<PAGE>   1



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

                                    FORM 10-Q

(MARK ONE)

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001 OR

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

                        COMMISSION FILE NUMBER: 000-23889



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

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


           4900 HOPYARD ROAD, SUITE 200, PLEASANTON, CALIFORNIA 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 [ ].

    The number of shares of Common Stock of the Registrant, par value $.001 per
share, outstanding at August 10, 2001 was 13,519,288.
<PAGE>   2
                          ITEM 1. FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
                                                                                   JUNE 30,     DECEMBER 31,
                                                                                     2001           2000
                                                                                 ------------   ----------
<S>                                                                              <C>            <C>
                        ASSETS
                        CURRENT ASSETS:
                          Cash                                                   $    132       $     --
                          Trade accounts receivable, net
                            of allowance for doubtful accounts
                            of $240 and $320                                        3,161          6,249
                          Unbilled revenue                                            419             --
                          Prepaid expenses and other                                  484            365
                          Net assets of discontinued operations                        --            336
                                                                                 --------       --------
                             Total current assets                                   4,196          6,950

                       PROPERTY AND EQUIPMENT                                       5,288          5,281
                          Less - accumulated depreciation                          (3,786)        (3,123)
                                                                                 --------       --------
                          Property and equipment, net                               1,502          2,158

                       GOODWILL                                                    14,224         14,224
                          Less - accumulated amortization                          (2,400)        (2,224)
                                                                                 --------       --------
                          Goodwill, net                                            11,824         12,000

                       OTHER                                                           45             46
                                                                                 --------       --------

                       TOTAL ASSETS                                              $ 17,567       $ 21,154
                                                                                 ========       ========

                       LIABILITIES AND STOCKHOLDERS' EQUITY
                       CURRENT LIABILITIES:
                          Line of credit                                         $  1,621       $  3,597
                          Accounts payable                                          1,600          2,195
                          Acquisition payable                                         532          1,693
                          Restructuring reserve                                       620            853
                          Accrued salaries and other expenses                       1,860          2,520
                          Payable to stockholders                                     900            900
                          Deferred revenue                                            279            324
                                                                                 --------       --------
                             Total current liabilities                              7,412         12,082

                       OTHER LIABILITIES                                               19             19
                       COMMITMENTS AND CONTINGENCIES                                   --             --
                       STOCKHOLDERS' EQUITY:
                       Common stock, $0.001 par value; 35,000,000
                         shares authorized; 13,519,288 and 11,545,057
                         shares issued and outstanding                                 14             12
                          Additional paid-in capital                               99,490         98,244
                          Common stock warrants                                       100            100
                          Accumulated other comprehensive income (loss)              (118)          (118)
                          Retained earnings (deficit)                             (89,350)       (89,185)
                                                                                 --------       --------
                             Total stockholders' equity                            10,136          9,053
                                                                                 --------       --------
                          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $ 17,567       $ 21,154
                                                                                 ========       ========
</TABLE>

See notes to condensed consolidated financial statements.


                                       2
<PAGE>   3
                  BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                         ($000'S, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED                 SIX MONTHS ENDED
                                                            -----------------------------       -----------------------------
                                                                 JUNE 30,        JUNE 30,        JUNE 30,           JUNE 30,
                                                                   2001            2000            2001               2000
                                                            -----------------------------------------------------------------
<S>                                                             <C>             <C>             <C>                <C>
                 REVENUE                                        $    5,357      $   18,096      $    12,050        $   37,701

                 COST OF REVENUE                                     3,554          12,492            8,138            25,744
                                                                ----------      ----------      -----------        ----------
                 GROSS PROFIT                                        1,803           5,604            3,912            11,957

                 OPERATING EXPENSES:
                   Selling, general and administrative
                       expenses                                      1,760           8,629            3,127            15,062
                   Restructuring charge                                 --           2,525               --             2,525
                   Goodwill amortization                                88             388              176               756
                   Depreciation and amortization                       324             464              663               937
                                                                ----------      ----------      -----------        ----------
                       Total operating expenses                      2,172          12,006            3,966            19,280

