UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(MARK ONE)

[X]   QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005 OR

[_]   TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______

                        COMMISSION FILE NUMBER: 000-23889

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

                  BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

           DELAWARE                                              76-0553110
(STATE OF OTHER JURISDICTION OF                               (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                               IDENTIFICATION NO.)

           6160 STONERIDGE MALL ROAD, SUITE 250, PLEASANTON, CA 94588
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (925) 251-0000

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

      Indicate by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].

      Indicate by check mark whether the registrant is an accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X].

      The number of shares of Common  Stock of the  Registrant,  par value $.001
      per share, outstanding at September 30, 2005 was 70,707,518. The number of
      shares of Series A Preferred Stock of the Registrant,  par value $.001 per
      share, outstanding at September 30, 2005 was 136,585.


                 The Exhibit Index is located on page 15 hereof.


                                       1
<PAGE>

                                     PART I
                              FINANCIAL INFORMATION


ITEM 1. Financial Statements

                  BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                          Unaudited
                                                                                         September 30,   December 31,
                                                                                             2005            2004
                                                                                           ---------       ---------
<S>                                                                                        <C>             <C>
                                     ASSETS
Current assets:
    Cash ............................................................................      $      19       $      43
    Trade accounts receivable, net of allowance
      for doubtful accounts of $18 ..................................................            287             486
    Unbilled revenue ................................................................             25               5
    Prepaid expenses and other ......................................................             50              34
                                                                                           ---------       ---------
      Total current assets ..........................................................            381             568
    Property and equipment ..........................................................            446             446
      Less - accumulated depreciation ...............................................           (422)           (408)
                                                                                           ---------       ---------
    Property and equipment, net .....................................................             24              38
                                                                                           ---------       ---------
      Total assets ..................................................................      $     405       $     606
                                                                                           =========       =========

                  LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Line of credit ..................................................................      $      19       $     218
    Accounts payable ................................................................             85              90
    Accrued salaries and other expenses .............................................            217             350
                                                                                           ---------       ---------
                                                                                           ---------       ---------
      Total current liabilities .....................................................            321             658
    Convertible notes payable, net ..................................................             --           1,258
    Note to shareholder, net ........................................................          1,258              --
    Other liabilities ...............................................................            101              75
    Commitments and contingencies ...................................................             --              --
Stockholders' equity:
    Preferred Stock, $0.001 par value; 3,000,000 shares authorized;  136,585 and
    0, Series A Preferred Stock, issued and outstanding
    in 2005 and 2004, respectively ..................................................             --              --
    Common stock, $0.001 par value; 747,000,000 shares authorized;
    70,707,518 and 15,287,968 shares issued and outstanding in 2005
    and 2004, respectively ..........................................................             71              16
    Additional paid-in capital ......................................................        100,102          99,925
    Unearned compensation ...........................................................             --              (1)
    Treasury stock ..................................................................             --            (118)
    Accumulated deficit .............................................................       (101,448)       (101,207)
                                                                                           ---------       ---------
      Total stockholders' equity ....................................................         (1,275)         (1,385)
                                                                                           ---------       ---------
             Total Liabilities and Stockholders' Equity .............................      $     405       $     606
                                                                                           =========       =========
</TABLE>

See notes to condensed consolidated financial statements.


                                       2
<PAGE>

                  BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED                    NINE MONTHS ENDED
                                                                 SEPTEMBER 30,                        SEPTEMBER 30,
                                                        -------------------------------       -------------------------------
                                                           2005                2004              2005                2004
                                                        ------------       ------------       ------------       ------------
<S>                                                       <C>                <C>                <C>                <C>
Revenue ..........................................               534                781              1,959              2,818
Cost of revenue ..................................               396                576              1,452              2,032
                                                        ------------       ------------       ------------       ------------
Gross profit .....................................               138                205                507                786

Operating expenses:
     Selling, general and administrative .........               209                318                640              1,165
     Depreciation and amortization ...............                 5                  5                 15                 14
                                                        ------------       ------------       ------------       ------------
Total operating expenses .........................               214                323                655              1,179

Loss from operations .............................               -76               -118               -148               -393

     Interest expense, net .......................               -32                -34                -93               -140
                                                        ------------       ------------       ------------       ------------
Net loss .........................................             ($108)             ($152)             ($241)             ($533)
                                                        ============       ============       ============       ============

Net loss per share: basic and diluted
                                                        ------------       ------------       ------------       ------------
     Net loss per share ..........................      $       0.00       ($      0.01)      $       0.00             ($0.03)
                                                        ============       ============       ============       ============

Average shares outstanding: basic and diluted ....        70,707,518         15,287,968         49,798,310         15,287,968
</TABLE>

See notes to condensed consolidated financial statements.


