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, 2004 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.)


            6601 OWENS DRIVE, SUITE 115, PLEASANTON, CALIFORNIA 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 November 1, 2004 was 15,287,968.


                 The Exhibit Index is located on page 14 hereof.

                                       1
<PAGE>




                      PART 1, ITEM 1. FINANCIAL STATEMENTS

                  BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                         ($000'S, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                           September 30,  December 31,
                                                                               2004          2003
                                                                             ---------     -------
                               ASSETS
  Current assets:
<S>                                                                           <C>         <C>
      Cash ................................................................   $     19    $    125
      Trade accounts receivable, net of allowance
        for doubtful accounts of $30 ......................................        452         537
      Unbilled revenue ....................................................         32          40
      Prepaid expenses and other ..........................................         70         117
                                                                              --------    --------
        Total current assets ..............................................        573         819
      Property and equipment ..............................................        446         437
        Less - accumulated depreciation ...................................       (403)       (389)
                                                                              --------    --------
        Property and equipment, net .......................................         43          48
      Goodwill ............................................................      1,748       1,748
                                                                              --------    --------
        Total assets ......................................................   $  2,364    $  2,615
                                                                              ========    ========
                  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
      Line of credit ......................................................   $    220    $     --
      Accounts payable ....................................................         75          81
      Accrued salaries and other expenses .................................        314         320
      Deferred revenue ....................................................         --          --
      Corporate legacy liabilities ........................................         11          --
      Convertible notes payable, short-term ...............................         --          38
                                                                              --------    --------
        Total current liabilities .........................................        620         439
      Convertible notes payable, net ......................................      1,258       1,203
      Corporate legacy liabilities ........................................         --          11
      Other liabilities ...................................................         50           2
      Commitments and contingencies .......................................         --          --
  Stockholders' equity:
      Common stock, $0.001 par value; 72,000,000 shares authorized;
      15,287,968 and 15,286,788 (excluding 255,000 shares held in treasury)
      shares issued and outstanding in 2004 and 2003, respectively ........         16          16
      Additional paid-in capital ..........................................     99,925      99,925
      Unearned compensation ...............................................         (2)        (11)
      Treasury stock ......................................................       (118)       (118)
      Accumulated deficit .................................................    (99,385)    (98,852)
                                                                              --------    --------
        Total stockholders' equity ........................................        436         960
                                                                              --------    --------
               TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .................   $  2,364    $  2,615
                                                                              ========    ========
</TABLE>

See notes to condensed consolidated financial statements.

                                       2
<PAGE>




                  BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                         ($000'S, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                            Three Months Ended                   Nine Months Ended
                                                                September 30,                       September 30,
                                                    --------------------------------       ------------------------------
                                                         2004               2003              2004                2003
                                                    --------------      ------------       ------------       ------------
<S>                                                   <C>              <C>                <C>                <C>
         Revenue ..............................      $        781       $      1,586       $      2,818       $      4,430
         Cost of revenue ......................               576              1,120              2,032              3,138
                                                     ------------       ------------       ------------       ------------
         Gross profit .........................               205                466                786              1,292

         Operating expenses:
            Selling, general and administrative               318                425              1,165              1,220
            Depreciation and amortization .....                 5                  5                 14                 23
                                                     ------------       ------------       ------------       ------------
              Total operating expenses ........               323                430              1,179              1,243

         Income (loss) from operations ........              (118)                36               (393)                49

            Other income ......................              --                 --                  --                  44
            Interest expense, net .............               (34)               (53)              (140)              (150)
                                                     ------------       ------------       ------------       ------------
         Loss before tax provision ............              (152)               (17)              (533)               (57)
            Income tax provision ..............              --                 --
                                                     ------------       ------------       ------------       ------------
         Net loss .............................      $       (152)      $        (17)      $       (533)      $        (57)
                                                     ============       ============       ============       ============
         Net loss per share: basic and diluted
              Net loss per share ..............      $      (0.01)      $      (0.00)      $      (0.03)      $      (0.00)
                                                     ============       ============       ============       ============
         Average shares outstanding:
            basic and diluted .................        15,287,968         15,284,668         15,287,968         15,284,416
                                                     ------------       ------------       ------------       ------------
</TABLE>


See notes to condensed consolidated financial statements.


