstanding as of December 31, 1996....... -- --
Granted................................... 505,646 $5.90
Forfeited................................. 59,577 $5.85
------- -----
Outstanding as of December 31, 1997....... 446,069 $5.91
======= =====
Exercisable as of December 31, 1997....... -- --
======= =====
Weighted average fair value of options granted during the year
ended December 31, 1997...................................... $1.54
=====

The fair value of each stock option granted is estimated on the date of
grant using the minimum value method of option pricing based on the following
weighted-average assumptions: dividend yield of 0%; risk-free interest rates
ranging from 6.03% and 6.27%; and expected life of 5 years. In determining the
"minimum value" SFAS No. 123 does not require the volatility of the Company's
common stock underlying the options to be calculated or considered because the
Company is not publicly-traded.

As of December 31, 1997, 446,069 options were outstanding with a remaining
weighted-average contractual term of 9.21 years.

Pro Forma Net Income and Earnings Per Share

Had the compensation cost for the Company's stock-based compensation plan
been determined consistent with SFAS No. 123, the Company's net income and net
income per share as of December 31, 1997 would approximate the pro forma
amounts below (unaudited):

AS REPORTED PRO FORMA
-------------------- -------------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

SFAS No. 123 charge.......... -- $ 178
Net income................... $ 1,408 $ 1,230
Diluted earnings per share... $ 0.28 $ 0.26

The effects of applying SFAS No. 123 in this pro forma disclosure are not
indicative of future amounts.

F-13

DA CONSULTING GROUP, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. SHAREHOLDERS' EQUITY

The following table sets forth pertinent information regarding shareholders'
equity transactions during the years ended December 31, 1996 and 1997 (in
thousands):

YEAR ENDED
DECEMBER 31,
-------------
SHARES 1996 1997
------ ------ ------

Purchase of Predecessor Companies......................... 1,579 -- --
Stock contribution to the Company......................... 1,170 -- --
Issuance of stock in connection with acquisition.......... 235 -- --
Employee stock purchases.................................. 121 $ 158 --
Sale of common stock...................................... 361 46 --
Stock awards to employees................................. 465 898 --
Private placement of shares............................... 597 -- $3,571
Employee stock purchases.................................. 15 -- 10
Employee stock repurchases................................ 18 -- (91)
------ ------
$1,102 $3,490
====== ======

Reduction in Par Value and Increase in Number of Authorized Shares

On May 16, 1996, the shareholders approved an amendment to the Articles of
Incorporation reducing the par value of the Company's common stock from $0.10
per share to $0.01 per share, and increasing the number of authorized shares
of common stock from 100,000 to 5,000,000. Simultaneous with the reduction in
par value, the shareholders declared a ten-for-one common stock split to
shareholders of record at the close of business January 19, 1996. All
references in the financial statements to number of shares, per share amounts
and stock option data of the Company's common stock have been restated to
reflect the stock split and the change in par value of the Company's common
stock and the contemplated 4.2-for-one common stock split in connection with
the Company's planned IPO.

Stock Exchange Transaction

As discussed in Note 1, prior to July 1, 1995, the Company's business was
operated through the Predecessor Companies. All of the Predecessor Companies
were under common management. As a result of the Exchange Transaction in July
1995, the Predecessor Companies became wholly-owned subsidiaries of the
Company. The Exchange Transaction consisted of the issuance of 4,200,000
shares of common stock of the Company in exchange for the outstanding common
stock of the Predecessor Companies. For accounting purposes, the acquisition
of the U.S. company has been treated as a recapitalization, and the U.S.
company has been treated as the acquiror of the other three entities.
Accordingly, the net assets of the U.S. company were carried forward at
historical basis while the net assets of the acquired Predecessor Companies
were recorded at fair market value utilizing the purchase method of
accounting.