                                       3
<PAGE>

                  BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
       UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005

<TABLE>
<CAPTION>
                                                       Common Stock                               Additional Paid in Capital
                                                --------------------------       Series A      ---------------------------------
                                                  Shares          Amount        Preferred      Common Stock   Series A Preferred
                                                ----------      ----------      ----------      ----------        ----------
<S>                                             <C>             <C>             <C>             <C>
Balance, December 31, 2004 ...............      15,287,968      $       16              --      $   99,925        $       --
Amortization of unearned compensation ....              --              --              --              --                --
Additional shares issued & ...............      55,419,550              55         136,585              40               137
paid-in-capital
Net loss .................................              --              --              --              --                --
                                                ----------      ----------      ----------      ----------        ----------
Balance, September 30, 2005 ..............      70,707,518      $       71         136,585      $   99,965        $      137
                                                ==========      ==========      ==========      ==========        ==========
</TABLE>


<TABLE>
<CAPTION>
                                                                                                  Total
                                                 Unearned       Treasury      Accumulated     Stockholdeeers'    Comprehensive
                                               Compensation        Stock        Deficit          Equity              Loss
                                                ----------      ----------      ----------      ----------        ----------
<S>                                             <C>             <C>             <C>             <C>
Balance, December 31, 2004 ...............      $       (1)     $     (118)     $ (101,207)     $   (1,385)               --
                                                ----------      ----------      ----------      ----------        ----------
Amortization of unearned\compensation ....               1              --              --               1                --
Additional shares issued & ...............              --             118              --             350                --
paid-in-capital
Net loss .................................              --              --            (241)           (241)       $     (241)
Balance, September 30, 2005 ..............      $       --      $       --      $ (101,448)     $   (1,275)       $     (241)
                                                ==========      ==========      ==========      ==========        ==========
</TABLE>


See notes to condensed consolidated financial statements.


                                       4
<PAGE>

                  BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                               NINE MONTHS ENDED
                                                                         -----------------------------
                                                                         SEPTEMBER 30,   SEPTEMBER 30,
                                                                             2005            2004
                                                                            --------       --------
<S>                                                                         <C>            <C>
Operating activities:
   Net loss ..........................................................      $   (241)      $   (533)
   Adjustments to reconcile net loss to net
      cash provided (used) by operating activities:
   Depreciation and amortization .....................................            15             57
   Non cash compensation expense on issuance of
      common stock options and warrants ..............................            --              9
   Changes in operating assets and liabilities
      Trade accounts receivable ......................................           199             85
      Unbilled revenue ...............................................           (20)             8
      Prepaid expenses and other assets ..............................           (16)            47
      Accounts payable ...............................................            (5)            (6)
      Accrued salaries and other expenses ............................          (133)            42
      Other liabilities ..............................................            26             --
                                                                            --------       --------
      Net cash provided (used) by operating activities ...............          (175)          (291)

Investing activities:
   Capital expenditures ..............................................            --             (9)
                                                                            --------       --------
      Net cash used in investing activities ..........................            --             (9)

Financing activities:
   Net borrowings (payments) under line of credit ....................          (199)           220
   Repayments of convertible notes payable ...........................            --            (26)
   Additional paid in capital, sale of common and preferred shares ...           350
                                                                            --------       --------
      Net cash provided (used) by financing activities ...............           151            194

Net increase (decrease) in cash ......................................           (24)          (106)

Cash:
   Beginning of period ...............................................            43            125
                                                                            --------       --------
   End of period .....................................................      $     19       $     19
                                                                            ========       ========
</TABLE>

See notes to condensed consolidated financial statements.


                                       5
<PAGE>

                  BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

      1. BASIS OF PRESENTATION

      The accompanying  unaudited condensed  consolidated  financial  statements
      have been  prepared in accordance  with  accounting  principles  generally
      accepted  in the  United  States of  America  ("U.S.  GAAP")  for  interim
      financial  information and the instructions to Form 10-Q and Article 10 of
      Regulation  S-X.  Accordingly,  they do not include all of the information
      and footnotes required by U.S. GAAP for complete financial statements.  In
      the opinion of management, all adjustments considered necessary for a fair
      presentation  have been  included in the financial  statements.  Operating
      results  for the  nine-month  period  ended  September  30,  2005  are not
      necessarily  indicative  of the results  that may be expected for the year
      ending December 31, 2005. The balance sheet at December 31, 2004, has been
      derived from the audited  financial  statements  at that date but does not
      include all of the  information  and  footnotes  required by U.S. GAAP for
      complete financial statements.  The information included in this Quarterly
      Report  on Form  10-Q  should be read in  conjunction  with  "Management's
      Discussion and Analysis of Financial Condition and Results of Operations",
      "Quantitative  and  Qualitative  Disclosures  About  Market  Risk" and the
      Consolidated  Financial  Statements and notes thereto included in Items 7,
      7A and 8,  respectively,  of the Company's  Annual Report on Form 10-K for
      the fiscal year ended December 31, 2004.

      The preparation of the condensed  financial  statements in conformity with
      U.S. GAAP  requires  management to make  estimates  and  assumptions  that
      affect the reported  amounts of assets and  liabilities and disclosures of
      contingent  assets and liabilities at the date of the condensed  financial
      statements  and the reported  amounts of revenues and expenses  during the
      reporting period. Actual results could differ from these estimates.