                                       3

<PAGE>



                  BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
       UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                         ($000'S, EXCEPT PER SHARE DATA)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004

<TABLE>
<CAPTION>
                                                            Common Stock
                                                   -------------------------------        Additional          Unearned
                                                      Shares             Amount        Paid-In-Capital      Compensation
                                                   ------------       ------------     ----------------     ------------
<S>                                                <C>              <C>                <C>                <C>
       Balance, December 31, 2003 ..........         15,286,788       $         16       $     99,925       $        (11)
       Variable stock options ...............                --                 --                 --
       Warrants issued with convertible notes                --                 --                 --                 --
       Exercise of stock options ............             1,180                 --                 --                 --
       Amortization of unearned compensation                 --                 --                 --                  9
       Net loss .............................                --                 --                 --                 --
                                                   ------------       ------------       ------------       ------------
       Balance, September 30, 2004 ..........        15,287,968       $         16       $     99,925       $         (2)
                                                   ============       ============       ============       ============
                                                                                            Total
                                                     Treasury          Accumulated       Stockholders'     Comprehensive
                                                      Stock              Deficit            Equity              Loss
                                                   ------------       ------------       ------------       ------------
       Balance, December 31, 2003 ...........      $       (118)      $    (98,852)      $        960
       Variable stock options ...............              --                 --                  --
       Warrants issued with convertible notes              --                 --                  --
       Exercise of stock options ............              --                 --                  --
       Amortization of unearned compensation               --                 --                    9
       Net loss .............................              --                 (533)              (533)      $       (177)
                                                   ------------       ------------       ------------       ------------
       Balance, September 30, 2004 ..........      $       (118)      $    (99,385)      $        436       $       (177)
                                                   ============       ============       ============       ============

</TABLE>

See notes to condensed consolidated financial statements.

                                       4
<PAGE>




                  BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                         ($000'S, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                 Nine Months Ended
                                                           -----------------------------
                                                            September 30, September 30,
                                                                2004        2003
                                                              -------     --------
  Operating activities:
<S>                                                           <C>         <C>
     Net loss ..........................................      $(533)      $ (57)
     Adjustments to reconcile net loss to net
        cash provided (used) by operating activities:
     Depreciation and amortization .....................         57          85
     Change in allowance for doubtful accounts .........       --           102
     Non cash compensation expense on issuance of
        common stock options and warrants ..............       --            49
     Expense of issuances of stock and warrants ........          9
     Non cash gains on settlement of liabilities .......       --           (35)
     Changes in operating assets and liabilities
        Trade accounts receivable ......................         85        (130)
        Unbilled revenue ...............................          8          (3)
        Prepaid expenses and other assets ..............         47          11
        Accounts payable ...............................         (6)        (26)
        Accrued salaries and other expenses ............         42         (48)
        Deferred revenue ...............................       --            25
        Corporate legacy liabilities ...................       --           (59)
                                                              -----       -----
        Net cash provided (used) by operating activities       (291)        (86)

  Investing activities:
     Capital expenditures ..............................         (9)         (2)
                                                              -----       -----
        Net cash used in investing activities ..........         (9)         (2)

  Financing activities:
     Net borrowings (payments) under line of credit ....        220          19
     Repayments of convertible notes payable ...........        (26)       --
                                                              -----       -----
        Net cash provided (used) by financing activities        194          19

  Net increase (decrease) in cash ......................       (106)        (69)

  Cash:
     Beginning of period ...............................        125         160
                                                              -----       -----
     End of period .....................................      $  19       $  91
                                                              =====       =====
  Supplemental disclosure:
  Interest paid ........................................      $  72       $  13

  Noncash issuance of convertible notes at fair value
     associated with interest due on notes payable .....                  $  74

</TABLE>


See notes to condensed consolidated financial statements.


                                       5

<PAGE>
                  BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                    ($000'S, EXCEPT SHARE AND PER SHARE DATA)

    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, 2004, are not necessarily  indicative
    of the results that may be expected  for the year ending  December 31, 2004.
    The balance  sheet at December  31, 2003 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.  For additional  information,  refer to the financial statements
    and footnotes  thereto  included in the Company's annual report on Form 10-K
    for the year ended December 31, 2003.

    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  incremental  common shares  issuable upon the
    exercise  of stock  options,  warrants  and  conversion  of  notes  payable.
    Potentially  dilutive  securities are excluded from the computation if their
    effect is anti-dilutive. Potentially dilutive securities excluded because of
    their  anti-dilutive  effect are  approximately  7.9 million  shares and 6.5
    million shares at September 30, 2004 and September 30, 2003, respectively.

