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 December 31, 1999
                                       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, INC.
             (Exact name of registrant as specified in its charter)


          Delaware                             94-3173918
(State of other jurisdiction of              (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)



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

     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



At February 11, 2000 there were 14,831,451 shares of common stock outstanding.





<PAGE>



                                COTELLIGENT, INC.


                                      INDEX

                         Part I - Financial Information

<TABLE>
<CAPTION>


Item 1. Financial Statements                                                          Page
<S>                                                                                <C>
Cotelligent, Inc.
         Consolidated Balance Sheets at December 31, 1999 (Unaudited)
            and March 31, 1999                                                         3
         Consolidated Statements of Operations for the Three and Nine Months
            Ended December 31, 1999 and 1998 (Unaudited)                               4
         Consolidated Statements of Cash Flows for the Nine Months Ended
            December 31, 1999 and 1998 (Unaudited)                                     5
         Notes to Consolidated Financial Statements (Unaudited)                        6



Item 2. Management's Discussion and Analysis of
         Financial Condition and Results of Operations                                11


                           Part II - Other Information


Item 6. Exhibits and Reports on Form 8-K                                              16

Signatures                                                                            17
</TABLE>
                                       2
<PAGE>

                                COTELLIGENT, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)


<TABLE>
<CAPTION>



                                                                       December 31, 1999       March 31, 1999
                                                                       -----------------     ------------------
                                                                         (Unaudited)
                             ASSETS
<S>                                                                   <C>                   <C>

Current assets:
   Cash and cash equivalents...................................         $         1,675      $             972
   Accounts receivable, including unbilled accounts of $20,637.
   and $17,719 and net of allowance for doubtful accounts......
   of $1,890 and $1,449, respectively..........................                  65,280                 62,087
   Deferred income taxes.......................................                     564                    960
   Prepaid expenses and other..................................                   4,649                  4,971
                                                                       -----------------     ------------------
     Total current assets......................................                  72,168                 68,990
Property and equipment, net....................................                  13,118                 11,405
Goodwill, net of accumulated amortization of $3,804 and........
$1,861, respectively...........................................                  83,076                 95,200
Notes receivable from officers and related party...............                   1,619                    191
Deferred income taxes..........................................                   8,153                      -
Other assets...................................................                   1,085                  1,094
                                                                       -----------------     ------------------
     Total assets..............................................         $       179,219      $         176,880
                                                                       =================     ==================

              LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Short-term debt.............................................         $        48,358       $            236
   Accounts payable............................................                   7,723                  9,399
   Accrued compensation and related payroll liabilities........                  17,131                 17,238
   Income taxes payable........................................                   1,975                  5,702
   Other accrued liabilities...................................                  14,502                  7,460
                                                                       -----------------     ------------------
     Total current liabilities.................................                  89,689                 40,035
Long-term debt.................................................                      73                 28,191
Deferred income taxes..........................................                       -                    821
                                                                       -----------------     ------------------
     Total liabilities.........................................                  89,762                 69,047
                                                                       -----------------     ------------------
Stockholders' equity:
   Preferred Stock, $0.01 par value; 500,000 shares authorized,
     no shares issued or outstanding...........................                       -                      -
   Common Stock, $0.01 par value; 100,000,000 shares...........
     authorized, 15,213,490 and 13,656,031 shares..............
     issued and outstanding, respectively......................                     152                    137
   Additional paid-in capital.................................                   87,023                 82,517
   Notes receivable from stockholders........................                    (5,297)                     -
   Retained earnings..........................................                    7,579                 25,179
                                                                       -----------------     ------------------
     Total stockholders' equity...............................                   89,457                107,833
                                                                       -----------------     ------------------

     Total liabilities and stockholders' equity...............         $        179,219       $        176,880
                                                                       =================     ==================

</TABLE>







The accompanying notes are an integral part of these consolidated financial
statements.
                                        3

<PAGE>
                                COTELLIGENT, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        (In thousands, except share data)
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                           Three Months Ended                    Nine Months Ended
                                                              December 31,                           December 31,
                                                    --------------------------------    -------------------------------------
                                                         1999               1998                1999               1998
                                                    --------------     -------------    -----------------    ----------------
<S>                                                 <C>                <C>              <C>                  <C>