For accounting purposes, the fair value of the acquired Predecessor
Companies was approximately $1.3 million and the acquired Predecessor
Companies were deemed to have been acquired through the issuance of 1,578,843
shares of the Company's common stock to the stockholders of the acquired
Predecessor Companies. The purchase price was allocated as follows (in
thousands):

TANGIBLE
ASSET
VALUE GOODWILL OTHER INTANGIBLES TOTAL COST
-------- -------- ----------------- ----------

United Kingdom............. $206 $313 $248 $ 767
South Africa............... 123 172 232 527
Australia.................. (29) -- 30 1
---- ---- ---- ------
$300 $485 $510 $1,295
==== ==== ==== ======

F-14

DA CONSULTING GROUP, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Stock Contribution to the Company

In June 1996, one shareholder contributed 1,170,448 shares of common stock
to the Company. These shares have been recorded by the Company as treasury
stock at the shareholders' original cost of $0.10 per common share.

Issuance of Stock in Connection with Acquisition

In July 1996, the Company issued 235,200 shares of common stock to a
shareholder in exchange for all of the outstanding stock of a company which is
now a subsidiary of the Company. The Exchange Transaction was accounted for at
fair value utilizing the purchase method of accounting which was not
materially different from historical cost at the date of the transaction.

Employee Stock Purchases

In February 1996, the Company established a plan which allowed certain
employees to purchase shares of common stock at fair market value on such
date. An aggregate of 121,065 shares were purchased pursuant to this plan, at
$1.27 per share. No additional shares will be sold under this plan as it has
been terminated. During the year ended December 31, 1997, the Company
repurchased 18,375 shares of common stock at fair value from former employees.

Sale of Common Stock

In June 1996, the Company sold 361,200 shares of common stock to employees,
at $1.27 per share, representing the fair value at the date of sale. The
Company received consideration of $46,000 and executed note receivable
agreements in the amount of $413,000.

In February 1997, the Company sold an additional 17,430 shares of common
stock to an employee, at the then fair value of $5.71 per share. The Company
received consideration of $10,000 and executed a note receivable agreement in
the amount of $90,000.

Stock Awards to Employees

In September 1996, the Company awarded 464,848 shares of common stock to
certain key employees. No cash consideration was paid for such shares. For the
year ended December 31, 1996, the Company recognized compensation expense of
$898,000 representing the fair market value of these shares on the date
awarded and $960,000 of cash payments to a former employee in lieu of the
issuance of such shares. In December 1997, the Company recognized compensation
expense of $263,000 relating to cash payments to a former employee in lieu of
an award of shares of common stock.

Private Placement of Shares

In January 1997, the Company sold 234,990 shares of common stock at $5.71
per share, representing the fair value at the date of sale. Proceeds to the
Company, net of offering costs, amounted to $1.2 million.

In December 1997, the Company sold 362,208 shares of common stock at $6.55
per share, representing the fair value at the date of sale, including 43,680
shares (for an aggregate of approximately $286,000) to directors of the
Company, and 52,920 shares (for an aggregate of approximately $347,000) to
officers and employees of the Company. Total proceeds to the Company amounted
to approximately $2.4 million.

F-15

DA CONSULTING GROUP, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Earnings Per Share

The following table summarizes the Company's computation of earnings per
share for the six months ended June 30, 1995 and December 31, 1995 and the
years ended December 31, 1996 and 1997 (in thousands, except per share
amounts):

YEAR ENDED
SIX MONTHS ENDED DECEMBER 31,
--------------------- --------------
JUNE 30, DECEMBER 31,
1995 1995 1996 1997
-------- ------------ ------ ------

Basic earnings per share................. $0.09 $0.03 $ 0.01 $ 0.29
===== ===== ====== ======
Net income (numerator)................... $ 315 $ 118 $ 34 $1,408
===== ===== ====== ======
Weighted average shares outstanding (de-
nominator).............................. 3,623 3,623 4,217 4,808
Computation of diluted earnings per
share:
Common shares issuable under outstand-
ing stock options..................... 449 449 449 449
Less shares assumed repurchased with
proceeds from exercise of stock
options............................... (204) (204) (204) (204)
----- ----- ------ ------
Adjusted weighted average shares out-
standing (denominator)................ 3,868 3,868 4,462 5,053
===== ===== ====== ======
Diluted earnings per share............. $0.08 $0.03 $ 0.01 $ 0.28
===== ===== ====== ======