    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>
                                                                                3 Months Ended          9 Months Ended
                                                                                 September 30,           September  30,
                                                                               2004        2003         2004         2003
                                                                              ------     --------     --------     --------
<S>                                                                           <C>        <C>      <C>              <C>
        Net income (loss), as reported .................................      $ (152)    $    (17)$       (533)    $    (57)
         Add: Stock based employee compensation expense included in
                   reported income, net of related tax .................         --             --          --           --
        Deduct: Total stock-based employee compensation expense
                        determined under fair value based method for all
                        awards, net of related tax effects .............         --            (8)        --            (23)
                                                                              ------     --------     --------       ------
        Pro forma net income (loss) ....................................      $ (152)    $    (25)    $   (533)    $    (80)
                                                                              ======     =========    ========       ======
        Pro forma basic and diluted income (loss) per share:
           Basic - as reported .........................................      $ (0.0)    $   (0.00)   $   (0.0)    $   (0.00)
           Basic - pro forma ...........................................      $ (0.0)    $   (0.00)   $   (0.0)    $   (0.00)
           Diluted - as reported .......................................      $ (0.0)    $   (0.00)   $   (0.0)    $   (0.00)
           Diluted - pro forma .........................................      $ (0.0)    $   (0.00)   $   (0.0)    $   (0.00)
</TABLE>

    Compensation  cost for the  quarter  ended  September  30, 2004 and 2003 was
    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 1.74%; and (v) expected  forfeiture rates of 40% for both
    periods.

                                       6

<PAGE>




    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, 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.  Borrowings  are  secured  on a  senior  basis by
    substantially   all  of  the  assets  of  the  Company  and  its   operating
    subsidiaries.  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 per month for the
    first six months,  escalating to $2 per month for the remaining  term of the
    agreement.  The term of the  agreement is stated to be two years and the two
    year term renews automatically unless terminated by the Company upon 30 days
    notice  prior to the end of the term.  However,  BFI has the right to cancel
    the agreement at any time on 30 days' prior notice.

    The Company's  liquidity  declined during the past quarter  primarily as the
    result of the fall off of revenue from the Company's largest  customer.  The
    Company expects that the revenue level from this customer through the end of
    this year will be similar to the revenue level realized in the past quarter.
    However,  as a result of our  current  general  and  administrative  expense
    level,  unless the Company  experiences other  improvements in its operating
    performance or is able to find sources of new capital,  the Company  expects
    that its net working  capital  will  continue  to  decrease.  Under  present
    circumstances,   the  Company   believes  that  its  planned   results  from
    operations,  when combined with the proceeds  available  from the BFI credit
    facility,  will be adequate to fund its  operations at least through the end
    of March 2005.  However,  our  operating  results could be worse than we are
    expecting,  or the  BFI  credit  facility  could  be  canceled.  Under  such
    circumstances,  there  can be no  assurance  that  the  Company  would  have
    sufficient  cash available to meet our obligations as they come due in order
    to continue as a going concern.  Furthermore, even without the occurrence of
    such circumstances, there is substantial doubt about our ability to continue
    as a going concern after March 31, 2005 without a strategic  transaction  or
    (i)  additional  forbearance  by the  holders  of the  Series 1  Convertible
    Subordinated  Promissory  Notes (see Note 6),  (ii)  further  reductions  in
    executive  overhead  expense,  and (iii) the  termination of our status as a
    public reporting company under the Securities Exchange Act of 1934.