Revenues...........................................  $     81,390       $    83,849      $       255,579      $      236,627
Cost of services...................................        59,407            59,530              184,619             167,630
                                                    --------------     -------------    -----------------    ----------------
        Gross profit...............................        21,983            24,319               70,960              68,997
Selling, general and administrative expenses.......        21,641            16,535               65,870              48,108
Depreciation and amortization of goodwill..........         1,711             1,067                4,829               2,556
Impairment of long-lived assets....................             -                 -               20,000                   -
Restructuring charge...............................             -                 -                4,920                   -
                                                    --------------     -------------    -----------------    ----------------
Operating income (loss) ...........................        (1,369)            6,717             (24,659)              18,333
Other income (expense):
   Interest expense................................        (1,128)             (139)              (2,535)               (142)
   Interest income.................................            55                54                  183                 674
   Other...........................................            (6)               (2)                 (66)                (28)
                                                    --------------     -------------    -----------------    ----------------
     Total other income (expense)..................        (1,079)              (87)              (2,418)                504
                                                    --------------     -------------    -----------------    ----------------
Income (loss) before provision for income taxes....        (2,448)            6,630              (27,077)             18,837
Provision (benefit) for income taxes...............        (1,104)            2,684               (9,477)              7,529
                                                    --------------     -------------    -----------------    ----------------
Net income (loss)..................................  $     (1,344)      $     3,946      $       (17,600)     $       11,308
                                                    ==============     =============    =================    ================

Earnings (loss) per share -
       Basic.......................................  $      (0.09)      $      0.28      $         (1.25)     $         0.81
                                                    ==============     =============    =================    ================
       Diluted ....................................  $      (0.09)      $      0.28      $         (1.25)     $         0.80
                                                    ==============     =============    =================    ================

Weighted average shares outstanding
       Basic.......................................    15,167,742        14,055,396           14,060,481          14,003,972
                                                    ==============     =============    =================    ================
       Diluted ....................................    15,167,742        14,213,639           14,060,481          14,164,902
                                                    ==============     =============    =================    ================

</TABLE>





















 The accompanying notes are an integral part of these consolidated financial
 statements.
                                       4
<PAGE>

                                COTELLIGENT, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>



                                                                                          Nine Months Ended
                                                                                             December 31,
                                                                            ---------------------------------------------
                                                                                     1999                     1998
                                                                            ---------------------    --------------------
<S>                                                                         <C>                      <C>
Cash flows from operating activities:
     Net income (loss)................................................       $           (17,600)     $           11,308
     Adjustments to reconcile net income (loss) to net cash
         used in operating activities:
                Depreciation and amortization of goodwill ............                     4,829                   2,556
                Impairment of long-lived assets ......................                    20,000                       -
                Deferred income taxes, net............................                    (8,578)                   (503)
                Loss on disposal of property and equipment............                        59                      28
                Provision for doubtful accounts.......................                       441                     729
                Changes in current assets and liabilities:
                      Accounts receivable.............................                    (3,634)                 (3,644)
                      Prepaid expenses and other current assets.......                       322                  (1,135)
                      Accounts payable and accrued expenses...........                    (1,783)                 (1,657)
                      Income taxes payable............................                    (3,727)                    131
                      Other accrued liabilities.......................                      (958)                   (778)
                      Other assets....................................                         9                     231
                                                                            ---------------------    --------------------

                     Net cash (used) provided in operating activities.                   (10,620)                  7,266
                                                                            ---------------------    --------------------
Cash flows from investing activities:
     Proceeds from sale of assets ....................................                         6                     206
     Other investment.................................................                      (253)                      -
     Purchase of businesses, net of cash acquired.....................                    (1,086)                (45,217)
     Purchases of property and equipment..............................                    (4,644)                 (4,047)
                                                                            ---------------------    --------------------
                    Net cash used in investing activities.............                    (5,977)                (49,058)
                                                                            ---------------------    --------------------
Cash flows from financing activities:
     Net borrowings (repayments) on long-term debt....................                    20,004                  18,587
     Increase in notes receivable from officers and related party, net                    (1,428)                      -
     Net proceeds from issuance of common stock ......................                       956                   1,750
     Repurchase of common stock ......................................                    (2,233)                (11,320)
                                                                            ---------------------    --------------------

                   Net cash provided by financing activities                              17,299                   9,017

                                                                            ---------------------    --------------------
     Net increase (decrease) in cash and cash equivalents.............                       702                 (32,775)
     Cash and cash equivalents at beginning of period.................                       972                  40,528
                                                                            =====================    ====================
     Cash and cash equivalents at end of period.......................       $             1,675                   7,753
                                                                            =====================    ====================
Supplemental disclosures of cash flow information:
     Cash transactions -
        Interest paid.................................................       $             2,281      $              132
        Income taxes paid.............................................       $             2,291      $            7,259
     Non cash transaction -
        Issuance of shares in exchange for notes receivable...........       $             5,297      $                -

</TABLE>









The accompanying notes are an integral part of these consolidated financial
 statements.
                                        5
<PAGE>
                                COTELLIGENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (Dollar amounts in thousands)
                                   (Unaudited)




Note 1 - Business Organization and Basis of Presentation

     Cotelligent,  Inc.  ("Cotelligent" or the "Company") was formed in February
1993 to  acquire,  own and  operate  software  professional  service  businesses
specializing  in  providing  information  technology  ("IT")  consultants  on  a
contract  basis and  consulting  and  outsourcing  services to  businesses  with
complex IT operations. The Company commenced operations in February 1996 when it
completed  its initial  public  offering  and started  acquiring  and  operating
businesses. Since that date, the Company has acquired 26 IT professional service
businesses.  All of the businesses  acquired have operations  substantially  the
same  as the  Company.  These  financial  statements  include  the  accounts  of
Cotelligent, Inc. and its subsidiaries.