10. RELATED PARTY TRANSACTIONS

During the six months ended June 30, 1995 and December 31, 1995 and the
years ended December 31, 1996 and 1997, the Company paid $97,000, $63,000,
$100,000, and $100,000, respectively, for accounting services provided by an
accountancy practice in which the Company's chief executive officer was a
partner until June 30, 1996.

Until December 31, 1997, the Company leased two properties from its chief
executive officer and from an affiliate of the chief executive officer. The
Company paid $19,000 for each of the six months ended June 30, 1995 and
December 31, 1995 and $38,000 and $28,000 for the years ended December 31,
1996 and 1997, respectively, in rent related to these two properties in both
1995 and 1996 and $28,000 in 1997.

11. COMMITMENTS AND CONTINGENCIES

The Company leases various office facilities under noncancelable operating
lease agreements. Rent expense amounted to $56,000 for each of the six months
ended June 30, 1995 and December 31, 1995 and $150,000 and $575,000 for the
years ended December 31, 1996 and 1997, respectively.

The Company leases apartments and housing facilities for certain employees,
and also leases office facilities in foreign cities. The terms of these leases
are less than one year.

As of December 31, 1997, future lease payments under noncancelable leases
with terms of more than one year are as follows:

1998.................................. $ 816
1999.................................. 789
2000.................................. 697
2001.................................. 387
2002.................................. 358
Thereafter............................ 537
------
$3,584
======

F-16

DA CONSULTING GROUP, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Company has employment agreements with certain officers and key members
of management of the Company, the terms of which expire on December 31, 1998.
The agreements provide for minimum salary levels, incentive bonuses at the
discretion of the Company's Board of Directors, customary benefits including
insurance coverage. In addition, the employment agreements further provide for
severance pay ranging from six months to two year's base salary, bonus, and
benefits, depending on the cause of termination and in the event of a change
in corporate control.

From time to time, the Company is a party to routine litigation in the
ordinary course of business. The Company does not believe that such litigation
will have a material impact on the financial statements.

12. EMPLOYEE BENEFIT PLANS

401(k) Plan

These amounts have been included in general and administrative expenses on
the statements of income. An employee is fully vested in the matching
contributions after six years of employment, or earlier upon attainment of
appropriate retirement age, upon retirement due to disability, or upon death.
The Company made contributions to the 401(k) Plan aggregating approximately
$4,200, $4,800, $92,000 and $224,000 during the six months ended June 30, 1995
and December 31, 1995 and the years ended December 31, 1996 and 1997,
respectively. Payment of benefits is generally made in the form of a single
lump sum or in installments. The Company sponsors similar plans in Canada,
South Africa and the United Kingdom, pursuant to which employees may defer
specified percentages of compensation which the Company matches at a rate of
50-100% on the first 3-5% of compensation deferred. The Company made matching
contributions of approximately $74,000 in 1997.

Incentive Compensation and Profit Sharing Policies

The Company has implemented incentive compensation and profit sharing
policies which cover substantially all salaried employees. Employees in
positions at project manager or below, as well as administrative staff, are
eligible for discretionary profit sharing payments. Each employee's profit
sharing payment is based on a formula and is contingent upon his or her level
of salary and length of service. Employees in positions at project manager or
above are eligible for incentive compensation payments based on satisfaction
of applicable performance criteria. The Company approved and recognized
incentive compensation and profit sharing payments aggregating approximately
$304,000, $346,000, $1,258,000 and $1,994,000 for the six months ended June
30, 1995 and December 31, 1995 and for the years ended December 31, 1996 and
1997, respectively, which are included in general and administrative expense.
The Company sponsors a profit sharing plan in the United Kingdom, pursuant to
which 9% of net revenues are paid to employees on a partially tax-deferred
basis. The Company made payments pursuant to this plan aggregating
approximately $98,000 and $93,000 in 1995 and 1996 respectively.