    On March 25, 2004, the Company retained the services of a financial advisory
    firm to help the Company  explore its  strategic  alternatives.  The Company
    paid an initial fee of $8 at the signing of the  agreement  and paid monthly
    payments of $8 up through June 25,  2004,  when the Company  terminated  the
    relationship.  However,  the Company is  continuing to explore its strategic
    alternatives, including the possibility of separating its operating business
    from its public shell in order to preserve for the public  stockholders  the
    value of the public shell on a stand alone  basis.  In this  connection,  on
    November  15,  2004,  the  Company   executed  an  agreement  (the  "Omnibus
    Agreement")  with all of the Holders of the Notes and PIK Notes (see Note 6)
    whereby  the  Company   agreed  to  transfer  to  an  entity  to  be  formed
    substantially  all of the  assets of the  Company  (the  "Asset  Transfer"),
    including all of the issued and outstanding stock of its principal operating
    subsidiary,  BrightStar Information  Technology Services,  Inc., in exchange
    for (i) a release of the lien and security  interest  encumbering the assets
    of the Company created  pursuant to the security  agreement dated as of July
    26, 2001 entered into by the Company, the Holders and others, (ii) a release
    of any and all claims of any nature that the  Holders  may have  against the
    Company,  (iii) a surrender of all of the warrants  issued to the Holders in
    connection with the Notes and the PIK Notes,  and (iv) the deletion from the
    Notes and PIK notes of any rights of conversion into the common stock of the
    Company,  all  subject to the Asset  Transfer  having  been  approved by the
    stockholders  of  the  Company  on  or  before  February  28,  2005  (unless
    extended).  Upon  completion  of the Asset  Transfer,  the Company will have
    certain contingent  liabilities,  which are not believed to be material, and
    no assets.

    In order for the strategy described above to achieve its goal, a third party
    will  have  to  agree  to fund  the  Company's  operating  costs  after  the
    completion  of the Asset  Transfer and to cause the Company to acquire a new
    operating business. Such a transaction,  if consummated, is likely to result
    in a change in control of the  Company  and in a very large  dilution in the
    stock held by the Company's current stockholders. There is no assurance that
    the  Company  will  be  successful  in  its  effort  to  consummate  such  a
    transaction with a third party or, if it does consummate such a transaction,
    that the Company after the change in control will succeed in preserving  for
    the public stockholders the value of the public shell on a stand alone basis
    or  acquiring a business  that will allow the company to continue as a going
    concern.



                                       7
<PAGE>

    3. ACCOUNTS RECEIVABLE

    The majority of the Company's accounts receivables are due from Global 2000,
    mid-market  and  public  sector  clients.  Credit  is  extended  based on an
    evaluation of the customers' financial condition and, generally,  collateral
    is not required.  The Company maintains allowances for doubtful accounts for
    estimated  losses  resulting  from the  inability  of our  customers to make
    required payments. Management regularly evaluates the allowance for doubtful
    accounts.  The  estimated  losses  are based on the aging of our  receivable
    balances,  a review of  significant  past due accounts,  and our  historical
    write-off experience,  net of recoveries.  If the financial condition of our
    customers were to  deteriorate,  resulting in an impairment of their ability
    to make payments, additional allowances would be required.

    4. ACCRUED SALARIES AND OTHER EXPENSES

    Accrued salaries and other expenses consist of the following:

                                               September 30,   December 31
                                                   2004           2003
                                                 -------       ----------
Accrued payroll and payroll taxes............    $   137       $      163
Accrued professional fees....................         75               64
Other accrued expenses.......................        102               93
                                                 -------       ----------
          Total accrued expenses.............    $   314       $      320
                                                 =======       ==========



    5. CORPORATE LEGACY LIABILITIES

    Corporate  legacy  liabilities  consist of obligations that were incurred in
    years  prior to  2001.  During  2001 the  Company  entered  into  settlement
    agreements  or issued  notes in  satisfaction  of certain of these  payables
    pursuant  to a  restructuring  plan  offered  to  substantially  all  of its
    creditors. The following chart represents what is left from those settlement
    agreements.

    Corporate legacy liabilities consist of the following:

<TABLE>
<CAPTION>
                                                     September 30,     December 31,
                                                          2004            2003
                                                     ------------     -------------
 Short-term:
<S>                                                  <C>              <C>
 Promissory note.................................    $         11     $          --
                                                     ------------     -------------
     Total short-term ...........................    $         11     $          --
                                                     ------------     -------------

 Long-term:
 Promissory note.................................    $         --     $           11
                                                     ------------     --------------
 Total long-term.................................    $         --     $           11
                                                     ------------     --------------
</TABLE>


    A promissory note was issued in conjunction with the Company's restructuring
    of the legacy  liabilities.  The note is an  unsecured  long-term  note that
    accrues  interest  at 6.5% per  annum.  Principal  and  interest  are due on
    January 3, 2005.  As of  September  30,  2004,  the  classification  on this
    promissory note was changed to short-term  based on the maturity date of the
    promissory  note.  However,  on October 18, 2004 the  Company  settled  this
    entire liability for a cash payment of $1.