                 LOSS FROM OPERATIONS                                 (369)         (6,402)             (54)           (7,323)

                 OTHER INCOME (EXPENSE)                                 --              (2)              --                (4)

                 INTEREST EXPENSE, net                                 (57)           (138)            (128)             (268)
                                                                ----------      -----------     -----------        ----------
                 LOSS BEFORE INCOME TAXES                             (426)         (6,542)            (182)           (7,595)

                 INCOME TAX PROVISION (CREDIT)                          --          (2,271)              --            (2,651)
                                                                ----------      -----------     -----------        ----------

                 LOSS FROM CONTINUING OPERATIONS                      (426)         (4,271)            (182)           (4,944)


                 DISCONTINUED OPERATIONS:
                    Gain (loss) on disposal of
                    discontinued operations, net of tax                 17            (223)              17              (223)
                                                                ----------      -----------     -----------        -----------


                 NET LOSS                                       $     (409)     $   (4,494)     $      (165)       $   (5,167)

                                                                ==============  ==============  =============      =============
                 NET LOSS PER SHARE: BASIC AND DILUTED
                   Continuing operations                        $       (0.03)  $       (0.46)  $      (0.01)      $       (0.55)
                   Discontinued operations                              --              (0.02)            --               (0.02)
                                                                --------------  --------------  ------------       -------------
                     Net loss per share                         $       (0.03)  $       (0.48)  $      (0.01)      $       (0.57)
                                                                ==============  ==============  =============      =============

                 AVERAGE SHARES OUTSTANDING: BASIC AND
                 DILUTED                                           13,423,117       9,403,010     13,075,687          9,104,394
                                                                ==============  ==============  =============      =============
</TABLE>

See notes to condensed consolidated financial statements.


                                       3
<PAGE>   4
    BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($000'S)

<TABLE>
<CAPTION>
                                                                                     SIX MONTHS ENDED
                                                                               JUNE 30,           JUNE 30,
                                                                                 2001               2000
                                                                             --------------------------------
                                      OPERATING ACTIVITIES:
<S>                                                                             <C>                <C>
                       Net loss                                                 $  (165)           $(5,167)
                       Adjustments to reconcile net loss to net
                           cash provided by (used in) operating
                           activities:
                       Depreciation and amortization                                839              1,693
                       Change in allowance for doubtful accounts                    (80)              (483)
                       Compensation expense on issuance of common stock              74                 --
                       Deferred taxes                                                --                665
                       Cash provided by (used in) operating activities:
                           Trade accounts receivable                              3,168              3,864
                           Unbilled revenue                                        (419)             1,164
                           Prepaid expenses and other                              (118)              (199)
                           Accounts payable                                        (595)               463
                           Restructuring reserve                                   (161)               611
                           Accrued salaries and other expenses                     (611)            (4,326)
                           Income taxes receivable/payable                           --             (3,320)
                           Deferred revenue                                         (45)               348
                           Discontinued operations                                  336                223
                                                                                -------            -------
                           Net cash provided by (used in) operating
                           activities                                             2,223             (4,464)


                    INVESTING ACTIVITIES:
                       Payments for acquisitions                                    (65)                --
                       Additions of property and equipment, net of
                           disposals                                                 (7)              (959)
                                                                                -------            -------
                           Net cash used in investing activities                    (72)              (959)

                    FINANCING ACTIVITIES:
                       Net proceeds (expense) from issuance of common
                           stock                                                    (43)             7,101
                       Repayments on line of credit                              (1,976)            (2,062)
                                                                                -------            -------
                           Net cash provided by (used in) financing
                               activities                                        (2,019)             5,039

                    NET INCREASE (DECREASE) IN CASH                                 132               (384)

                    CASH:
                       Beginning of period                                           --                973
                                                                                -------            -------
                       End of period                                            $   132            $   589
                                                                                =======            =======