F-17

DA CONSULTING GROUP, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

YEAR ENDED
SIX MONTHS ENDED DECEMBER 31,
--------------------- -------------
JUNE 30, DECEMBER 31,
1995 1995 1996 1997
-------- ------------ ------ ------
COMBINED CONSOLIDATED
Cash paid for interest and income
taxes amounted to (in thousands):

Interest........................... $ 31 $ 25 $ 79 $ 80
Income taxes....................... 210 210 355 816

YEAR ENDED
DECEMBER 31,
---------------
1996 1997
Non-cash activities were (in thousands): ------- ------

Stock contribution to the Company...................... $ (28) --
Common stock issued for notes receivable............... 413 $90
Issuance of stock awards to key employees.............. 898 --

14. GEOGRAPHIC FINANCIAL DATA

The following table sets forth certain information with respect to the
Company (in thousands):

EUROPE,
MIDDLE EAST
CORPORATE AMERICAS AND AFRICA ASIA/PACIFIC TOTAL
--------- -------- ----------- ------------ -------

YEAR ENDED DECEMBER 31,
1997:
Revenues.............. -- $28,663 $11,341 $4,200 $44,204
Operating income
(loss)............... $ (317)(1) 2,221 284 251 2,439
Total assets.......... -- 15,676 3,223 1,236 20,135
YEAR ENDED DECEMBER 31,
1996:
Revenues.............. -- $15,565 $ 8,906 $1,731 $26,202
Operating income
(loss)............... $(2,132)(1) 1,296 592 324 80
Total assets.......... -- 4,798 3,016 735 8,549
SIX MONTHS ENDED
DECEMBER 31, 1995:
Revenues.............. -- $ 5,113 $ 2,939 $ 267 $ 8,319
Operating income
(loss)............... (230)(1) 419 213 5 406
Total assets.......... -- 3,154 2,164 122 5,440
SIX MONTHS ENDED JUNE
30, 1995:
Revenues.............. $ -- $ 3,813 $ 2,462 $ 24 $ 6,299
Operating income
(loss)............... -- 384 171 (27) 528
Total assets.......... -- 1,711 1,485 15 3,211

- --------
(1) Represents charges, for the year ended December 31, 1996, for stock awarded
to employees, without cash consideration, and payments in lieu thereof,
and, for the year ended December 31, 1997, for payments to an employee in
lieu of a stock award; and for the six months ended December 31, 1995 and
for the years ended December 31, 1996 and 1997, amortization expense
related to goodwill and other intangible assets which were recorded as a
result of the Exchange Transaction.

F-18

DA CONSULTING GROUP, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

15. QUARTERLY FINANCIAL DATA

Summarized quarterly financial data for the years ended December 31, 1997
and 1996 is as follows (in thousands, except per share amounts):

FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------

YEAR ENDED DECEMBER 31, 1997:
Revenues................................... $8,084 $9,897 $12,075 $14,148
Operating income........................... 186 560 783 910
Net income................................. 106 318 467 517
Basic earnings per share................... $ 0.02 $ 0.07 $ 0.10 $ 0.11
Weighted average shares outstanding........ 4,808 4,808 4,808 4,808
Diluted earnings per share................. $ 0.02 $ 0.06 $ 0.09 $ 0.10
Weighted average shares outstanding........ 5,053 5,053 5,053 5,053
YEAR ENDED DECEMBER 31, 1996:
Revenues................................... $5,677 $6,363 $ 6,999 $ 7,163
Operating income (loss).................... 598 545 (347) (716)
Net income (loss).......................... 324 325 (187) (428)
Basic earnings (loss) per share............ $ 0.08 $ 0.08 $ (0.04) $ (0.09)
Weighted average shares outstanding........ 3,859 3,943 4,282 4,787
Diluted earnings (loss) per share.......... $ 0.08 $ 0.08 $ (0.04) $ (0.09)
Weighted average shares outstanding........ 4,103 4,188 4,527 5,032