    6. CONVERTIBLE NOTES PAYABLE, NET

    Convertible notes payable, net consists of the following:


<TABLE>
<CAPTION>
                                                     September 30, December 31,
                                                         2004       2003
                                                        ------      -----
<S>                                                     <C>         <C>
Series 1 Convertible Subordinated Promissory Notes      $1,258      $1,283
  Less fundraising and warrant costs:
    Fundraising costs, net of amortization .......        --            10

    Warrant  costs  associated  with  convertible
       notes,  net  of amortization ..............        --            32
                                                        ------      ------
         Subtotal fundraising costs ..............        --            42
                                                        ------      ------
 Notes payable, net ..............................      $1,258      $1,241
                                                        ======      ======
 Convertible notes payable - short-term ..........      $ --        $   38
                                                        ------      ------
 Convertible notes payable - long-term ...........      $1,258      $1,203
                                                        ------      ------
</TABLE>

    On July 26,  2001,  the Company  completed a private  placement  through the
    issuance  of  approximately  $1,100  of  Series 1  Convertible  Subordinated
    Promissory  Notes (the "Notes")  with warrants to a group of investors  (the
    "Holders"),  including members of BrightStar's senior management.  The Notes
    are  secured  on a junior  basis by  substantially  all of the assets of the
    Company and its  operating  subsidiaries,  and are  convertible  into common
    stock, at the option of the investors,  at a fixed price of $0.23 per share,
    subject  to  anti-dilution  provisions.  The  Notes are  entitled  to simple
    interest  calculated  at a rate per annum  equal to 8%. The  Company had the
    option  to pay  interest  for the  first  year  from the  date of the  Notes
    (subsequently  extended for another year during the second  quarter of 2002)
    by issuing  additional  Notes (the "PIK Notes") and  warrants  with the same
    terms as above.  The Company  elected to pay the  interest  due on the Notes
    from inception  through June 30, 2003 by issuing PIK Notes totaling $182 and
    warrants  totaling  118,867.  In October 2003, the Company started paying in
    cash the quarterly interest due on the Notes and PIK Notes.


                                       8
<PAGE>

    The Notes and the PIK Notes were originally due and payable on July 1, 2004.
    The Holders  representing more than 75% of the aggregate principal amount of
    the Notes and PIK Notes,  however,  agreed to amend the Notes and PIK Notes,
    effective  October 24, 2003,  to extend their due date to December 31, 2005.
    As consideration for this amendment the Company agreed to a partial pay down
    schedule for the PIK Notes,  commencing  January 2004. The Company agreed to
    pay in cash each quarter an amount equal to 50% of the interest  then due on
    the Notes and PIK Notes and the amounts so paid will be applied sequentially
    to retire the PIK Notes in the order issued until December 31, 2005.

    On August 3, 2004,  the Company  repriced the  exercise  price of the 70,000
    stock warrants  previously awarded to Brewer Capital Group LLC from $1.00 to
    $0.02 per share,  the closing price on August 3, 2004,  in  connection  with
    services performed for the Company.  While these repriced stock warrants are
    subject to variable accounting treatment, no material amount was expensed in
    the quarter ended September 30, 2004.

    The Holders  representing more than 75% of the aggregate principal amount of
    the  Notes and PIK  Notes  agreed  to amend  the  Notes  and the PIK  Notes,
    effective  September 1, 2004, to extend to December 31, 2005 the due date of
    the amount  otherwise  currently  payable for the period ended September 30,
    2004 and the amount that would  otherwise  be payable for the period  ending
    December 31, 2004.

    7. INCOME TAXES

    As a result of  historical  losses,  the  Company  has  recorded a valuation
    allowance to offset all of its net deferred tax assets recorded at September
    30, 2004. The valuation  allowance,  which was  approximately  $10,900 as of
    December  31,  2003,  relates to  deferred  tax assets  established  for net
    operating loss carryforwards  generated through September 30, 2004 and other
    temporary differences. The Company does not expect to recognize tax benefits
    on prior or future  losses or other  temporary  differences  until such time
    that it is more  likely than not that tax  benefits  will be realized by the
    Company.  At  December  31,  2003,  the  Company  had a net  operating  loss
    carryforward of approximately $15,600 for federal income tax purposes, which
    will expire in years 2018 through 2023.