     The Company is currently  organized in two practice  groups  consisting  of
Technology Solutions and Professional  Services, and operates offices across the
United States along with international  consultant  recruiting offices in Brazil
and the Philippines.  At December 31, 1999, the Company had approximately  3,000
employees,  including  technical  staff of  approximately  2,400 IT professional
consultants  providing  services to  approximately  900  clients  across a broad
spectrum of industries.

Note 2 - Summary of Significant Accounting Policies

Interim Financial Statement Presentation

     The  accompanying   interim   financial   statements  do  not  include  all
disclosures  included in the financial  statements as included in  Cotelligent's
Annual Report on Form 10-K for the year ended March 31, 1999 ("Form 10-K"),  and
therefore  these  financial  statements  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.  Certain 1998  balances have been  reclassified  to
conform with the current presentation.



Note 3 - Changes in Stockholders' Equity

<TABLE>
<CAPTION>






                                                                                  Notes
                                      Common Stock             Additional       Receivable                        Total
                                 ------------------------       Paid-In           From           Retained      Stockholders'
                                    Shares        Amount        Capital        Stockholders      Earnings         Equity
                                 -----------     --------     -----------     -------------     ----------    --------------
<S>                              <C>             <C>          <C>            <C>               <C>           <C>
Balance at March 31, 1999        13,656,031       $  137       $  82,517      $         -       $  25,179     $     107,833
Repurchase of Common Stock         (238,400)          (2)         (2,231)                               -            (2,233)
Issuance of Common Stock          1,795,859           17           6,737           (5,297)              -             1,457
Net loss                                  -            -               -                          (17,600)          (17,600)
                                 ===========     ========     ===========    =============     ===========    ==============
Balance at December 31, 1999     15,213,490       $  152       $  87,023      $    (5,297)      $   7,579     $      89,457
                                 ===========     ========     ===========    =============     ===========    ==============

</TABLE>


                                       6


<PAGE>

                                COTELLIGENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (Dollar amounts in thousands)
                                   (Unaudited)


Note 4 - Business Combinations

     Since  inception,  the Company has  acquired  26 IT  professional  services
firms.  During fiscal 1999,  Cotelligent  acquired five  companies  (acquired on
September 16, 1998,  October 29, 1998,  October 30, 1998,  November 30, 1998 and
January 4, 1999)  accounted for under the purchase  method.  During fiscal 2000,
Cotelligent  acquired  one  company on August 12, 1999  accounted  for under the
purchase  method.  The results of these  acquisitions  have been included in the
Company's  results from their  respective  acquisition  dates. The following pro
forma consolidated  statements of operations for the three and nine months ended
December  31, 1998 and 1999 give  effect to the  acquisitions  of the  companies
purchased in fiscal 1999 and 2000 as if these acquisitions were made on April 1,
1998  and  1999.  The  pro  forma  consolidated   financial  statement  reflects
adjustments  for interest  expense on cash  consideration  and  amortization  of
goodwill  for  the  companies   accounted  for  under  the  purchase  method  of
accounting.
<TABLE>
<CAPTION>


                                                                   Three Months Ended
                                                                      December 31,
                                                           -----------------------------------
                                                                1999                1998
                                                           ----------------     --------------
<S>                                                        <C>                  <C>
Revenues........................................            $       81,390       $     95,291
Cost of services................................                    59,407             66,160
                                                           ----------------     --------------
       Gross profit.............................                    21,983             29,131
Selling, general and administrative expenses....                    23,352             22,045
                                                           ----------------     --------------
Operating income (loss).........................                    (1,369)             7,086
Other income (expense)..........................                    (1,079)              (599)
                                                           ----------------     --------------
Income (loss) before provision for income taxes.                    (2,448)             6,487
Provision (benefit) for income taxes............                    (1,104)             2,627
                                                           ----------------     --------------
Net income (loss)...............................            $       (1,344)      $      3,860
                                                           ================     ==============
Earnings (loss) per share -
     Basic......................................            $        (0.09)      $       0.26
                                                           ================     ==============
     Diluted....................................            $        (0.09)      $       0.25
                                                           ================     ==============
Weighted average shares outstanding -
     Basic......................................                15,167,742         14,960,876
                                                           ================     ==============
     Diluted....................................                15,167,742         15,119,118
                                                           ================     ==============