16. SUBSEQUENT EVENTS

Initial Public Offering

The Company is in the process of completing an IPO of shares of its common
stock. In connection with the IPO, the Company effected, on April 20, 1998, a
4.2-for-one stock split of the common stock. Accordingly, all references in
the financial statements to number of shares, per share amounts and stock
option data of the Company's common stock have been restated to reflect the
anticipated stock split. In connection with the stock split, the Company's
authorized capital will be increased to 40,000,000 shares of common stock,
$0.01 par value per share, and 10,000,000 shares of Preferred Stock, $0.01 par
value per share.

F-19

LOGO
[CHART APPEARS HERE]
END-USER SUPPORT

Change Communication Education Performance Support

Multimedia Distance Learning DA PASSPORT(TM)
Videos CBT Intranet
Newsletters ILT Documentation

DA Cornerstone(TM)

DA Foundation(R)

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDER-
WRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITA-
TION OF AN OFFER TO BUY THE SHARES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING THE OF-
FER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PRO-
SPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT THE IN-
FORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

---------------

TABLE OF CONTENTS

PAGE
----

Prospectus Summary....................................................... 3
Risk Factors............................................................. 6
Use of Proceeds.......................................................... 10
Dividend Policy.......................................................... 10
Capitalization........................................................... 11
Dilution................................................................. 12
Selected Combined and Consolidated Financial Data........................ 13
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 14
Business................................................................. 22
Management............................................................... 33
Certain Relationships and Related Transactions........................... 40
Principal and Selling Shareholders....................................... 42
Description of Capital Stock............................................. 43
Shares Eligible for Future Sale.......................................... 46
Underwriting............................................................. 47
Legal Matters............................................................ 48
Experts.................................................................. 48
Additional Information................................................... 49
Index to Financial Statements............................................ F-1

---------------

UNTIL , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPAT-
ING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

2,400,000 SHARES

LOGO
OF DA CONSULTING GROUP, INC. APPEARS HERE

COMMON STOCK

-------------

PROSPECTUS

, 1998

-------------

WILLIAM BLAIR & COMPANY

ROBERT W. BAIRD & CO.
INCORPORATED
PENNSYLVANIA MERCHANT GROUP LTD

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth an itemized statement of expenses, other than
underwriting discounts and commissions, all of which will be paid by the
Company, in connection with the issuance and distribution of the securities
being registered. All amounts are estimates except for the fees payable to the
Commission and the NASD and the Nasdaq listing fee:

NATURE OF EXPENSE AMOUNT
----------------- ----------

Commission registration fee...................................... $ 11,026
NASD filing fee.................................................. 4,238
Nasdaq National Market listing fee............................... 66,000
Printing and engraving expenses.................................. 210,000
Legal fees and expenses.......................................... 350,000
Accounting fees and expenses..................................... 585,000
Blue Sky filing fees and expenses................................ 15,000
Transfer agent and registrar fees................................ 10,000
Director & Officer liability insurance........................... 200,000
Miscellaneous.................................................... 398,736
----------
Total.......................................................... $1,850,000
==========

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Article 2.02-1 of the TBCA generally provides that a corporation may
indemnify any director or officer who was, is or is threatened to be made a
named defendant or respondent in a proceeding because he is or was a director
or officer, provided that the director or officer (i) conducted himself in
good faith, (ii) reasonably believed (a) in the case of conduct in his
official capacity, that his conduct was in the corporation's best interests or
(b) in all other cases, that his conduct was at least not opposed to the
corporation's best interests and (iii) in the case of any criminal proceeding,
had no reasonable cause to believe his conduct was unlawful. Subject to
certain exceptions, a director or officer may not be indemnified if the person
is found liable to the corporation or if the person is found liable on the
basis that he improperly received a personal benefit. Under the TBCA,
reasonable expenses incurred by a director or officer may be paid or
reimbursed by the corporation in advance of a final disposition of the
proceeding after the corporation receives a written affirmation by the
director or officer of his good faith belief that he has met the standard of
conduct necessary for indemnification and a written undertaking by or on
behalf of the director or officer to repay the amount if it is ultimately
determined that the director or officer is not entitled to indemnification by
the corporation. The TBCA also requires a corporation to indemnify an officer
or director against reasonable expenses incurred in connection with the
proceeding in which he is named defendant or respondent because he is or was a
director or officer if he is wholly successful in defense of the proceeding.

