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, 1997
                                       OR

o        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 0-25372

                             COTELLIGENT GROUP, INC.
             (Exact name of registrant as specified in its charter)


                      Delaware                            94-3173918
           (State of other jurisdiction                (I.R.S. Employer
         incorporation or organization)                Identification No.)

         101 California Street, Suite 2050
              San Francisco, California                        94111
       (Address of principal executive offices)              (Zip Code)

                                     (415) 439-6400
              (Registrant's telephone number, including area code)

                                       N/A

           (Former name, former address and former fiscal year, if changed 
                              since last report)


Indicates  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       No  X

         At August  13,  1997  there  were  9,761,190  shares  of  common  stock
         outstanding.



<PAGE>



                             COTELLIGENT GROUP, INC.


                                      INDEX

                         Part I - Financial Information


 Item 1. Financial Statements                                            PAGE

       Cotelligent Group, Inc.
          Balance Sheet at March 31, 1997 
               and June 30, 1997 (Unaudited)                               3
          Statement of Operations for the Three 
               Months Ended June 30, 1996  and 1997 (Unaudited)            4
          Statement of Cash Flows for the Three Months 
               Ended June 30, 1996 and 1997  (Unaudited)                   5
                                 

Item 2. Management's Discussion and Analysis of
           Financial Condition and Results of Operations                   8


                         Part II - Other Information

       Signatures                                                         12

                                       2
<PAGE>


                             COTELLIGENT GROUP, INC.

                           CONSOLIDATED BALANCE SHEET
                      (In Thousands, Except Share Amounts)
<TABLE>
<CAPTION>

                                                                        March 31,           June 30,
                             ASSETS                                        1997               1997
                                                                      ---------------    ---------------
                                                                                           (Unaudited)
<S>                                                                   <C>                 <C>
Current assets:
   Cash and cash equivalents.................................          $      2,244        $       589
    Accounts receivable, including unbilled accounts of
        $5,535 and $7,545 net................................                29,153             34,464
   Notes receivable..........................................                    75                 52
   Prepaid expenses and other current assets.................                 1,280              1,551
                                                                      ---------------    ---------------
     Total current assets.....................................               32,752             36,656
Property and equipment, net...................................                4,899              4,743
Deferred income taxes.........................................                   61                  -
Goodwill, net of accumulated amortization of $38 and $60......                2,649              2,627
Other assets..................................................                  336                270
                                                                      ===============    ===============
     Total assets.............................................         $     40,697        $    44,296
                                                                      ===============    ===============

              LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Short-term debt............................................         $      4,087        $         -
   Accounts payable...........................................                2,149              3,871
   Accrued compensation and related payroll liabilities.......                8,667             11,877
   Income taxes payable.......................................                  260              1,623
   Deferred income taxes......................................                  768                510
   Other accrued liabilities..................................                2,050              1,808
                                                                      ---------------    ---------------
     Total current liabilities................................               17,981             19,689
Long-term debt................................................                  163                119
Other long-term liabilities...................................                  289                255
                                                                      ---------------    ---------------
     Total liabilities........................................               18,433             20,063
                                                                      ---------------    ---------------
Commitments and contingencies.................................
Stockholders' equity:
   Common Stock, $0.01 par value; 100,000,000 shares
     authorized 9,730,786 and 9,758,428 shares
     outstanding, respectively................................                   97                 98
   Additional paid-in capital.................................               18,765             18,959
   Retained earnings..........................................                3,402              5,176
                                                                      ---------------    ---------------
     Total stockholders' equity...............................               22,264             24,233
                                                                      ---------------    ---------------
     Total liabilities and stockholders' equity...............         $     40,697        $    44,296
                                                                      ===============    ===============

</TABLE>

          The  accompanying notes are an integral part of these consolidated
                              financial statements.