      Basic income (loss) per share is based upon the weighted average number of
      Common shares  outstanding  during the period.  Diluted  income (loss) per
      share is computed  using the weighted  average number of Common shares and
      potentially dilutive securities outstanding during the period. Potentially
      dilutive  securities  include Common shares  issuable upon the exercise of
      stock  options,  warrants,  preferred  shares and the  conversion of notes
      payable.  Potentially  dilutive  securities  excluded are  approximately 1
      million  shares and 7.9 million shares at September 30, 2005 and September
      30, 2004,  respectively and preferred shares  convertible into 482,764,933
      common shares.  At September 30th,  2005, the exercise price for the stock
      options and  warrants  exceeded  the  current  share price and the company
      recorded a loss for both reporting periods.

      Pro forma disclosures required under SFAS 148 are presented below. The pro
      forma  compensation  cost may not be  representative  of that  expected in
      future years.

<TABLE>
<CAPTION>
(In Thousands, Except Per Share Data)             3 Months Ended September 30,      9 Months Ended September 30,
                                                      2005           2004                 2005           2004
                                                     -------       -------              -------          ----
<S>                                                  <C>           <C>                  <C>              <C>
Net loss, as reported .........................      $  (108)      $  (152)             $  (241)         (533)
Pro forma net loss ............................      $  (108)      $  (152)             $  (241)      $  (533)
                                                     =======       =======              =======       =======


Pro forma basic and diluted loss per share:
   Basic - as reported ........................      $ (0.00)      $ (0.01)             $ (0.00)      $ (0.03)
   Basic - pro forma ..........................      $ (0.00)      $ (0.01)             $ (0.00)      $ (0.03)
   Diluted - as reported ......................      $ (0.00)      $ (0.01)             $ (0.00)      $ (0.03)
   Diluted - pro forma ........................      $ (0.00)      $ (0.01)             $ (0.00)      $ (0.03)
</TABLE>

      Compensation costs for the quarters ended September 30, 2005 and 2004 were
      calculated  in  accordance  with the binomial  model,  using the following
      weighted  average  assumptions:  (i)  expected  volatility  of 123%;  (ii)
      expected  dividend  yield of 0%; (iii)  expected  option term of 10 years;
      (iv) risk-free rates of return of 2.0% and (v) expected  forfeiture  rates
      of 40% for both periods.

      2. LIQUIDITY AND CREDIT FACILITY

      On December 16,  2002,  the Company  entered  into an  agreement  with BFI
      Business Finance ("BFI"), a Santa Clara,  California-based business credit
      company,  for a two year  working  capital  line of credit for $750,000 to


                                       6
<PAGE>

      replace our existing  credit  facility with Comerica  Bank.  Under the BFI
      agreement,  available  borrowings  are up to 85% of  accounts  receivable,
      after reduction for ineligible accounts.  The interest rate on outstanding
      balances is at prime plus 4% per annum, plus a monthly  administrative fee
      of 0.50% per month,  calculated on the average daily balance  outstanding.
      The minimum monthly interest and administrative fee charged to the Company
      was at least  $1,000  per month for the first six  months,  escalating  to
      $2,375 per month for the remaining term of the agreement.  The term of the
      agreement is two years and renews  automatically  unless terminated by the
      Company  upon 30 days'  notice  prior to the end of the term.  In December
      2004, the agreement between the Company and BFI was automatically  renewed
      for an  additional  period of two years;  however,  both  parties have the
      right to cancel the agreement at any time on 30 days' prior notice.

      On April 14, 2005,  the Company  entered into a Stock  Purchase  Agreement
      with  Stellar  McKim LLC  ("Stellar"),  a financial  services and software
      group (the "Stellar  Transaction").  Pursuant to the Stellar  Transaction,
      the Company filed a Certificate of  Designations  creating a new series of
      Preferred Stock designated Series A Convertible Preferred Stock ("Series A
      Preferred  Stock") and issued and sold to Stellar (i) 41,487,929 shares of
      Common  Stock,  representing  approximately  57.6%  of  BrightStar's  then
      authorized  shares of Common  Stock for  $213,000 in cash and (ii) 136,585
      shares of Series A Preferred Stock, which are convertible into 482,764,933
      shares of the Company's Common Stock, for $137,000 in cash.  Authorization
      of the shares of Common Stock  issuable  upon  conversion  of the Series A
      Preferred  Stock issued to Stellar in the Stellar  Transaction was subject
      to stockholder approval. This approval was granted at a Special Meeting of
      Stockholders held on September 20th, 2005 (the "Special Meeting").