The TBCA also permits a corporation to purchase and maintain insurance or
another arrangement on behalf of any person who is or was a director or
officer against any liability asserted against him and incurred by him in such
a capacity or arising out of his status as such a person, whether or not the
corporation would have the power to indemnify him against that liability under
Article 2.02-1.

The Company's Restated Articles and its Bylaws both provide for the
indemnification of its officers and directors, and the advancement to them of
expenses in connection with proceedings and claims, to the fullest extent
permitted by the TBCA. In addition, the Company intends to maintain directors'
and officers' liability insurance policies for its directors and officers. In
addition, the Company's Restated Articles of Incorporation

II-1

provide that a director of the Company will not be liable to the corporation
or its shareholders for monetary damages for an act or omission in the
director's capacity as a director, except in the case of (i) a breach of the
director's duty of loyalty to the corporation or its shareholders, (ii) an act
or omission not in good faith that involves intentional misconduct or a
knowing violation of the law, (iii) a transaction from which a director
received an improper benefit, whether or not the benefit resulted from an
action taken within the scope of the director's office, (iv) an act or
omission for which the liability of the director is expressly provided by
statute, or (v) an act related to an unlawful stock repurchase or payment of a
dividend.

The above discussion of Article 2.02-1 of the TBCA and of the Company's
Restated Articles and Bylaws is not intended to be exhaustive and is
respectively qualified in its entirety by such statute and the Company's
Restated Articles and Bylaws.

Reference is made to Item 17 of this Registration Statement for additional
information regarding indemnification of directors and officers.

The Underwriting Agreement (Exhibit 1.1 hereto) provides for indemnification
by the underwriters of the Company, its directors, and its officers who signed
the Registration Statement in the offering of the Common Stock registered
hereby, and each person, if any, who controls the Company, for certain
liabilities, including liabilities arising under the Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

In July 1995, the Company issued 4,200,000 shares of Common Stock to the
founder, three trusts for the benefit of the founder's family, a member of the
founder's family and the Chief Executive Officer of the Company in exchange
for shares of companies which are now subsidiaries of the Company. The
foregoing described issuances of securities were, to the extent within the
jurisdictional scope of the Securities Act, exempt from registration under the
Securities Act by virtue of the exemption provided by Section 4(2) thereof for
transactions not involving a public offering.

In January 1996, the Company issued 235,200 shares of Common Stock to the
CEO of the Company in exchange for shares of a company which is now a
subsidiary of the Company. The foregoing described issuance of securities was
not within the jurisdictional scope of the Securities Act.

In June 1996, the Company sold 438,509 shares of Common Stock to one trust
for the benefit of a South African employee, 21 U.S. employees of the Company,
nine foreign employees of the Company, and one foreign company owned by a
foreign employee for an aggregate consideration of $556,489. The foregoing
described issuances of securities were, to the extent within the
jurisdictional scope of the Securities Act, exempt from registration under the
Securities Act by virtue of the exemption provided by Section 4(2) thereof for
transactions not involving any public offering.

In July 1996, the Company sold 33,844 shares of Common Stock to 10 foreign
employees of the Company for an aggregate consideration of $42,949. The
foregoing described issuances of securities were not within the jurisdictional
scope of the Securities Act.

In September 1996, the Company awarded an aggregate of 464,848 shares of
Common Stock to two U.S. employees and two foreign employees of the Company.
The foregoing described issuances of securities were, to the extent within the
jurisdictional scope of the Securities Act, exempt from registration under the
Securities Act by virtue of the exemption provided by Section 4(2) thereof for
transactions not involving any public offering.