                                       3
<PAGE>


                             COTELLIGENT GROUP, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                 (In Thousands Except Share and Per Share Data)
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                           Quarter             Quarter
                                                            Ended               Ended
                                                        June 30, 1996       June 30, 1997
                                                       -----------------    ---------------

<S>                                                    <C>                  <C>          
     Revenues.........................................  $     31,963         $   46,333
     Cost of services.................................        22,943             32,712
                                                       -----------------    ---------------
          Gross profit ...............................         9,020             13,621
     Non-recurring transaction costs...............              245                  -
     Selling, general and administrative expenses              7,265             10,605
                                                       -----------------    ---------------
          Operating income...........................          1,510              3,016
     Other (income) expense:
          Interest expense...........................            112                108
          Interest income ...........................           (130)                (4)
          Other .....................................            (21)                 4
                                                       -----------------    ---------------
             Total other ............................            (39)               108
                                                       -----------------    ---------------
     Income before provision for income taxes ..               1,549              2,908
     Provision for income taxes....................            1,239              1,134
                                                       -----------------    ---------------
     Net income......................................   $        310         $    1,774
                                                       =================    ===============

     Earnings per share..............................   $        .03         $      .18
                                                       =================    ===============

     Weighted average shares outstanding.......            9,898,262          9,825,859
                                                       =================    ===============

     Pro forma net income (adjusted
          for income taxes - Note 4).................   $        960
                                                       =================
                                                       
</TABLE>
















        The accompanying notes are an integral part of these consolidated 
                              financial statements

                                       4
<PAGE>



                             COTELLIGENT GROUP, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                            Quarter Ended
                                                                                ---------------------------------------
                                                                                  June 30, 1996        June 30, 1997
                                                                                ------------------    -----------------
<S>                                                                             <C>                   <C>
        Cash flows from operating activities:
             Net income (loss)................................................   $          310        $       1,774
             Adjustments to reconcile net income to net cash provided
                by operating activities:
                Depreciation and amortization.................................              141                  358
                Provision for doubtful accounts...............................                -                  125
                Deferred income taxes, net....................................               54                 (197)
                Changes in current assets and liabilities:
                      Accounts receivable.....................................           (1,927)              (5,436)
                      Prepaid expenses and other current assets...............              174                 (248)
                      Accounts payable and accrued expenses...................              249                4,690
                      Income taxes payable....................................               63                1,363
                      Increase (decrease) in other liabilities................              144                  (34)
                Changes in other assets.......................................              (37)                  66
                                                                                ------------------    -----------------
                      Net cash provided by (used in) operating activities                  (829)               2,461
                                                                                ------------------    -----------------

        Cash flows from investing activities:
             Purchases of property and equipment..............................             (682)                (180)
             Net repayments from (advances to) related parties................             (250)                   -
                                                                                ------------------    -----------------
                     Net cash used in investing activities....................             (932)                (180)
                                                                                ------------------    -----------------
        Cash flows from financing activities:
             Proceeds on long-term debt......................................                77                    -
             Payments on long-term debt......................................              (699)                 (44)
             Net borrowings (repayments) on short-term debt..................            (1,664)              (4,087)
             Net proceeds from issuance of Common Stock......................                47                  195
             Distribution to former Stockholders.............................              (940)                   -
                                                                                -----------------     -----------------
                     Net cash provided by (used in) financing activities                 (3,179)              (3,936)
                                                                                ------------------    -----------------
             Net increase (decrease) in cash and cash equivalents............            (4,940)              (1,655)
             Cash and cash equivalents at beginning of period................            14,648                2,244
                                                                                -----------------     -----------------
             Cash and cash equivalents at end of period......................    $        9,708        $         589
                                                                                ==================    =================
        Supplemental disclosures of cash flow information:
             Interest paid...................................................               109                   94
             Income taxes paid...............................................             1,160                   54


</TABLE>








          The  accompanying  notes  are an  integral  part of  these
                    consolidated financial statements.

                                       5
<PAGE>


                             COTELLIGENT GROUP, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 (In Thousands, Except Share and Per share Data)
                                   (Unaudited)


Note 1 - Business Organization and Basis of Presentation

         Cotelligent Group, Inc.  ("Cotelligent" or the "Company") was formed in
February  1993  to  acquire,  own and  operate  software  professional  services
businesses  specializing in providing information  technology ("IT") consultants
on a contract basis and consulting and  outsourcing  services to businesses with
complex IT operations.