</TABLE>

<TABLE>
<CAPTION>


                                                                    Nine Months Ended
                                                                       December 31,
                                                           -----------------------------------
                                                                1999                1998
                                                           ----------------     --------------
<S>                                                        <C>                  <C>
Revenues.......................................             $      258,623       $    280,087
Cost of services...............................                    186,776            191,981
                                                           ----------------     --------------
       Gross profit............................                     71,847             88,106
Selling, general and administrative expenses...                     96,736             66,504
                                                           ----------------     --------------
Operating income (loss)........................                    (24,889)            21,602
Other income (expense).........................                     (2,588)            (2,515)
                                                           ----------------     --------------
Income (loss) before provision for income taxes                    (27,477)            19,087
Provision (benefit) for income taxes...........                     (9,477)             7,730
                                                           ----------------     --------------
Net income (loss)..............................             $      (18,000)      $     11,357
                                                           ================     ==============
Earnings (loss) per share -
     Basic.....................................             $       (1.28)       $       0.75
                                                           ================     ==============
     Diluted...................................             $       (1.28)       $       0.74
                                                           ================     ==============
Weighted average shares outstanding -
     Basic.....................................                 14,098,219         15,164,100
                                                           ================     ==============
     Diluted...................................                 14,098,219         15,325,030
                                                           ================     ==============

</TABLE>

                                       7


<PAGE>
                                COTELLIGENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (In thousands, except share data)
                                   (Unaudited)

Note 5 - Earnings (loss) Per Share

Earnings per share were as follows:
<TABLE>
<CAPTION>


                                                                  For the Three Months Ended December 31, 1999
                                                             -------------------------------------------------------
                                                                                                         Per Share
                                                                Income (loss)           Shares              Amount
                                                             ------------------     --------------     -------------
<S>                                                          <C>                    <C>                <C>
   Basic and diluted earnings (loss) per share-
   Net loss available to common stockholders .............    $         (1,344)        15,167,742       $     (0.09)


                                                                  For the Three Months Ended December 31, 1998
                                                             -------------------------------------------------------
                                                                                                        Per Share
                                                                Income (loss)           Shares             Amount
                                                             ------------------     --------------     -------------
   Basic earnings (loss) per share-
   Net income available to common stockholders ...........              $3,946         14,055,396       $      0.28
   Options issued to directors and employees .............                                158,243
                                                                                    --------------

   Diluted earnings (loss) per share-
   Income available to common stockholders
       plus assumed conversions ..........................              $3,946         14,213,639       $      0.28
                                                                                    ==============


                                                                  For the Nine Months Ended December 31, 1999
                                                             -------------------------------------------------------
                                                                                                       Per Share
                                                                Income (loss)           Shares             Amount
                                                             ------------------     --------------     -------------
   Basic and diluted earnings (loss) per share-
   Net loss available to common stockholders .............    $        (17,600)        14,060,481       $     (1.25)


                                                                  For the Nine Months Ended December 31, 1998
                                                             -------------------------------------------------------
                                                                                                        Per Share
                                                                Income (loss)           Shares             Amount
                                                             ------------------     --------------     -------------
   Basic earnings (loss) per share-
   Net income available to common stockholders ...........    $         11,308         14,003,972       $      0.81
   Options issued to directors and employees .............                                160,930
                                                                                    --------------

   Diluted earnings (loss) per share-
   Income available to common stockholders
       plus assumed conversions ..........................    $         11,308         14,164,902       $      0.80
                                                                                    ==============

</TABLE>
                                       8

<PAGE>

                                COTELLIGENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (Dollar amounts in thousands)
                                   (Unaudited)


Note 6 - Credit Agreement

     On November 15, 1999,  the Company  entered into the second  amendment (the
"Second  Amendment") to the Amended and Restated Credit  Agreement,  dated March
12, 1999, among the Company, its consolidated subsidiaries,  BankBoston N.A., as
administrative  agent,  letter of credit  issuer and swingline  lender,  and the
other banks and financial  institutions party thereto (the "Credit  Agreement").
The Second Amendment,  among other  provisions,  required that the Company's net
income and EBIT be greater  than one dollar  beginning  with the fiscal  quarter
ending  December 31, 1999 through the fiscal quarter  ending  September 30, 2000
and set minimum levels for the Company's  EBITDA for the fiscal  quarters ending
September 30, 1999 through September 30, 2000. The Company's net income and EBIT
for the quarter ended  December 31, 1999 was not greater than one dollar and the
EBITDA for the quarter ended  December 31, 1999 did not meet the minimum  levels
required by the Second Amendment.