      Pursuant to the Stellar  Transaction,  the Company  also  entered  into an
      Omnibus  Agreement (as amended,  the "Omnibus  Agreement"),  with Stellar,
      BrightStar  Information  Technology  Services,   Inc.  ("Services"),   the
      Company's principal operating subsidiary, and each holder (each a "Holder"
      and   collectively  the  "Holders")  of  Service's  Series  1  Convertible
      Subordinated  Promissory  Notes (the  "Notes"),  pursuant to which Stellar
      agreed to acquire all of the Notes from the Holders for $860,000. Pursuant
      to the Omnibus  Agreement and the Purchase  Agreement,  warrants that were
      originally  issued together with the Notes were cancelled,  the conversion
      feature of the Notes was  eliminated,  the maturity date of the Notes,  as
      well as the due date for  payment of interest  accrued at March 31,  2005,
      was extended  until  December 31, 2007 and the Company  issued  13,869,121
      shares of Common Stock to the Holders.

      On April 14th 2005,  holders of 125,000 warrants  converted those warrants
      into 62,500 shares of Common Stock.

      The company  continues  to follow the going  concern  basis of  accounting
      although  there  have been  recurring  losses.  Management  believes  that
      existing borrowing  capabilities will be able to ensure the continuance as
      a going concern for a reasonable period of time. Further,  the controlling
      shareholders plan to facilitate the acquisition of operating  companies in
      the near future, which should enhance the company's profitability and cash
      flows.

      3. ACCRUED SALARIES AND OTHER EXPENSES

      Accrued salaries and other expenses consist of the following:

      (In Thousands)                          September 30,         December 31
                                              -------------         -----------
                                                  2005                 2004
                                                 -------             -------
      Accrued payroll and payroll taxes ....     $    49             $   145
      Accrued professional fees ............          49                  61
      Other accrued expenses ...............         119                 144
                                                 -------             -------
      Total accrued expenses ...............     $   217             $   350
                                                 =======             =======


      4. LITIGATION

      On January 17, 2005,  the Company  received  service of an action filed by
      the State of Texas in the 353d Judicial  District of the District Court of
      Travis County,  Texas (Cause No.  GV500031)  against the Company and BRBA,
      Inc.,  its former  wholly-owned  subsidiary,  for sales  taxes,  interest,
      penalties  and  attorneys'  fees for the period 1997  through  2004 in the
      aggregate  amount of  $666,387,  plus  future  interest.  BRBA,  Inc.  was
      liquidated  in a chapter 7 proceeding  that was  completed in 2002 and the
      Company no longer has any responsibility for its affairs.


                                       7
<PAGE>

      The Company believes that the suit against it was without merit.  However,
      to avoid the cost and time required to adjudicate this matter,  it entered
      into a  contingent  settlement  agreement  on January 19, 2005 whereby the
      action against the Company would be dismissed, provided the State of Texas
      receives  $25,000 from the Company on or before May 12, 2005.  The Company
      made the  $25,000  payment in April  2005.  On May 9th 2005,  the  Company
      received a Notice of Non-Suit  under Rule 162 from the Attorney  General's
      office of the State of Texas.

      On August 1, 2005, the Company  received  notice of a claim on behalf of a
      prior  director /  employee  for the  non-payment  of  severance  payments
      totaling  approximately  $200,000. The Company has taken the position that
      there is no valid  claim,  as the  applicable  statue of  limitations  has
      expired  and the  asserted  claim  is  time-barred,  and the  Company  has
      indicated  so in its  response  to the  claimant.  As  such,  the  Company
      believes that there is no significant  uncertainty affecting the financial
      statements as a result of this claim.

      In  addition,  the  Company is from time to time  involved  in  litigation
      incidental to its business.  The Company believes that the results of such
      litigation  will not have a  materially  adverse  effect on the  Company's
      financial condition.

      5. SIGNIFICANT CUSTOMERS

      For the  third  quarter  of 2005,  the  Company  had four  customers  that
      accounted  for  approximately  55%,  15%, 11% and 8% of the total  revenue
      respectively. For the first nine months of 2005, these customers accounted
      for  approximately  47%,  17%, 13% and 8% of total  revenue  respectively.
      These  customers  also accounted for  approximately  31%, 18%, 16% and 16%
      respectively;  of the  Company's  total  outstanding  accounts  receivable
      balances as of September 30, 2005.

      For the  third  quarter  of 2004,  the  Company  had four  customers  that
      accounted  for  approximately  44%,  17%, 12% and 11% of the total revenue
      respectively. For the first nine months of 2004, these customers accounted
      for approximately 64%, 5%, 4% and 10% of total revenue respectively. These
      customers  also  accounted  for   approximately   18%,  21%,  24%  and  9%
      respectively;  of the  Company's  total  outstanding  accounts  receivable
      balance as of September 30, 2004.