         On  February  20,  1996,   Cotelligent  acquired  four  companies  (the
"Founding  Companies")  simultaneously  with the initial public  offering of its
Common  Stock (the  "Offering").  These  acquisitions  were  accounted  for on a
historical cost basis.  During fiscal 1997, the Company  acquired six businesses
accounted for under the-pooling-of-interests method (the "Pooled Companies"). In
addition,  during fiscal 1997, the Company acquired two businesses accounted for
under the purchase method (the "Purchased Companies").  The operating results of
theFounding and  Purchased  Companies are included  subsequent to their  
respective acquisition dates.



Note 2 - Summary of Significant Accounting Policies

         The  accompanying  interim  financial  statements  do not  include  all
disclosures  included in the  financial  statements  for the fiscal  years ended
March 31, 1995, 1996 and 1997 as included on Cotelligent's Annual Report on Form
10-K for the year ended March 31, 1997 ("Form  10-K"),  and therefore  should be
read in conjunction with the financial statements included on Form 10-K.

         In the opinion of management, the interim financial statements filed as
part of this Quarterly Report on Form 10-Q reflect all  adjustments,  consisting
only of normal  recurring  accruals,  necessary for a fair  presentation  of the
financial  position  and the  results  of  operations  and of cash flows for the
interim periods presented.

         In February  1997,  the  Financial  Accounting  Standards  Board issued
Statement  of  Financial  Accounting  Standards  (SFAS) No. 128,  "Earnings  per
share".  This  statement  establishes  standards for  comparing  and  presenting
earnings per share ("EPS").  SFAS 128 simplifies the standards for computing EPS
and  makes  the  presentation  comparable  to  international  EPS  standards  by
replacing the  presentation  of primary EPS with a presentation of basic EPS. It
also  requires  dual  presentation  of basic and dilutive EPS on the face of the
income statement. Basic EPS excludes dilution and is computed by dividing income
available to common shareholders by the weighted average number of common shares
outstanding  for the period.  Diluted EPS reflects the  potential  dilution that
could  occur  if  securities  or other  contracts  to issue  common  stock  were
exercised or converted into common stock.
This Statement is required to be adopted by the Company during fiscal 1998.

Note 3 - Changes in Stockholder's Equity
<TABLE>
<CAPTION>


                                                                     Additional                            Total
                                           Common Stock                Paid-In         Retained        Stockholders'
                                   -----------------------------
                                      Shares          Amount           Capital         Earnings            Equity
                                   -------------    ------------    --------------    ------------    -----------------
<S>                                <C>              <C>             <C>               <C>             <C>            
Balance at March 31, 1997             9,730,786      $       97      $    18,765       $    3,402      $        22,264
Issuance of Common Stock                 27,642               1              194                -                  195
Net income....................                -               -                -            1,774                1,774
                                   -------------    ------------    --------------    ------------    -----------------
Balance at June 30, 1997.....         9,758,428      $       98      $    18,959       $    5,176      $        24,233
                                   =============    ============    ==============    ============    =================

</TABLE>


                                       6
<PAGE>


                          NOTES TO FINANCIAL STATEMENTS
                 (In Thousands, Except Share and Per share Data)
                                   (Unaudited)


Note 4 - Unaudited Pro Forma Income Tax Information

         Prior to their  acquisitions in fiscal 1997,  certain  companies were S
corporations  and  accordingly,  the  financial  statements  did not  reflect  a
provision  for income  taxes,  as income  taxes were the  responsibility  of the
individual  stockholders.  Effective  with  these  acquisitions,  the  companies
terminated their respective S corporation  status.  The following  unaudited pro
forma  income tax  information  is  presented in  accordance  with  Statement of
Financial  Accounting  Standards  No.  109  as  if  the  companies  had  been  C
corporations  subject to federal and state income taxes  throughout  the periods
presented.
<TABLE>
<CAPTION>

                                    (In Thousands)
                                                                    Quarter Ended
                                                                    June 30, 1996
                                                               -------------------------
 <S>                                                            <C>                     
Income before provision for income taxes....................     $              1,549
Provision for income taxes..................................                      589
                                                               -------------------------
Pro forma net income........................................     $                960
                                                               =========================

</TABLE>



                                       7
<PAGE>




                                     ITEM 2

           Management's Discussion and Analysis of Financial Condition 
                         and Results of Operations

Overview

         Cotelligent  was formed in February  1993 to  acquire,  own and operate
software   professional   services  businesses   specializing  in  providing  IT
consultants  on a contract  basis and  consulting  and  outsourcing  services to
businesses  with  complex IT  operations.  On  February  20,  1996,  Cotelligent
acquired four  companies  (the  "Founding  Companies")  simultaneously  with the
initial  public  offering of its Common Stock ( the  "Offering").  Prior to this
date Cotelligent was a non-operating entity.