    8. NET (LOSS) INCOME PER SHARE

    The following table sets forth the computation of basic and diluted earnings
per share:

<TABLE>
<CAPTION>
                                                                        Three months ended             Nine months ended
                                                                   September 30,   September 30,   September 30,  September 30,
                                                                      2004            2003            2004            2003
                                                                  ------------    ------------    ------------    ------------
    Numerator:
<S>                                                               <C>             <C>             <C>             <C>
Income  (loss)  before  cumulative  effect of
  change  in  accounting principle ............................   $       (152)   $        (17)   $       (533)   $        (57)
                                                                  ============    ============    ============    ============
Net income (loss) .............................................   $       (152)   $        (17)   $       (533)   $        (57)
                                                                  ============    ============    ============    ============
Numerator for basic earnings per share - income (loss)
  available to common stockholders ............................           (152)            (17)           (533)            (57)
Effect of dilutive securities:
Series 1 Convertible Subordinated Promissory Notes (1) ........           --              --              --              --
Numerator for diluted earnings per share - income
  available to common stockholders after assumed conversions ..   $       (152)   $        (17)   $       (533)   $        (57)
                                                                  ============    ============    ============    ============
Denominator:
Denominator for basic earnings per share - weighted
     average shares ...........................................     15,289,968      15,284,668      15,287,783      15,284,416
Effect of dilutive securities:
Series 1 Convertible Subordinated Promissory Notes (1) ........           --              --              --              --
Employee stock options (2) ....................................           --              --              --              --
Common stock warrants (3) .....................................           --              --              --              --
Denominator for diluted earnings per share - adjusted weighted-
   average shares and assumed conversions .....................     15,289,968      15,284,668      15,287,783      15,284,416
                                                                  ------------    ------------    ------------    ------------
</TABLE>

                                       9

<PAGE>

(1)     Diluted EPS for the nine-month  period ended September 30, 2004 excludes
        "as  converted"  treatment  of the  Series  1  Convertible  Subordinated
        Promissory  Notes as their inclusion would be  anti-dilutive.  The Notes
        are  convertible  at a price of $0.23 per share into  approximately  5.5
        million common shares.

(2)     Diluted EPS for the nine-month  period ended September 30, 2004 excludes
        the effect of approximately  1.2 million employee stock options as their
        inclusion  would be  anti-dilutive.  Of the 1.2 million  employee  stock
        options, approximately zero were in-the-money as of September 30, 2004.

(3)     Diluted EPS for the nine-month  period ended September 30, 2004 excludes
        the effect of  approximately  0.5 million common stock warrants as their
        inclusion  would  be  anti-dilutive.  Of the 0.5  million  common  stock
        warrants, approximately .1 million were in-the-money as of September 30,
        2004.

    9. LITIGATION

    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 material adverse effect on the Company's financial condition.

    10. SIGNIFICANT CUSTOMERS

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

    For the third  quarter  of 2003,  the  Company  had a single  customer  that
    accounted for approximately 60% of total revenue.  For the first nine months
    of 2003,  this customer  accounted for  approximately  60% of total revenue.
    This customer also accounted for  approximately  55% of the Company's  total
    outstanding accounts receivable balance as of September 30, 2003.


    ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
            AND RESULTS OF OPERATIONS

    BrightStar   Information   Technology  Group,  Inc.  ("BrightStar"  or  "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 applications
    from SAP and Actuate and the maintenance of legacy  application  software by
    focusing  primarily  on serving  clients in the  healthcare  and  government
    markets.  BrightStar had approximately 21 full time equivalent employees and
    contractors  at  October  31,  2004  and  has  its  headquarters  in the San
    Francisco Bay Area with a field office in Addison, 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.

                                       10
<PAGE>

    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.

    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.

    Goodwill  --  Goodwill  is  the  cost  in  excess  of  amounts  assigned  to
    identifiable assets acquired less liabilities assumed.  Goodwill recorded in
    conjunction with the Founding  Companies and all other  acquisitions in 1998
    is no longer  being  amortized  due to the  Company  adopting  Statement  of
    Financials  Accounting  Standards  (SFAS) No. 142 as of January 1, 2002.  In
    accordance  with SFAS No. 142,  the Company  annually  reviews its  Goodwill
    valuation on October 1st.