      6. RECENTLY ISSUED ACCOUNTING STANDARDS

      In  December  2004,  the  Financial   Accounting  Standards  Board  issued
      Statement  of  Financial  Accounting  Standards  No.  123  (revised  2004)
      "Share-Based  Payments" ("SFAS 123R").  SFAS 123R requires  measurement of
      all employee stock-based compensation awards using a fair value method and
      the recording of such expenses in the consolidated  financial  statements.
      In addition,  the adoption of SFAS 123R will require additional accounting
      related to the income tax effects and additional  disclosure regarding the
      cash flow effects resulting from share-based  payment  arrangements.  SFAS
      123R is effective beginning in the Company's first quarter of fiscal 2006.
      The Company is  evaluating  the  requirements  of SFAS 123R and it expects
      that  the  adoption  of SFAS  123R  will  have a  material  impact  on the
      Company's results of operations and financial  condition.  The Company has
      not yet  determined  whether  the  adoption  of SFAS 123R will result in a
      stock-based compensation charges that are similar to the current pro forma
      disclosures under SFAS 123.

      In March 2005,  the Securities and Exchange  Commission  ("SEC")  released
      Staff  Accounting  Bulletin No. 107,  "Share-Based  Payment"  ("SAB 107"),
      which provides  interpretive  guidance related to the interaction  between
      SFAS 123(R) and certain SEC rules and  regulations.  It also  provides the
      SEC staff's views regarding valuation of share-based payment arrangements.
      In April 2005,  the SEC amended the compliance  dates for SFAS 123(R),  to
      allow  companies to implement  the standard at the beginning of their next
      fiscal year, instead of the next reporting period beginning after June 15,
      2005. The Company is currently  evaluating the impact SAB 107 will have on
      its consolidated financial statements.

      In May 2005, the FASB issued Statement of Financial  Accounting  Standards
      No. 154,  "Accounting Changes and Error Corrections - a Replacement of APB
      Opinion No. 20 and FASB  Statement No. 3". This new standard  replaces APB
      Opinion No. 20, "Accounting Changes", and FASB Statement No. 3, "Reporting
      Accounting Changes in Interim Financial Statements".  Among other changes,
      Statement 154 requires that a voluntary change in accounting  principle be
      applied   retrospectively  with  all  prior  period  financial  statements
      presented on the new accounting  principle,  unless it is impracticable to
      do so.  Statement  154  also  provides  that  (1) a change  in  method  of
      depreciating or amortizing a long lived  non-financial  asset be accounted
      for as a change in estimate  (prospectively) that was effected by a change
      in accounting principle, and (2) correction of errors in previously issued
      financial statements should be termed a "restatement". The new standard is
      effective for  accounting  changes and correction of errors made in fiscal
      years beginning  after December 15, 2005.  Early adoption of this standard
      is  permitted  for  accounting  changes and  correction  of errors made in
      fiscal years beginning after June 1, 2005.


                                       8
<PAGE>

      In June 2005, the Emerging Issue Task Force, or EITF,  reached a consensus
      on  Issue  05-6,   Determining  the  Amortization   Period  for  Leasehold
      Improvements,  which  requires that leasehold  improvements  acquired in a
      business  combination or purchased  subsequent to the inception of a lease
      be  amortized  over the lesser of the useful  life of the assets or a term
      that  includes  renewals  that are  reasonably  assured at the date of the
      business  combination  or  purchase.  EITF 05-6 is  effective  for periods
      beginning  after July 1, 2005.  We do not  expect  the  provision  of this
      consensus to have a material impact on the Company's  financial  position,
      results of operations or cash flows.

      7. SUBSEQUENT EVENTS

      On October 14th, 2005 the Company amended its Certificate of Incorporation
      to increase the number of shares of Common Stock the Company is authorized
      to issue from 72,000,000 to 747,000,000.

      On October 31st,  2005, the Company  entered into a Purchase of Assets and
      Sale Agreement, with Neulogic Media, LLC (the "Asset Agreement"), pursuant
      to which the Company has agreed to acquire all of the assets and  business
      of  Neulogic  Media,  LLC,  an  Ohio  based  provider  of  e-communication
      solutions and content  management  systems to clients in the philanthropic
      market.

      Under the Asset Agreement,  the Company has agreed to pay as consideration
      for the assets and business of Neulogic $1.8 million in cash,  $200,000 of
      which has been paid as a deposit  and the balance of which will be paid at
      the closing,  and 139,000,000 shares of newly-issued  Common Stock, which,
      when issued at the closing, will constitute approximately 20% of the total
      outstanding Common Stock on a fully diluted basis. In addition the Company
      has agreed to negotiate in good faith employment agreements with the three
      individual principals of Neulogic.

      ITEM 2.  Management's  Discussion And Analysis Of Financial  Condition And
      Results Of Operations

      The  Company  provides  information  technology  ("IT")  services  for its
      customers.  We help  organizations  maximize their  competitive  advantage
      through   the   implementation   and   /or   support   of   leading   edge
      enterprise-level packaged-systems applications and legacy software systems
      by  focusing  primarily  on serving  clients in  government  markets.  The
      Company also  provides  software  support and  training  services to major
      corporations.  We have  approximately  20 employees and  contractors.  The
      Company has its  headquarters  in the San  Francisco Bay Area with a field
      office near Dallas, Texas. We also have other  service-delivery  locations
      throughout the United States,  including  Arizona,  Arkansas,  California,
      Florida, Oregon and Texas.