                    SUPPLEMENTAL DISCLOSURE:
                       Noncash issuance of common stock in satisfaction
                       of severance obligations                                 $   394            $    --
                                                                                =======            =======
                       Noncash settlement in connection with
                       prior acquisition                                        $   893            $ 2,500
                                                                                =======            =======
                       Noncash settlement in connection with
                       litigation between the Company and affiliates
                       of Unaxis                                                $   125            $    --
                                                                                =======            =======
                       Noncash settlement in satisfaction of our
                       obligations under various rights agreements.             $    49            $    --
                                                                                =======            =======
</TABLE>

See notes to condensed consolidated financial statements.


                                       4
<PAGE>   5
                  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 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
    accounting principles generally accepted in the United States of America
    ("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
    three and six month periods ended June 30, 2001, are not necessarily
    indicative of the results that may be expected for the year ending December
    31, 2001. The balance sheet at December 31, 2000, 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 financial statements and
    footnotes thereto included in the Company's annual report on Form 10-K for
    the year ended December 31, 2000.

    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 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 and warrants. 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 3.5 million shares and 2.1 million shares at June 30, 2001 and
    June 30, 2000, respectively.

2. LIQUIDITY

    The Company's liabilities as of June 30, 2001, reflect approximately $3.8
    million of past-due liabilities, including the requirement to make payments
    amounting to $0.5 million related to the PROSAP acquisition, as well as
    payments to certain stockholders, subject to a registration rights
    agreement, of approximately $0.9 million. Due to our current and foreseeable
    liquidity issues, we may be unable to make any of these payments in cash.

    The Company relies primarily on the timeliness and amount of accounts
    receivable collections to fund cash disbursements. As a result of prior
    losses and prior negative cash flows, the Company has experienced a
    significant decline in available liquidity, which has had an adverse impact
    on the ability of the Company to meet its immediate and future obligations
    and to continue as a going concern. The Company has improved its liquidity
    by securing private placement financing and restructuring its credit
    facility with Comerica Bank, which matured on March 31, 2001. Comerica Bank
    provided the Company with interim financing in the form of a $3.0 million
    Demand Note. The Demand Note carries interest of Comerica's prime rate plus
    4%. Available borrowings are being reduced by 2% of eligible accounts
    receivable each month. On July 26, 2001, the Demand Note was converted to a
    term note having a six month maturity until January 26, 2002 (the "Term
    Note"). The Term Note carries the same credit availability, interest rate
    and accounts receivable eligibility as the Demand Note.

    On July 26, 2001, the Company completed a private placement through the
    issuance of approximately $1.1 million of convertible notes to a group of
    primarily individual investors, including members of BrightStar 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. In addition,
    the investors received approximately 718,000


                                       5
<PAGE>   6
    warrants, exercisable at $0.50 per share. The notes are mandatorily
    convertible, at the Company's option, into common stock at $0.23 per share,
    subject to anti-dilution provisions, upon the occurrence of; (i) the market
    price of the Company's common stock, determined on a moving average basis
    equals or exceeds $0.50; and (ii) the investor may lawfully sell immediately
    all of the common stock issuable upon conversion and the common stock
    issuable upon exercise of Warrants held by the investor, either under a
    registration statement, or, if after 2 years from the issuance date of the
    note, under Rule 144; and (iii) at least $2.3 million of past due payables
    have been restructured. In addition, 70,000 warrants were issued to the
    placement agent for the transaction at an exercise price of $1.00 per share.
    BrightStar is obligated to file for registration of the common stock
    underlying the convertible notes and warrants within 90 days after the
    private placement closing.

    Under present circumstances, the Company believes it has sufficient cash
    resources to meet its operating requirements at least through the end of
    2001. Beyond the year 2001, the Company believes that the planned results
    from operations when combined with proceeds from additional structured
    financing, the restructuring of its past-due liabilities or continued
    forbearance of its creditors, and replacement of its Comerica credit
    facility, will be adequate to fund its operations. However, there can be no
    assurance that the Company's efforts to increase revenue and reduce
    operating costs will result in operating profits or positive cash flows from
    operations, that the Company's collection efforts with respect to its
    accounts receivable will be sufficient to fund cash disbursements, that the
    Company's new financing will be sufficient to fund its operations, that the
    Company's creditors will continue to forbear or accept restructuring of the
    amounts owed to them, or that the Comerica Bank credit facility can be
    replaced on a timely basis.