     On December 22, 1999,  the Company  entered into the third  amendment  (the
"Third  Amendment") to the Credit  Agreement.  The Third Amendment  required the
Company to enter into a capital transaction on or before January 7, 2000 to fund
the  earnout  payment  due to sellers  pursuant  to the  agreement  to  purchase
Information  System  Resources  ("ISR")  or  alternatively,  to  enter  into  an
agreement with the sellers of ISR with a revised payment  schedule.  The Company
has not yet  entered  into a capital  transaction  for such  funding  nor has it
entered any agreement with the ISR sellers.

     Due to the breach of the covenants at December 31, 1999, as amended  above,
the amount  due under the  credit  agreement  has been  classified  as a current
liability.

     However,  on February 11, 2000, the Company entered into a letter agreement
with  BankBoston  N.A.  whereby the lenders party to the Credit  Agreement  (the
"Lenders")  agreed to waive the defaults set forth above through March 31, 2000.
The letter  agreement  also amended the Credit  Agreement so as to (i) terminate
the obligation of the Lenders to make available  certain  revolving  acquisition
loans,  thereby reducing the credit facility by $42,600 to $57,400 (ii) obligate
the Company to deliver all cash presently held and hereafter generated by it and
its consolidated  subsidiaries to BankBoston N.A., to be used for satisfying the
Company's  obligations  under  the  Credit  Agreement  and (iii)  terminate  the
Company's  ability  to  elect  LIBOR  Rate  Loans  (as  defined  in  the  Credit
Agreement). In addition, the Company agreed (a) that no payments will be made to
the ISR sellers  from  working  capital  loans  advanced  pursuant to the Credit
Agreement  or from  cash  generated  from the  Company's  business  and any such
payments will be made  exclusively  from a capital  transaction and (b) that any
funds  received  from  such a  capital  transaction  will be used to pay the ISR
sellers  (and the  sellers due an earnout  payment as a result of the  Company's
acquisition of MD Technology, Inc.) in full and any remaining funds will be used
solely for  working  capital and not for  further  acquisitions.  Subject to the
foregoing,  the  Company  is  agreed to pay in full all  amounts  due to the ISR
sellers by March 5, 2000.  Finally,  the parties also agreed to meet in other to
negotiate a mutually acceptable forbearance agreement by March 31, 2000.

                                       9


 <PAGE>
                                COTELLIGENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (Dollar amounts in thousands)
                                   (Unaudited)


Note 7 - Stockholders Equity

     Stock Repurchase Program

     In  September  1998,   Cotelligent's  Board  of  Directors  authorized  the
repurchase of up to 2.0 million shares of the Company's  Common Stock,  or 14.0%
of the then outstanding shares.  During the six months ended September 30, 1999,
the Company  completed  the stock  repurchase  program  with the  repurchase  of
238,400 shares for a total cost of $2,233.

     Leveraged Stock Purchase Plan

     On September 8, 1999, the stockholders approved The Cotelligent,  Inc. 1999
Leveraged  Stock  Purchase  Plan (the "Plan") which  authorizes  the purchase of
shares  of  Common  Stock  by  eligible   employees  who  are  selected  by  the
Compensation Committee of the Board (the "Committee") to participate in the Plan
on terms and conditions determined by the Committee.

     Effective  October 1, 1999,  1,486,842  shares were  issued  under the Plan
resulting in notes receivable from stockholders for $5,297, which is included in
stockholders  equity.  The notes  receivable (i) bear interest at the applicable
federal  interest rate as defined by the Internal Revenue Code; (ii) are secured
by the pledge of  Cotelligent  stock  issued;  (iii) are full recourse as to the
employee,  except  that in the case of  death,  disability,  termination  by the
Company without cause or change of control of the Company,  recourse against the
employee  is limited to the  pledged  stock;  and (iv) have a term of five years
from date  issuance,  unless the stock is sold,  then the loan shall be prepaid,
otherwise,  the loan may not be  prepaid.  The  stock  issued  under the Plan is
restricted  from sale in the open market for a period of two years from the date
of issuance, except in the case of death, disability, termination by the Company
without  cause or change of control of the  Company,  then the stock may be sold
and proceeds used to repay the loan.


Note 8 - Goodwill Impairment Charge

     In accordance with Statement of Financial  Accounting  Standards (SFAS) No.
121, the Company  considers,  among other  factors,  deterioration  of operating
performance  or  significant  loss of client base to be  indicators of potential
impairment of long-lived assets.  The Company  experienced a reduction in demand
for its  services,  which it believes to be  principally  related to  strategies
being  employed  by  the  Company's  customers  of  reducing  investment  in  IT
infrastructures  while their "Year 2000"  compliance  is being  ascertained.  In
particular,  one of the Company's operating locations  experienced a significant
reduction in demand.  As a result of the  reduction in demand for its  services,
the Company  recognized an  impairment  of goodwill during the nine months ended
December  31,  1999 as the  future  undiscounted  cash  flows of certain  of its
long-lived  assets were estimated to be less than the asset's  related  carrying
value. The pre-tax  non-cash charge was $20,000,  which represents the excess of
the assets' carrying value over the Company's estimate of its fair value.