      The timing of revenue is difficult to forecast because the Company's sales
      cycle can be relatively long and is subject to a number of  uncertainties,
      including  customers'  budgetary  constraints,  the  timing of  customers'
      budget cycles, customers' internal approval processes and general economic
      conditions.  In addition,  as is customary in the industry,  the Company's
      engagements  generally can be changed or terminated  without a significant
      customer  penalty.  The Company's  revenue and results of  operations  may
      fluctuate significantly from quarter to quarter or year to year because of
      a number of factors,  including, but not limited to, changes in demand for
      IT  services,  the effect of changes in  estimates  to complete  fixed fee
      contracts,  the rate of hiring and the productivity of revenue  generating
      personnel,   the   availability   of  qualified  IT   professionals,   the
      significance  of customer  engagements  commenced and  completed  during a
      quarter,  the  number of  business  days in the  quarter,  changes  in the
      relative  mix of the  Company's  services,  changes in the  pricing of the
      Company's  services,  the  timing  and  the  rate  of  entrance  into  new
      geographic or IT specialty  markets,  departures or temporary  absences of
      key   revenue-generating   personnel,   the   structure   and   timing  of
      acquisitions, and general economic factors.

      Cost of revenue consists primarily of salaries (including non-billable and
      training time) and benefits for consultants. The Company generally strives
      to maintain its gross profit  margins by offsetting  increases in salaries
      and benefits with increases in billing rates,  although this is subject to
      the market  conditions  at the time.  In  addition,  the Company  tries to
      increase  or  decrease  the number of  consultants  used by the Company to
      provide its services,  including third party contractors, as the amount of
      billable work (and resultant revenue) changes. In other words, the Company
      continually  strives  to  minimize  the  amount of  unbillable  consulting
      resources or bench.  As revenues  declined  over the past couple of years,
      the Company reduced its consulting resources accordingly.

      Selling,  general and administrative  expenses (SG&A) primarily consist of
      costs  associated  with (i)  corporate  overhead,  (ii) sales and  account
      management, (iii) telecommunications, (iv) human resources, (v) recruiting
      and training, and (vi) other administrative expenses.


                                       9
<PAGE>

      CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      Management's Discussion and Analysis of Financial Condition and Results of
      Operations discusses BrightStar's consolidated financial statements, which
      have been  prepared in accordance  with  accounting  principles  generally
      accepted  in the United  States for  interim  financial  information.  The
      preparation  of these  financial  statements  requires  management to make
      estimates and assumptions  that affect the reported  amounts of assets and
      liabilities and the 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.  On an on-going  basis,  management
      evaluates its estimates and judgments.  Management bases its estimates and
      judgments on historical  experience  and on various other factors that are
      believed to be reasonable  under the  circumstances,  the results of which
      form the basis for making judgments about the carrying value of assets and
      liabilities  that are not  readily  apparent  from other  sources.  Actual
      results may differ from these  estimates  under  different  assumptions or
      conditions.

      Management  believes the following  critical  accounting  policies,  among
      others,  affect  its more  significant  judgments  and  estimates  used in
      preparation of its consolidated financial statements.

      Revenue recognition -- The Company provides services to customers for fees
      that  are  based  on  time  and  materials  or,  occasionally,  fixed  fee
      contracts.  Revenue for fixed fee contracts is recognized ratably over the
      contract term based on the percentage-of-completion method. Costs incurred
      to date as a percentage of total estimated costs are used to determine the
      percentage of the contract that has been completed throughout the contract
      life.  Costs  reimbursed  by its customers are included in revenue for the
      periods in which costs are incurred.

      Income taxes -- The Company  accounts for income taxes under SFAS No. 109,
      "Accounting  for  Income  Taxes."  SFAS No.  109  requires  an  asset  and
      liability  approach to accounting for income taxes.  The Company  provides
      deferred  income  taxes for  temporary  differences  that  will  result in
      taxable or deductible  amounts in future years.  A valuation  allowance is
      recognized if it is  anticipated  that some or all of a deferred tax asset
      may not be realized.  Based on the  Company's  net losses for the previous
      years,  the Company has recorded a valuation  allowance for deferred taxes
      as of June 30, 2005. In the event that the Company were to determine  that
      it would be able to realize  its  deferred  tax assets in the  future,  an
      asset  would be  recorded,  which in turn  would  increase  income for the
      period in which such determination was made.

      RESULTS OF OPERATIONS

      Revenue for the third quarter  ended  September  30, 2005  decreased  from
      $0.78  million to $0.53 million or 32% compared to the third quarter ended
      September  30,  2004 as a result  of a  reduction  in the  demand  for our
      services.

      Gross  profit as a  percentage  of  revenue  for the third  quarter  ended
      September 30, 2005 decreased from 26.2% to 25.8% compared to third quarter
      ended September 30, 2004 as a result of consultant  cost increases,  which
      were not passed on to our  customers  and a change in the mix of  services
      provided to our clients.