3. RESTRUCTURING

    Remaining amounts recorded as accrued restructuring costs at June 30, 2001,
    relate to ongoing severance and lease obligations, which have extended
    payment terms.

4. CREDIT FACILITIES

    Our operating line of credit facility with Comerica Bank matured on March
    31, 2001. Since that time, Comerica Bank has provided the Company with
    short-term interim financing in the form of a $3.0 million Demand Note,
    secured by liens on substantially all of the assets of the Company and its
    operating subsidiaries. The Demand Note carries interest of Comerica's prime
    rate plus 4%. Available borrowings will be reduced monthly by 2% of eligible
    accounts receivable. The Demand Note originally provided that payment could
    be demanded by Comerica Bank at any time. However, on July 26, 2001, the
    Demand Note was converted to a term note having a six month maturity until
    January 26, 2002.



5. INCOME TAXES

    As a result of continued losses, the Company has recorded a valuation
    allowance to offset all of its net deferred tax assets recorded at June 30,
    2001. The valuation allowance relates to deferred tax assets established for
    net operating loss carryforwards generated through June 30, 2001 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.


6. LITIGATION

    The Company has accrued $0.6 million relating to its litigation exposure.
    This amount includes estimated costs to settle legal claims related
    primarily to two separate lawsuits brought against the Company for damages
    related to software development and implementation services provided by the
    Company. The amounts accrued primarily represent defense costs to be paid by
    the Company up to its deductible under its errors and omissions insurance
    policy. The aggregate amount of the claims filed against the Company is $5.4
    million. As a result of a previous settlement, Unaxis Trading was issued
    250,000 shares of our common stock on February 15, 2001. Pursuant to the
    settlement agreement, if, prior to a sale of these shares by Unaxis, the
    Company has not exercised its right, between January 1, 2002 and February 1,
    2002, to call the shares for $1.60 per share, Unaxis may exercise its right
    to put the shares to the Company for a price of $2.00 per share during the
    15 day period commencing on February 1, 2002. Additionally, the Company is a
    defendant in a lawsuit brought by the prior owners of Integrated Systems
    Consulting LLC ("ISC"), alleging violations of federal and state securities
    laws, fraud, negligent misrepresentation, breach of contract, breach of good
    faith and fair dealing and unjust enrichment related to purchase
    consideration surrounding the


                                       6
<PAGE>   7
    Company's acquisition of ISC in 1999. The plaintiffs are seeking
    compensatory damages in excess of $2 million, court costs, attorney's fees
    and punitive damages. The Company denies any wrongdoing and intends to
    vigorously defend the case. The Company has accrued an amount, which
    represents estimated defense costs to be paid by the Company, subject to the
    deductible amount under its directors and officers insurance policy. While
    any litigation contains an element of uncertainty, the Company believes,
    based upon its assessment of the claims and negotiation to settle with the
    plaintiffs, that the liability recorded as of June 30, 2001, combined with
    coverage under the Company's errors and omissions and directors and
    officer's insurance policies, is adequate to cover the estimated exposure.

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

7.  RECENT ACCOUNTING PRONOUNCEMENTS

    On July 20, 2001, the Financial Accounting Standards Board (FASB) issued
    Statement of Financial Accounting Standards (SFAS) 141, Business
    Combinations, and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is
    effective for all business combinations completed after June 30, 2001. SFAS
    142 is effective for fiscal years beginning after December 15, 2001:
    however, certain provisions of this Statement apply to goodwill and other
    intangible assets acquired between July 1, 2001 and the effective date of
    SFAS 142. Major provisions of these Statements and their effective dates for
    the Company are as follows:

     -    All business combinations initiated after June 30, 2001 must use the
          purchase method of accounting. The pooling of interest method of
          accounting is prohibited except for transactions initiated before July
          1, 2001.