    The Company  believes  that as of October 1, 2004,  the value of Goodwill is
    impaired in the amount of $0.1 million. If the Company completes a strategic
    alternative  as  described  in Note 2, it believes  the value of Goodwill is
    likely to be substantially further impaired.

    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
    September 30, 2004. 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 in the period such
    determination was made.

    RESULTS OF OPERATIONS

    Revenue for the third quarter and first nine months of 2004  decreased  from
    $1.6  million to $0.8  million and from $4.4  million to $2.8 million or 51%
    and 36%,  respectively,  compared to the third quarter and first nine months
    of 2003 as a result of a reduction in the demand for our services.

                                       11
<PAGE>

    Gross  profit  as a  percentage  of  revenue  for the  third  quarter  ended
    September 30, 2004 decreased from 29% to 26% compared to third quarter ended
    September  30, 2003 as a result of  underutilized  resources and a change in
    the mix of services provided to our clients.

    Total  assets  decreased  $0.2 million from $2.6 million to $2.4 million for
    the first nine months of 2004  primarily  due to the  decreases  in Accounts
    Receivable and Cash.  These  decreases are  attributable  to the decrease in
    revenues  that the  Company  experienced  in 2004 and the  resulting  losses
    caused  by the  reduction  of  revenues.  In  addition,  as a result  of the
    operating losses experienced in the current quarter, the balance outstanding
    on the Company's  line of credit  increased  from $0.1 million at the end of
    the prior quarter to $0.2 million at September 30, 2004.

    The Company's selling, general and administrative expenses decreased for the
    third  quarter and first nine months of 2004  compared with the same periods
    in  2003  principally  due  to a  reduction  in  the  number  of  management
    personnel.


    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 $0.75 million, 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.  Borrowings are secured on a senior basis
    by  substantially  all of  the  assets  of the  Company  and  its  operating
    subsidiaries.  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 stated to be two years and
    the two year term renews automatically unless terminated by the Company upon
    30 days notice prior to the end of the term.  However,  BFI has the right to
    cancel the agreement at any time on 30 days' prior notice.

    The Company's  liquidity  declined during the past quarter  primarily as the
    result of the fall off of revenue from the Company's largest  customer.  The
    Company expects that the revenue level from this customer through the end of
    this year will be similar to the revenue level realized in the past quarter.
    However,  as a result of our  current  general  and  administrative  expense
    level,  unless the Company  experiences other  improvements in its operating
    performance or is able to find sources of new capital,  the Company  expects
    that its net working  capital  will  continue  to  decrease.  Under  present
    circumstances,   the  Company   believes  that  its  planned   results  from
    operations,  when combined with the proceeds  available  from the BFI credit
    facility,  will be adequate to fund its  operations at least through the end
    of March 2005.  However,  our  operating  results could be worse than we are
    expecting,  or the  BFI  credit  facility  could  be  canceled.  Under  such
    circumstances,  there  can be no  assurance  that  the  Company  would  have
    sufficient  cash available to meet our obligations as they come due in order
    to continue as a going concern.  Furthermore, even without the occurrence of
    such circumstances, there is substantial doubt about our ability to continue
    as a going concern after March 31, 2005 without a strategic  transaction  or
    (i)  additional  forbearance  by the  holders  of the  Series 1  Convertible
    Subordinated  Promissory  Notes (see Note 6),  (ii)  further  reductions  in
    executive  overhead  expense,  and (iii) the  termination of our status as a
    public reporting company under the Securities Exchange Act of 1934.


    On March 25, 2004, the Company retained the services of a financial advisory
    firm to help the Company  explore its  strategic  alternatives.  The Company
    paid an  initial  fee of $8,000 at the  signing  of the  agreement  and paid
    monthly  payments  of  $8,000 up  through  June 25,  2004  when the  Company
    terminated the relationship.  However,  the Company is continuing to explore
    its strategic  alternatives,  including the  possibility  of separating  its
    operating business from its public shell in order to preserve for the public
    stockholders  the value of the public shell on a stand alone basis.  In this
    connection,  on November 15, 2004,  the Company  executed an agreement  (the
    "Omnibus Agreement") with all of the Holders of the Notes and PIK Notes (see
    Note 6) whereby  the  Company  agreed to  transfer to an entity to be formed
    substantially  all of the  assets of the  Company  (the  "Asset  Transfer"),
    including all of the issued and outstanding stock of its principal operating
    subsidiary,  BrightStar Information  Technology Services,  Inc., in exchange
    for (i) a release of the lien and security  interest  encumbering the assets
    of the Company created  pursuant to the security  agreement dated as of July
    26, 2001 entered into by the Company, the Holders and others, (ii) a release
    of any and all claims of any nature that the  Holders  may have  against the
    Company,  (iii) a surrender of all of the warrants  issued to the Holders in
    connection with the Notes and the PIK Notes,  and (iv) the deletion from the
    Notes and PIK Notes of any rights of conversion into the common stock of the
    Company,  all  subject to the Asset  Transfer  having  been  approved by the
    stockholders  of  the  Company  on  or  before  February  28,  2005  (unless
    extended).  Upon  completion  of the Asset  Transfer,  the Company will have
    certain contingent  liabilities,  which are not believed to be material, and
    no assets.