Note 9 - Restructuring of Operations

     As part of the  Company's  reorganization  into two  practice  groups,  the
Company  identified  opportunities  to align its operating  structure by closing
certain of its redundant  facilities and  rationalizing  headcount to conform to
the  Company's  new  operating  structure.  Accordingly,  the Company  adopted a
restructuring plan, which resulted in a pre-tax  restructuring  charge of $4,920
during the nine months ended December 31, 1999. The charge  includes  provisions
for severance of  approximately  60 management  and operating  staff ($3,510) as
well as closure  costs  related  to a plan of  consolidating  certain  operating
locations ($1,410). As the Company's reorganization plan proceeds, the amount of
the  restructuring  charge  could  change.  At  December  31,  1999,  $2,357  of
restructuring charges remained in accrued liabilities.

                                       10

<PAGE>

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


     Cotelligent,  Inc.  ("Cotelligent" or the "Company") was formed in February
1993 to  acquire,  own and  operate  software  professional  service  businesses
specializing  in  providing   information   technology  ("IT")   consultants  to
businesses with complex IT operations.  Cotelligent's  consulting  practices are
divided  into two  groups:  Professional  Services - IT staff  augmentation  and
Technology  Solutions,  which encompass all of the Company's consulting services
including custom  application  software  development and outsourcing  solutions,
solutions in  conjunction  with national  partnerships  with leading  enterprise
application   software   companies,   network  design,   intranet  and  internet
application design and development and IT Education.

     During  fiscal 1999 and fiscal 2000,  Cotelligent  acquired  six  companies
(acquired on September 16, 1998,  October 29, 1998,  October 30, 1998,  November
30, 1998,  January 4, 1999 and August 12, 1999) accounted for under the purchase
method.  The results of these  acquisitions  have been included in the Company's
results from their respective acquisition dates.

     The Company  derives  substantially  all of its revenues from IT consulting
and  outsourcing  service  activities.  The  majority  of these  activities  are
provided under ''time and  materials''  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  provided and are a function of
the type of work  performed and the related skill level of the  consultant.  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
services  provided 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, if
consultant cost increases exceed bill rate increases or if there are high levels
of unutilized  time (work  activities  not chargeable to clients or unrelated to
client services) of full-time salaried service professional employees. Operating
income  (gross  profit  less  selling,   general  and  administrative  expenses,
depreciation and amortization of goodwill,  impairment of long-lived  assets and
restructuring  charge) can be  adversely  impacted by  increased  administrative
staff  compensation  and expenses related to growing and expanding the Company's
business,  which may be  incurred  before  revenues  or  economies  of scale are
generated from such investment.  In addition,  the Company's  solutions oriented
practices  require  a  higher  level  of  selling,  general  and  administrative
infrastructure  in order to  generate  revenue.  If the  Company  is  unable  to
generate  sufficient  revenue  from these  activities,  operating  income may be
adversely affected.

     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.

     Except  for  historical   information  contained  herein,  the  information
contained  in this  report  includes  forward-looking  statements  that  involve
certain  risks  and  uncertainties  that  could  cause  actual  results  to vary
materially from such statements. All forward-looking statements included in this
report  are based  upon  information  available  to  Cotelligent  as of the date
thereof,   and   Cotelligent   assumes   no   obligation   to  update  any  such
forward-looking  statement.  Please refer to the  discussion of risk factors and
other  factors  included  in  Cotelligent's  Annual  Report on Form 10-K for the
fiscal year ended March 31, 1999 and other filings made with the  Securities and
Exchange Commission.
                                       11
<PAGE>


                       CONSOLIDATED RESULTS OF OPERATIONS

Three Months Ended December 31, 1999 Compared to Three Months Ended December 31,
1998

Revenues

     Revenues  decreased  $2.5  million,  or 2.9%, to $81.4 million in the three
months  ended  December  31, 1999 from $83.8  million in the three  months ended
December 31, 1998.  The decrease  was  primarily  due to a general  reduction in
demand for the Company's services,  offset by the inclusion of revenues from the
companies  acquired under the purchase  method of accounting  during fiscal 1999
and 2000 ("FY99 and FY00 Purchases").

Gross Profit

     Gross profit decreased $2.3 million, or 9.6%, to $22.0 million in the three
months  ended  December  31, 1999 from $24.3  million in the three  months ended
December 31, 1998.  The decrease  was  primarily  due to a general  reduction in
demand for the Company's services,  offset by the inclusion of the FY99 and FY00
Purchases.  Gross profit as a percentage  of revenues  decreased to 27.0%,  from
29.0%,  primarily due to a drop in utilization of salaried employees caused by a
general reduction in demand for IT consulting services.