         During fiscal 1997, the Company  acquired six businesses  accounted for
under  the-pooling-of-interests  method (the "Pooled  Companies").  In addition,
during fiscal 1997, the Company acquired two businesses  accounted for under the
purchase method ("Purchased  Companies").  The operating results of the Founding
and Purchased Companies are included subsequent to their respective  acquisition
dates.

         The Company derives substantially all of its revenues from professional
service  activities.  The majority of these  activities are provided under "time
and  expense"  billing  arrangements,  and  revenues  are  recorded  as  work is
performed.  Revenues are directly related to the total number of hours billed to
clients and the  associated  hourly  billing  rates.  Hourly  billing  rates are
established for each service  professional  and such rates are a function of the
professional's skills,  experience and the type of work performed. The Company's
principal  costs  are   professional   compensation   directly  related  to  the
performance  of services and related  expenses.  Gross profits  (revenues  after
professional  compensation  and related  expenses)  are  primarily a function of
hours billed to clients per professional employee or consultant,  hourly billing
rates of those employees or consultants and employee or consultant  compensation
relative to those  billing  rates.  Gross  profits can be adversely  impacted if
service activities cannot be billed, if the Company is not effective in managing
its service  activities,  if fixed-fee  engagements (which historically have not
constituted a significant  portion of total revenues) are not properly priced or
if there are high levels of unutilized  time (work  activities not chargeable to
clients or unrelated  to client  services)  of  full-time  service  professional
employees.   Operating   income  (gross   profit  less   selling,   general  and
administrative  expenses) can be adversely impacted by increased  administrative
staff  compensation,  expenses  related to growing and  expanding  the Company's
business,  which may be  incurred  before  revenues  or  economics  of scale are
generated from such investment.

     As part of its  strategic  plan,  the  Company  intends  to  acquire  other
software professional  services businesses.  Should the Company be successful in
acquiring such  businesses,  the period in which such acquisition is consummated
could be  adversely  impacted by costs  associated  with such  acquisitions.  In
addition, financial periods subsequent to the completion of an acquisition could
be adversely  impacted by costs and activities  associated with the assimilation
and integration of the acquired company.

     As a professional  services  organization,  the Company responds to service
demands from its clients.  Accordingly, the Company has limited control over the
timing and circumstances under which its services are provided.  Therefore,  the
Company can  experience  volatility  in its  operating  results  from quarter to
quarter. The operating results for any quarter are not necessarily indicative of
the results for any future period. The Company generally experiences a reduction
in gross profit in the first calendar quarter due to employment related taxes.

                                       8
<PAGE>


                    HISTORICAL COMBINED RESULTS OF OPERATIONS

 Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996

Revenues

         Revenues increased $14.3 million,  or 45% to $46.3 million in the first
quarter of 1998 from $32.0  million in the first  quarter of 1997.  The increase
was  primarily  attributable  to a 41%  increase in total client  service  hours
provided to 792,000 hours in the first quarter of 1998 from 561,000 hours in the
first quarter of 1997, and a 6.9% increase in the average hourly billing rate to
$59.62 in the first  quarter of 1998 from  $55.77 in the first  quarter of 1997.
The increase in hourly billing rate reflects  increased demand for employees and
consultants with higher skill levels and a more favorable economic climate.  The
increases  discussed  above were in addition to an  increase  in  placement  fee
revenues generated to $446,000 in the first quarter of 1998 from $407,000 in the
first quarter 1997.