                                       12
<PAGE>

    In order for the strategy described above to achieve its goal, a third party
    will  have  to  agree  to fund  the  Company's  operating  costs  after  the
    completion  of the Asset  Transfer and to cause the Company to acquire a new
    operating business. Such a transaction,  if consummated, is likely to result
    in a change in control of the  Company  and in a very large  dilution in the
    stock held by the Company's current stockholders. There is no assurance that
    the  Company  will  be  successful  in  its  effort  to  consummate  such  a
    transaction with a third party or, if it does consummate such a transaction,
    that the Company after the change in control will succeed in preserving  for
    the public stockholders the value of the public shell on a stand alone basis
    or  acquiring a business  that will allow the company to continue as a going
    concern.

    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, 2003.  Refer to the Company's  Annual Report on Form
    10-K for the year ended December 31, 2003 for more details.

ITEM 4. CONTROLS AND PROCEDURES

    (a) Evaluation of disclosure  controls and  procedures.  Our chief executive
    officer  and our  controller,  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.

                           PART II - OTHER INFORMATION

ITEM 1. Legal proceedings

    There have been no material changes from the information previously reported
    under Item 3 of the Company's Annual Report on Form 10-K for the fiscal year
    ended December 31, 2003.  Refer to the Company's  Annual Report on Form 10-K
    for the year ended December 31, 2003 for more details.

ITEM 5.  Other Information


Effective August 9, 2004, Mr. Wagda's employment agreement was amended to extend
its term to December 31, 2005 (with  automatic one year renewals unless 6 months
notice is given),  limit any severance to $150,000 paid over 6 months and reduce
his salary to $250,000 per annum  starting  November 1, 2004 (but paid at a rate
of  $350,000  per annum  until  any  unused  accrued  vacation  has been  paid).
Commencing  July 1, 2005,  Mr.  Wagda's  salary will be reduced to $150,000  per
annum when Mr.  Wagda may, in his  discretion,  engage in other  activities  not
inconsistent with his obligations under the agreement.  The amendment reaffirmed
that the agreement  also is an obligation of the Company's  principal  operating
subsidiary,  BrightStar  Information  Technology Services,  Inc. (of which he is
CEO),  and that the potential  transaction to separate the public shell from the
operating subsidiary described in Note 2, with his consent,  would not result in
a qualifying termination.

                                       13

<PAGE>




ITEM 6.  Exhibits

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

 31.2 - Certification of Director of Finance and Controller 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 Director of Finance and Controller pursuant to 18
         U.S.C. Section 1360.

 10.1 - Omnibus Agreement regarding Series 1 Convertible Subordinated
        Promissory Notes entered into as of September 1, 2004.

 10.2 - Amended and restated employment agreement of chief executive officer
        entered into as of August 9, 2004.

                                       14

<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: November 15, 2004.        BY: /s/ Joseph A. Wagda
                                    ------------------------------------------
                                    Joseph A. Wagda
                                    Chairman and Chief Executive Officer

                                BY: /s/ Noel M. Tripod
                                    ------------------------------------------
                                    Noel M. Tripod
                                    Director of Finance and Controller




                                       15



<PAGE>


                                INDEX TO EXHIBITS

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

  31.2 - Certification of Director of Finance and Controller 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 Director of Finance and Controller pursuant to 18
         U.S.C. Section 1350.

  10.1 - Omnibus Agreement regarding Series 1 Convertible Subordinated
         Promissory Notes entered into as of September 1, 2004.

  10.2 - Amended and restated employment agreement of chief executive officer
         entered into as of August 9, 2004.