Selling, General and Administrative Expenses

     Selling,  general and administrative  expenses  increased $5.1 million,  or
30.9%,  to $21.6 million in the three months ended  December 31, 1999 from $16.5
million in three months ended  December 31, 1998. The increase was primarily due
to the inclusion of selling,  general and administrative expenses related to the
FY99 and FY00  Purchases,  new staff added in advance of  anticipated  continued
growth,  and  additional  occupancy  costs  and  increased  marketing  and sales
activities during the third quarter of fiscal 2000.

     Selling,  general and administrative  expenses as a percent of revenue were
26.6% in the three months ended December 31, 1999 compared to 19.7% in the three
months  ended  December 31,  1998.  The majority of the FY99 and FY00  Purchases
offer  solutions  oriented  services,  which  require a higher level of selling,
general  and  administrative  infrastructure  in order to generate  revenue.  In
addition,  the increased  staffing,  occupancy,  marketing and sales  activities
occurred in advance of anticipated  revenue and were in place in the period when
the Company experienced a reduction in demand for its services.

Depreciation and Amortization of Goodwill

     Depreciation and amortization of goodwill increased $0.6 million, or 60.4%,
to $1.7 million in the three months ended December 31, 1999 from $1.1 million in
three months ended  December 31,  1998.  The increase was  primarily  due to the
inclusion of amortization of goodwill related to the FY99 and FY00 Purchases.

Other Income (Expense)

     Other  income  (expense)  primarily  consists of interest  expense,  net of
interest income.  Interest expense,  net of interest income, was $1.1 million in
the three months ended December 31, 1999 as compared to interest expense, net of
interest  income,  of $0.1 million in the three months ended  December 31, 1998.
The increase  was  primarily  due to interest  expense on the  Company's  credit
facility during the third quarter of fiscal 2000. The lower net interest expense
in the third quarter of fiscal 1999 was the result of interest  expense on lower
debt levels  offset by interest  income  earned on cash proceeds from the common
stock offering completed in March 1998.


Provision for Income Taxes

     Provision  for  income  taxes  was a tax  benefit  of $1.1  million,  or an
effective tax rate of 45.1% of pre-tax income in the three months ended December
31, 1999,  compared to income tax expense of $2.7 million,  or an effective rate
of 40.5% of pre-tax  income for the three  months ended  December 31, 1998.  The
increase  in the  effective  tax rate in the third  quarter of fiscal  2000,  as
compared to the same period of fiscal 1999,  reflects a change in the  full-year
effective tax rate from 34.0% to 35.0%.

                                       12
<PAGE>

                       CONSOLIDATED RESULTS OF OPERATIONS



Nine Months Ended  December 31, 1999 Compared to Nine Months Ended  December 31,
1998

Revenues

     In the first nine months of fiscal 2000,  revenues increased $19.0 million,
or 8.0%,  to $255.6  million  from  $236.6  million in the same period of fiscal
1999.  The increase was primarily due to the inclusion of revenues from the FY99
and FY00 Purchases.


Gross Profit

     Gross profit increased $2.0 million, or 2.8%, to $71.0 million in the first
nine months of fiscal 2000 from $69.0 million in the same period of fiscal 1999,
as a result of the inclusion of the FY99 and FY00  Purchases.  Gross profit as a
percentage of revenues  decreased to 27.8%, from 29.2%,  primarily due to a drop
in utilization of salaried employees caused by a general reduction in demand for
IT consulting services.


Selling, General and Administrative Expenses

     Selling,  general and administrative  expenses increased $17.8 million,  or
36.9%,  to $65.9  million  in the first  nine  months of fiscal  2000 from $48.1
million in the same period of fiscal 1999. The increase was primarily due to the
inclusion of selling,  general and  administrative  expenses related to the FY99
and FY00 Purchases, increased compensation to existing staff, new staff added in
advance  of  anticipated  continued  revenue,  additional  occupancy  costs  and
increased  marketing and sales activities during the first nine months of fiscal
2000.

     Selling,  general and administrative  expenses as a percent of revenue were
25.8% in the nine months ended  December 31, 1999  compared to 20.3% in the nine
months  ended  December 31,  1998.  The majority of the FY99 and FY00  Purchases
offer  solutions  oriented  services,  which  require a higher level of selling,
general  and  administrative  infrastructure  in order to generate  revenue.  In
addition,  the increased  staffing,  occupancy,  marketing and sales  activities
occurred in advance of anticipated  revenue and were in place in the period when
the Company experienced a reduction in demand for its services.

Depreciation and Amortization of Goodwill

     Depreciation and amortization of goodwill increased $2.3 million, or 88.9%,
to $4.8 million in the nine months ended  December 31, 1999 from $2.6 million in
the nine months ended  December 31, 1998.  The increase was primarily due to the
inclusion of amortization of goodwill related to the FY99 and FY00 Purchases.