      LIQUIDITY AND CAPITAL RESOURCES

On December 16, 2002,  the Company  entered into an agreement  with BFI Business
Finance ("BFI"), a Santa Clara,  California-based business credit company, for a
two year working  capital line of credit for  $750,000,  to replace our existing
credit  facility  with  Comerica  Bank.  Under  the  BFI  agreement,   available
borrowings are up to 85% of accounts receivable,  after reduction for ineligible
accounts.  The  interest  rate on  outstanding  balances is at prime plus 4% per
annum,  plus a monthly  administrative  fee of 0.50% per month calculated on the
average   daily  balance   outstanding.   The  minimum   monthly   interest  and
administrative  fee charged to the Company was at least $1,000 per month for the
first six months,  escalating to $2,375 per month for the remaining  term of the
agreement.  The term of the  agreement  is two  years and  renews  automatically
unless  terminated  by the Company  upon 30 days' notice prior to the end of the
term.  In  December  2004,  the  agreement  between  the  Company  and  BFI  was
automatically  renewed  for an  additional  period of two years;  however,  both
parties  have the right to cancel the  agreement  at any time on 30 days'  prior
notice.


                                       10
<PAGE>

      On April 14, 2005,  the Company  entered into a Stock  Purchase  Agreement
      with  Stellar  McKim LLC  ("Stellar"),  a financial  services and software
      group (the "Stellar  Transaction").  Pursuant to the Stellar  Transaction,
      the Company filed a Certificate of  Designations  creating a new series of
      Preferred Stock designated Series A Convertible Preferred Stock ("Series A
      Preferred  Stock") and issued and sold to Stellar (i) 41,487,929 shares of
      Common  Stock,  representing  approximately  57.6%  of  BrightStar's  then
      authorized  shares of Common Stock,  for $213,000 in cash and (ii) 136,585
      shares  of  Series  A  Preferred  Stock,  which  are  convertible  into an
      aggregate  of  482,764,933  shares  of the  Company's  Common  Stock,  for
      $137,000 in cash.  Authorization  of the shares of Common  Stock  issuable
      upon  conversion  of the  shares of  Series A  Preferred  Stock  issued to
      Stellar in the Stellar  Transaction  was subject to stockholder  approval.
      This approval was granted at a Special  Meeting of  Stockholders,  held on
      September 20th, 2005 (the "Special Meeting").

      Pursuant to the Stellar  Transaction,  the Company  also  entered  into an
      Omnibus  Agreement (as amended,  the "Omnibus  Agreement"),  with Stellar,
      BrightStar  Information  Technology  Services,   Inc.  ("Services"),   the
      Company's principal operating subsidiary, and each holder (each a "Holder"
      and   collectively  the  "Holders")  of  Service's  Series  1  Convertible
      Subordinated  Promissory  Notes (the  "Notes"),  pursuant to which Stellar
      agreed to acquire all of the Notes from the Holders for $860,000. Pursuant
      to the Omnibus  Agreement and the Purchase  Agreement,  warrants that were
      originally  issued together with the Notes were cancelled,  the conversion
      feature of the Notes was  eliminated,  the maturity date of the Notes,  as
      well as the due date for  payment of interest  accrued at March 31,  2005,
      was extended  until  December 31, 2007 and the Company  issued  13,869,121
      shares of Common Stock to the Holders.

      The company  continues  to follow the going  concern  basis of  accounting
      although  there  have been  recurring  losses.  Management  believes  that
      existing borrowing  capabilities will be able to ensure the continuance as
      a going concern for a reasonable period of time. Further,  the controlling
      shareholders plan to facilitate the acquisition of operating  companies in
      the near future, which should enhance the company's profitability and cash
      flows.

      FORWARD-LOOKING  INFORMATION  -  Management's  Discussion  and Analysis of
      Financial   Condition   and  Results  of  Operations   ("MD&A")   includes
      "forward-looking  statements"  within the  meaning  of Section  27A of the
      Securities Act of 1933 and Section 21E of the  Securities  Exchange Act of
      1934. All statements,  other than statements of historical facts, included
      in this MD&A regarding the Company's financial position, business strategy
      and  plans  and  objectives  of  management  of  the  Company  for  future
      operations   are   forward-looking   statements.   These   forward-looking
      statements  rely on a number of assumptions  concerning  future events and
      are subject to a number of uncertainties and other factors,  many of which
      are outside of the Company's  control,  that could cause actual results to
      materially  differ from such  statements.  While the Company believes that
      the assumptions concerning future events are reasonable,  it cautions that
      there are inherent  difficulties in predicting  certain important factors,
      especially  the  timing  and  magnitude  of  technological  advances;  the
      prospects for future acquisitions; the possibility that a current customer
      could be acquired or  otherwise  be affected by a future  event that would
      diminish their information technology requirements; the competition in the
      information  technology  industry  and the impact of such  competition  on
      pricing,  revenues  and  margins;  the degree to which  business  entities
      continue to  outsource  information  technology  and  business  processes;
      uncertainties   surrounding   budget  reductions  or  changes  in  funding
      priorities of existing  government programs and the cost of attracting and
      retaining highly skilled personnel.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

      There  have  been no  material  changes  from the  information  previously
      reported under Item 7A of the Company's Annual Report on Form 10-K for the
      fiscal year ended December 31, 2004.  Refer to the Company's Annual Report
      on Form 10-K for the year ended December 31, 2004 for more details.