     -    Goodwill, as well as intangible assets with indefinite lives, acquired
          after June 30, 2001 will not be amortized. Effective January 1, 2002,
          all previously recognized goodwill and intangible assets with
          indefinite lives will no longer be subject to amortization.

     -    Effective January 1, 2002, goodwill and intangible assets with
          indefinite lives will be tested for impairment annually and whenever
          there is an impairment indicator.

    The Company will continue to amortize goodwill recognized prior to July 1,
    2001, under its current method until January 1, 2002, at which time annual
    and quarterly goodwill amortization of approximately $350,000 and $87,500,
    respectively, will no longer be recognized. By December 31, 2002 the Company
    will have completed a transitional fair value based impairment test of
    goodwill as of January 1, 2002.

8.  SIGNIFICANT CUSTOMERS

    For the second quarter of 2001, the Company had two unrelated customers that
    accounted for approximately 19% and 13%, respectively, of the total revenue.
    Also, for the first half of 2001, the Company had two unrelated customers
    that accounted for approximately 18% and 11%, respectively, of the total
    revenue. These two customers also accounted for approximately 21% and 10%,
    respectively, of the total outstanding accounts receivable balance as of
    June 30, 2001.

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

    BrightStar is an information technology company that emphasizes Application
    Team Outsourcing services for Global 2000, mid-market and public sector
    clients, including packaged and custom application management, custom
    application development, integration of comprehensive enterprise and
    e-business solutions and staff augmentation. Application Team Outsourcing
    services generally generate recurring revenues based on long-term contracts
    for application support or development projects or from sustainable client
    relationships. Originally centered on Enterprise Resource Planning (ERP)
    solutions, the Company also implements and manages Customer Relationship
    Management (CRM), E-commerce, Supply Chain Management (SCM) and corporate
    portal solutions.

    We call our business strategy "Application Team Outsourcing," because we
    team with our clients' organizations to deliver the required application
    outsourcing solution. Application Team Outsourcing enables BrightStar to
    leverage its excellent reputation for rapid-hiring and client satisfaction
    to provide agile units of highly skilled applications engineers in an
    outsourcing environment. We focus on redirecting a client's current IT
    budget from a fixed expense, to a flexible budget, by utilizing BrightStar's
    ability to expand and contract resources both in numbers and skill sets. In
    doing so, we strive to become part of the "fabric" of our clients'
    organizations, thereby generating ongoing business from satisfied clients.

    We have approximately 118 employees and full-time contractors in client
    locations around the United States and


                                       7
<PAGE>   8
    in the Company's offices located in Pleasanton, California, Dallas, Texas,
    Lafayette, Louisiana, Little Rock, Arkansas and Quincy, Massachusetts.

    The Company provides services to its customers for fees that are based on
    time and material or fixed fee contracts. Accordingly, revenue is recognized
    as consulting services are performed. Unbilled revenue is recorded for
    contract services provided for which a billing has not been rendered.
    Deferred revenue represents the excess of amounts billed over the contract
    amount earned.

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

    Cost of revenue consists primarily of salaries (including non-billable and
    training time) and benefits for consultants. The Company generally strives
    to maintain its gross profit margins by offsetting increases in salaries and
    benefits with increases in billing rates.

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

    RESULTS OF OPERATIONS

    Revenue for the second quarter and first half of 2001 decreased from $18.1
    million to $5.4 million and from $37.7 million to $12.1 million or 70.4% and
    68%, respectively, compared to the second quarter and first half of 2000 as
    a result of a continued reduction in the demand for ERP and e-commerce
    project consulting services and the sale of our Australian subsidiary. In
    2000 our Australian subsidiary accounted for $5.1 and $10.6 million in
    revenue the second quarter and first half, respectively.