In December 1996, the Company sold 12,600 shares of Common Stock to four
U.S. employees for an aggregate consideration of $24,330. The foregoing
described issuances of securities were exempt from registration under the
Securities Act by virtue of the exemption provided by Section 4(2) thereof for
transactions not involving any public offering.

II-2

In January 1997, the Company sold 234,990 shares of Common Stock to 10
accredited investors and one foreign investor for an aggregate consideration
of $1,342,800. The foregoing described issuances of securities were, to the
extent within the jurisdictional scope of the Securities Act, exempt from
registration under the Securities Act by virtue of the exemption provided by
Section 4(2) thereof for transactions not involving any public offering.

In February and August 1997, the Company granted options to employees to
purchase an aggregate of 448,589 shares of Common Stock. The foregoing
described issuance of securities was exempt from registration under the
Securities Act by virtue of the exemption provided by Section 4(2) thereof for
transactions not involving any public offering and Rule 701 promulgated under
the Securities Act.

In July 1997, the Company sold 17,430 shares of Common Stock to one U.S.
employee for a consideration of $99,600. The foregoing described issuance of
securities was exempt from registration under the Securities Act by virtue of
the exemption provided by Section 4(2) thereof for transactions not involving
any public offering.

In December 1997, the Company sold 362,208 shares of Common Stock to 23
accredited investors and six foreign investors for an aggregate consideration
of $2,371,600. The foregoing described issuances of securities were, to the
extent within the jurisdictional scope of the Securities Act, exempt from
registration under the Securities Act by virtue of the safe harbor exemption
provided by Section 4(2) thereof for transactions not involving any public
offering.

The foregoing described issuances of securities did not involve
underwriters. The above information reflects a 10-for-1 split of the shares of
Common Stock on January 19, 1996 and a 4.2-for-1 split of the shares of Common
Stock to be effected prior to the date of this offering.

ITEM 16. EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

EXHIBIT
NO. DESCRIPTION
------- -----------

1.1 --Form of Underwriting Agreement by and among the Company, the
Underwriters and the Selling Shareholders*
3.1 --Amended and Restated Articles of Incorporation of the Company
3.2 --Restated By-Laws of the Company
4.1 --Specimen Stock Certificate
5.1 --Opinion of Pepper Hamilton LLP dated March 20, 1998*
5.2 --Opinion of Pepper Hamilton LLP dated April 16, 1998
10.1 --1997 Stock Option Plan (including form of option agreements)*
10.2 --Employment Agreement between the Company and Nick Marriner*
10.3 --Employment Agreement between the Company and Patrick J. Newton*
10.4 --Employment Agreement between the Company and Michael J. Mackey*
10.5 --Employment Agreement between the Company and Lisa L. Costello*
10.6 --Employment Agreement between the Company and Eric J. Fernette*
10.7 --Form of Consulting Agreement dated October 27, 1997, between the
Company and Richard W. Thatcher, Jr.*
10.8 --Letter Loan Agreement dated March 18, 1996 between Documentation
Associates, Inc. (now known as DA Consulting Group (USA), Inc.) and
Southwest Bank of Texas, N.A.*
10.9 --First Amendment to Letter Loan Agreement, dated November, 1996,
between D.A. Consulting Group, Inc. (now known as DA Consulting Group
(USA), Inc.) and Southwest Bank of Texas, N.A.*
10.10 --Second Amendment to Letter Loan Agreement, dated May 18, 1997,
between D.A. Consulting Group, Inc. (now known as DA Consulting Group
(USA), Inc.) and Southwest Bank of Texas, N.A.*
10.11 --Third Amendment to Letter Loan Agreement, dated effective May 1997,
between D.A. Consulting Group, Inc. (now known as DA Consulting Group
(USA), Inc.) and Southwest Bank of Texas, N.A.*