ITEM 4. Controls and Procedures

      (a) Evaluation of disclosure controls and procedures.  Our chief executive
      officer  and  our  chief   financial   officer,   after   evaluating   the
      effectiveness  of the company's  "disclosure  controls and procedures" (as
      defined in the Securities  Exchange Act of 1934, as amended (the "Exchange
      Act"),  Rules 13a-15e and 15d-15e) as of the end of the period  covered by
      this  report (the  "Evaluation  Date"),  have  concluded  that,  as of the
      Evaluation  Date,  our disclosure  controls and  procedures  were adequate
      based on the  evaluation  of these  controls  and  procedures  required by
      paragraph (b) of the Exchange Act Rules 13a-15 or 13d-15.

      (b) Changes in internal  controls.  During our last fiscal quarter,  there
      was no change in our internal  control over  financial  reporting that has
      materially  affected,  or is reasonably  likely to  materially  affect our
      internal control over financial reporting.



                                       11
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1. Legal proceedings

      On August 1, 2005, the Company  received  notice of a claim on behalf of a
      prior  director /  employee  for the  non-payment  of  severance  payments
      totaling  approximately  $200,000. The Company has taken the position that
      there is no valid  claim,  as the  applicable  statue of  limitations  has
      expired  and the  asserted  claim  is  time-barred,  and the  Company  has
      indicated  so in its  response  to the  claimant.  As  such,  the  Company
      believes that there is no significant  uncertainty affecting the financial
      statements as a result of this claim.

ITEM 4. Submission of Matters to a Vote of Security Holders.

      The Company held a Special  Meeting of Stockholders on September 20, 2005,
      at which the following persons were elected as Directors:

      Ian Scott-Dunne - 53,107,989 For, 75,400 Votes Withheld

      James Cahill - 53,107,989 Votes For, 75,400 Votes Withheld

      Robert Taggart, Jr. - 53,097,989 Votes For, 85,400 Votes Withheld

      Leonard Zehnwirth - 53,097,989 Votes For, 85,400 Votes Withheld

      Julie Houk - 53,169,989 Votes For, 13,400 Votes Withheld

      Deborah Seal - 53,107,989 Votes For, 75,400 Votes Withheld

      In  addition,  stockholders  voted  in  favor of  amending  the  Company's
      Certificate  of  Incorporation  to increase the number of shares of Common
      Stock the Company is  authorized to issue from  72,000,000 to  747,000,000
      (the "Share  Amendment")  and  authorized  our Board of Directors,  in its
      discretion,  to effect a reverse stock split of the Company's  outstanding
      Common Stock by a ratio of between one-for-two and one-for-ten, inclusive,
      without further approval by our stockholders (the "Split Amendment").

      Votes for these two proposals were as follows:

      Share Amendment:  42,554,024  Votes For; 481,530 Votes Against;  100 Votes
      Abstaining;  10,147,735 Broker Non-votes Split Amendment: 42,411,524 Votes
      For;  556,030 Votes Against;  68,100 Vote  Abstaining;  10,147,735  Broker
      Non-votes

ITEM 6. Exhibits

      (a) Exhibits

      3.1 - Certificate of Incorporation and all Amendments

      10.1 - Purchase  of Assets  and Sale  Agreement,  Dated as of October  31,
      2005, Between and Among the Company and Neulogic Media, LLC.

      31.1 - Certification of Chief Executive Officer pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002.

      31.2 - Certification of Chief Financial Officer pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002.

      32.1 -  Certification  of Chief  Executive  Officer  pursuant to 18 U.S.C.
      Section 1350.

      32.2 -  Certification  of Chief  Financial  Officer  pursuant to 18 U.S.C.
      Section 1350.


                                       12
<PAGE>

                                   SIGNATURES

    Pursuant to the  requirements  of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned  there
unto duly authorized.

                                   BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.

Date: Nov __, 2005.                BY: /s/ Brian Burnett
                                       -----------------------------------------
                                       Brian Burnett
                                       Chief Executive Officer

                                       13
<PAGE>


                                                         INDEX TO EXHIBITS

EXHIBIT
NUMBER            DESCRIPTION
------            -----------

3.1 -             Certificate of Incorporation and all amendments

10.1 -            Purchase of Assets and Sale Agreement, dated as of October 31,
                  2005, between and among the Company and Neulogic Media, LLC.

31.1 -            Certification  of Chief Executive  Officer pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002.

31.2 -            Certification  of Chief Financial  Officer pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002

32.1 -            Certification of Chief Executive Officer pursuant to 18 U.S.C.
                  Section 1360

32.2 -            Certification of Chief Financial Officer pursuant to 18 U.S.C.
                  Section 1360

                                       14