    Gross profit as a percentage of revenue for the second quarter and the first
    half of 2001 increased from 31.0% to 33.7% and increased from 31.7% to 33%,
    respectively, compared to the second quarter and first half of 2000. This
    increase is a result of higher productivity.

    The Company's year-over-year reductions in selling, general and
    administrative expenses are the result of the execution of the turnaround
    plan, which included reductions in office space, sales personnel and related
    costs, management overhead and discretionary expenses.

    Goodwill is the cost in excess of amounts assigned to identifiable assets
    acquired less liabilities assumed. Goodwill recorded in conjunction with the
    founding companies originally combined to form BrightStar and all other
    acquisitions in 1998 is being amortized over 40 years on a straight-line
    basis. The realizability and period of benefit of goodwill is evaluated
    periodically to assess recoverability, and, if warranted, impairment or
    adjustments to the period benefited would be recognized. As a result of its
    evaluation of market conditions, the Company reduced the carrying value of
    its remaining goodwill to $12 million at December 31, 2000.

    LIQUIDITY AND CAPITAL RESOURCES

    The Company's liabilities as of June 30, 2001, reflect approximately $3.8
    million of past-due liabilities, including the requirement to make payments
    amounting to $0.5 million related to the PROSAP acquisition, as well as
    payments to certain stockholders, subject to a registration rights
    agreement, of approximately $0.9


                                       8
<PAGE>   9
    million. Due to our current and foreseeable liquidity issues, we may be
    unable to make any of these payments in cash.

    The Company relies primarily on the timeliness and amount of accounts
    receivable collections to fund cash disbursements. As a result of prior
    losses and prior negative cash flows, the Company has experienced a
    significant decline in available liquidity, which has had an adverse impact
    on the ability of the Company to meet its immediate and future obligations
    and to continue as a going concern. The Company has improved its liquidity
    by securing private placement financing and restructuring its credit
    facility with Comerica Bank, which matured on March 31, 2001. Comerica Bank
    provided the Company with interim financing in the form of a $3.0 million
    Demand Note. The Demand Note carries interest of Comerica's prime rate plus
    4%. Available borrowings are being reduced by 2% of eligible accounts
    receivable each month. On July 26, 2001, the Demand Note was converted to a
    term note having a six month maturity until January 26, 2002 (the "Term
    Note"). The Term Note carries the same credit availability, interest rate
    and accounts receivable eligibility as the Demand Note.

    On July 26, 2001 the Company completed a private placement through the
    issuance of approximately $1.1 million of convertible notes to a group of
    primarily individual investors, including members of BrightStar 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. In addition,
    the investors received approximately 718,000 warrants, exercisable at $0.50
    per share. The notes are mandatorily convertible, at the Company's option,
    into common stock at $0.23 per share, subject to anti-dilution provisions,
    upon the occurrence of; (i) the market price of the Company's common stock,
    determined on a moving average basis, equals or exceeds $0.50; and (ii) the
    investor may lawfully sell immediately all of the common stock issuable upon
    conversion and the common stock issuable upon exercise of Warrants held by
    the investor, either under a registration statement, or, if after 2 years
    from the issuance date of the note, under Rule 144; and (iii) at least $2.3
    million of past due payables have been restructured. In addition, 70,000
    warrants were issued to the placement agent for the transaction at an
    exercise price of $1.00 per share. BrightStar is obligated to file for
    registration of the common stock underlying the convertible notes and
    warrants within 90 days after the private placement closing.

    Under present circumstances, the Company believes it has sufficient cash
    resources to meet its operating requirements at least through the end of
    2001. Beyond the year 2001, the Company believes that the planned results
    from operations when combined with proceeds from additional structured
    financing, the restructuring of its past-due liabilities or continued
    forbearance of its creditors, and replacement of its Comerica credit
    facility, will be adequate to fund its operations. However, there can be no
    assurance that the Company's efforts to increase revenue and reduce
    operating costs will result in operating profits or positive cash flows from
    operations, that the Company's collection efforts with respect to its
    accounts receivable will be sufficient to fund cash disbursements, that the
    Company's new financing will be sufficient to fund its operations, that the
    Company's creditors will continue to forbear or accept restructuring of the
    amounts owed to them, or that the Comerica Bank credit facility can be
    replaced on a timely basis.