Gross Profit

         Gross profit  increased  $4.6  million,  or 51% to $13.6 million in the
first quarter of 1998 from $9.0 million in the first quarter of 1997,  primarily
due an increase  in hours of service  provided  to  clients.  Gross  margin as a
percentage  of  revenues  increased  to 29.4% in the first  quarter of 1998 from
28.2% in the first  quarter of 1997,  principally  due to a greater  increase in
billing rates compared to the increase in the cost of services rate.


Non - Recurring Transaction Costs

         Non-recurring  transaction costs include  expenditures  associated with
the acquisition of the Pooled Companies.

Selling, General and Administrative Expenses

         Selling, general and administrative expenses increased $3.3 million, or
45%,  to $10.6  million in the first  quarter  of 1998 from $7.3  million in the
first  quarter of 1997.  The increase in absolute  dollars was  primarily due to
increased  compensation  to existing staff,  staff added to support  anticipated
growth,   additional  occupancy  costs  and  an  increased  level  of  corporate
activities.   Selling,  general  and  administrative  expenses  increased  as  a
percentage  of revenues  from 22.7% in the first quarter of 1997 to 22.9% in the
first quarter of 1998.

Interest Expense, Net

         Interest  expense,  net of  interest  income was  $104,000 in the first
quarter of 1998.  Interest  income net of  interest  expense  was $18,000 in the
first quarter of 1997, due to the cash provided from the Offering.

Provision for Income Taxes

         The Company's  provision for income taxes was $1.1 million in the first
quarter of 1998,  which  reflects a  provision  on  pre-tax  income of 39%.  The
Company's provision for income taxes was $1.2 million for the first quarter 1997
at a rate of 80%, which includes a $799,000 provision related to the termination
of the S corporation status of certain acquired companies.

                                       9
<PAGE>




                         LIQUIDITY AND CAPITAL RESOURCES

         The Company has financed its growth principally through cash flows from
operations,  periodic  borrowings under its credit facilities and cash generated
from the February 20, 1996 Offering to the public.

         The  Company's  primary  source of liquidity is the  collection  of its
accounts receivable.  Accounts receivable have grown as the Company's operations
have grown. Receivables increased to 61 days of revenue at June 30, 1997 from 59
days of revenue at March 31,  1997.  Should the  Company not be able to bill and
collect  for its  services  on a timely  basis,  the  Company  could use utilize
existing cash on hand or draw upon  available  credit  facilities to finance its
operations.

         Cash flow  provided by  operating  activities  was $2.5 million for the
three months ended June 30, 1997.  During this period the Company  utilized this
cash plus a portion of  existing  cash  balances  to acquire  $180,000  of fixed
assets and pay down the credit line by $4.1 million. The average balance of such
borrowings  outstanding was approximately  $4.6 million and  approximately  $1.7
million during the first quarter of 1998 and 1997, respectively.

         At June 30, 1997, the Company had $589,000 in cash and cash equivalents
as compared to $2.2 million at March 31, 1997. At June 30, 1997, the Company had
no outstanding borrowings under its bank revolving credit facilities.  Long-term
obligations,  consisting  of capital  lease  obligations  and  equipment  loans,
totaled $119,000 at June 30, 1997 compared to $163,000 at March 31, 1997.

         Subsequent to the end of the first quarter of 1998 the Company received
a commitment from  BankBoston,  N.A. to provide a $40 million  revolving  credit
facility.  The Company  expects this  transaction to be completed in the quarter
ending September 30, 1997.



                                      10
<PAGE>


                           PART II - OTHER INFORMATION

Item 1.    Legal Proceedings.

           The Company is, from time to time, a party to  litigation  arising in
           the normal  course of its  business.  The  Company  is not  presently
           subject to any material litigation.

Item 2.  Changes in Securities.

           None.

Item 3.  Defaults Upon Senior Securities.

           None.

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

           None.


Item 5.  Other Information.

           None.


Item 6   Exhibits and Reports on Form 8-K.

         None.

                                      11
<PAGE>



                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
         the  registrant  has duly caused this report to be signed on its behalf
         by the undersigned, thereunto duly authorized.




                                                 COTELLIGENT GROUP, INC




August 14, 1997                                   By :  /S/ CURTIS J. PARKER
                                                       ------------------------
                                                       Curtis J. Parker
                                                       Vice President and Chief
                                                       Accounting Officer

                                      12