II-3

EXHIBIT
NO. DESCRIPTION
------- -----------

10.12 --Fourth Amendment to Letter Loan Agreement, dated effective November
26, 1997, between D.A. Consulting Group, Inc. (now known as DA
Consulting Group (USA), Inc.) and Southwest Bank of Texas, N.A.*
10.13 --Continuing Guaranty, dated May 27, 1997, of DA International, Inc.
(now known as DA Consulting Group, Inc.) in favor of Southwest Bank
of Texas, N.A.*
10.14 --Promissory Note, dated October 7, 1997, of D.A. Consulting Group,
Inc. (now known as DA Consulting Group (USA), Inc.) payable to Heller
Financial, Inc. *
10.15 --Security Agreement, dated October 7, 1997, between D.A. Consulting
Group, Inc. (now known as DA Consulting Group (USA), Inc.) and Heller
Financial, Inc. *
10.16 --Promissory Note dated August 8, 1997 from Michael J. Mackey to the
Company in the original principal amount of $89,640*
10.17 --Amended and Restated Employment Agreement between the Company and
Lisa Costello*
10.18 --DA Consulting Group, Inc. Deferred Compensation Plan*
10.19 --Amended and Restated 1997 Stock Option Plan*
11.1 --Computation of Net Income Per Share dated January 9, 1998*
11.2 --Computation of Pro Forma Earnings per Share dated March 2, 1998*
11.3 --Computation of Pro Forma Earnings per Share dated March 31, 1998
16.1 --Letter re change in certifying accountants dated January 9, 1998*
16.2 --Letter re change in certifying accountants dated March 30, 1998*
21.1 --Subsidiaries*
23.1 --Consent of Coopers & Lybrand L.L.P. (included on page II-5 of the
Registration Statement)
23.2 --Consent of Pepper Hamilton LLP (included in Exhibit 5.2)
24 --Power of Attorney (included on Signature Pages)*
27 --Financial Data Schedule*

- --------
* Previously filed.
** To be filed by amendment.

(b) Financial Statement Schedules:

All schedules have been omitted because they are not applicable, not
required, or the required information is included in the Financial Statements
or the notes thereto.

ITEM 17. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes to provide to the
Underwriters at the Closing specified in the underwriting agreement,
certificates in such denomination and registered in such names or required by
the Underwriters to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-4

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1 (file
no. 333-43989) of our report dated February 19, 1998, except Note for 16, as
to which the date is April 20, 1998, on our audits of the combined and
consolidated financial statements of DA Consulting Group, Inc. as of December
31, 1996 and 1997 and for the six months ended June 30, 1995 and December 31,
1995 and for the years ended December 31, 1996 and 1997. We also consent to
the reference to our firm under the caption "Experts."

Coopers & Lybrand L.L.P.

Houston, Texas

April 20, 1998

II-5

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS Amendment No. 4 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Houston, State of Texas, on the 20th day of April, 1998.

DA Consulting Group, Inc.

/s/ Nicholas H. Marriner
By: _________________________________
Nicholas H. Marriner
President and Chief Executive
Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED:

SIGNATURE TITLE DATE

/s/ Nicholas H. Marriner Chief Executive
- ------------------------------------- Officer and April 20, 1998
NICHOLAS H. MARRINER President
(principal
executive officer)

/s/ Michael J. Mackey Vice President,
- ------------------------------------- Chief Financial April 20, 1998
MICHAEL J. MACKEY Officer, (principal
financial officer
and principal
accounting officer)

* Director
- ------------------------------------- April 20, 1998
VIRGINIA L. PIERPONT

* Director
- ------------------------------------- April 20, 1998
NIGEL W.E. CURLET

* Director
- ------------------------------------- April 20, 1998
GUNTHER E.A. FRITZE

* Director
- ------------------------------------- April 20, 1998
RICHARD W. THATCHER JR.

/s/ Nicholas H. Marriner
*By__________________________________
Nicholas H. Marriner
Attorney-in-fact

II-6