    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 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.


                                       9
<PAGE>   10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The Company's demand note from Comerica Bank bears interest at variable
    rates; therefore, the Company's results of operations would be affected by
    interest rate changes. An immediate 10 percent change in interest rates
    would not have a material effect on the Company's results of operations over
    the next fiscal year.

                           PART II - OTHER INFORMATION
ITEM 1. Legal proceedings

    Information related to Item 1 is disclosed in Part I Item I (Note 6 to the
    Consolidated Financial Statement) and is by the reference incorporated
    herein.

ITEM 2. Changes in Securities and Use of Proceeds

    None

ITEM 3. Defaults upon Senior Securities

    The credit facility with Comerica Bank was secured by liens on substantially
    all of the Company's assets (including accounts receivable) and a pledge of
    all outstanding capital stock of the Company's domestic operating
    subsidiaries. The credit facility also required that the Company comply with
    various loan covenants, including (i) maintenance of certain financial
    ratios, (ii) restrictions on additional indebtedness and (iii) restrictions
    on liens, guarantees and payments of dividends. As of, and during the three
    months ended March 31 and June 30, 2001 and the year ended December 31,
    2000, the Company was not in compliance with certain financial covenants.
    Comerica Bank has agreed to waive the defaults for all three periods.

ITEM 4. Submission of matters to a vote of Stockholders

    (a) The Annual Meeting of Stockholders of the Company was held on June 21,
        2001.

    (b) The following directors were elected at the Annual Meeting of
        Stockholders:
                                    Joseph A. Wagda
                                    Kevin J. Murphy
                                    W. Barry Zwahlen
                                    Jennifer Barrett
                                    Thomas A. Hudgins

    (c) 1. Set forth below is the tabulation of the votes on each nominee for
        election as a director:

<TABLE>
<CAPTION>
                  Name                 For               Against      Votes Abstained

<S>               <C>                  <C>               <C>          <C>
                  Joseph A. Wagda      10,647,784        436,507              -
                  Kevin J. Murphy      10,650,784        433,507              -
                  W. Barry Zwahlen     10,650,784        433,507              -
                  Jennifer Barrett     10,599,216        485,075              -
                  Thomas A. Hudgins    10,650,784        433,507              -
</TABLE>

         2. Set forth below is the tabulation of the votes for the proposal to
         approve an amendment to increase the number of shares issuable
         thereunder by 1,000,000 and to amend certain provisions applicable to
         non employee directors in the Company's 2000 Long-Term Incentive Plan:

                        For                                 4,492,802
                        Against                               885,220
                        Abstained and unvoted               5,706,269

         3. Set forth below is the tabulation of the votes for the proposal to
         ratify Grant Thornton LLP as the


                                       10
<PAGE>   11
        Company's independent accountant for the fiscal year ending December 31,
        2001:

                         For                                11,064,476
                         Against                                10,450
                         Abstained                               9,365

         4. Set forth below is the tabulation of the votes for the proposal to
         authorize the Company's board of directors to, at their discretion,
         effect a reverse stock split of up to 20 shares for 1 share of the
         Company's Common Stock:

                         For                                10,775,705
                         Against                               297,786
                         Abstained                              10,800

ITEM 6. Exhibits and reports on Form 8-K

(a) Exhibits

    None

(b) Reports on Form 8-K

    None



                                   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: August 13,  2001.                             BY: /s/ Joseph A. Wagda
                                                       ________________________
                                                    Joseph  A.  Wagda, Chairman
                                                    and Chief Executive Officer

                                                    BY: /s/ Ken Czaja
                                                       ________________________
                                                    Kenneth A. Czaja, Vice
                                                    President - Finance and
                                                    Chief Financial Officer



                                       11