Impairment of Long-Lived Assets

     In accordance with Statement of Financial  Accounting  Standards (SFAS) No.
121, the Company  considers,  among other  factors,  deterioration  of operating
performance  or  significant  loss of client base to be  indicators of potential
impairment of long-lived assets.  The Company  experienced a reduction in demand
for its  services,  which it believes to be  principally  related to  strategies
being  employed  by  the  Company's  customers  of  reducing  investment  in  IT
infrastructures  while their "Year 2000"  compliance  is being  ascertained.  In
particular,  one of the Company's operating locations  experienced a significant
reduction in demand.  As a result of the  reduction in demand for its  services,
the Company  recognized an  impairment of goodwill  during the nine months ended
December  31,  1999 as the  future  undiscounted  cash  flows of  certain of its
long-lived  assets were estimated to be less than the asset's  related  carrying
value.  The pre-tax  non-cash  charge was $20.0  million,  which  represents the
excess of the asset's  carrying  value over the  Company's  estimate of its fair
value.
                                       13
<PAGE>

Restructuring Charge

     As part of the  Company's  reorganization  into two  practice  groups,  the
Company  identified  opportunities  to align its operating  structure by closing
certain of its redundant  facilities and  rationalizing  headcount to conform to
the  Company's  new  operating  structure.  Accordingly,  the Company  adopted a
restructuring  plan,  which resulted in a pre-tax  restructuring  charge of $4.9
million  during the nine months ended  December 31,  1999.  The charge  includes
provisions  for severance of  approximately  60 management  and operating  staff
($3.5  million)  as well as closure  costs  related  to a plan of  consolidating
certain operating locations ($1.4 million). As the Company's reorganization plan
proceeds, the amount of the restructuring charge could change.

Other Income (Expense)

     Other  income  (expense)  primarily  consists of interest  expense,  net of
interest income.  Interest expense,  net of interest income, was $2.4 million in
the nine months ended December 31, 1999 as compared to interest  income,  net of
interest  expense,  of $0.5 million in the nine months ended  December 31, 1998.
The increase was primarily due to interest  expense  recognized on the Company's
line of credit  during the first nine months of fiscal  2000.  The net  interest
income in the first nine months of fiscal 1999 was the result of interest income
earned on cash proceeds from the common stock offering completed in March 1998.

Provision for Income Taxes

     Provision for income taxes was a benefit of $9.5  million,  or an effective
tax rate of 35.0% of pre-tax  loss in the nine months  ended  December 31, 1999,
compared to income tax expense of $7.5 million, or an effective rate of 40.0% of
pre-tax  income for the nine months ended December 31, 1998. The decrease in the
effective  tax rate in the first nine months of fiscal 2000,  as compared to the
same  period of  fiscal  year  1999,  reflects  the  impact,  in a pre-tax  loss
situation, of non-deductible items to the effective tax rate.
                                       14
<PAGE>

                         LIQUIDITY AND CAPITAL RESOURCES


     The Company has  financed  its growth  principally  through cash flows from
operations,  periodic  borrowing under its credit  facilities and the use of the
net proceeds from its public offerings.

     On November 15, 1999,  the Company  entered into the second  amendment (the
"Second  Amendment") to the Amended and Restated Credit  Agreement,  dated March
12, 1999, among the Company, its consolidated subsidiaries,  BankBoston N.A., as
administrative  agent,  letter of credit  issuer and swingline  lender,  and the
other banks and financial  institutions party thereto (the "Credit  Agreement").
The Second Amendment,  among other  provisions,  required that the Company's net
income and EBIT be greater  than one dollar  beginning  with the fiscal  quarter
ending  December 31, 1999 through the fiscal quarter  ending  September 30, 2000
and set minimum levels for the Company's  EBITDA for the fiscal  quarters ending
September 30, 1999 through September 30, 2000. The Company's net income and EBIT
for the quarter ended  December 31, 1999 was not greater than one dollar and the
EBITDA for the quarter ended  December 31, 1999 did not meet the minimum  levels
required by the Second Amendment.

     On December 22, 1999,  the Company  entered into the third  amendment  (the
"Third  Amendment") to the Credit  Agreement.  The Third Amendment  required the
Company to enter into a capital transaction on or before January 7, 2000 to fund
the  earnout  payment  due to sellers  pursuant  to the  agreement  to  purchase
Information  System  Resources  ("ISR")  or  alternatively,  to  enter  into  an
agreement with the sellers of ISR with a revised payment  schedule.  The Company
has not yet  entered  into a capital  transaction  for such  funding  nor has it
entered any agreement with the ISR sellers.

     However,  on February 11, 2000, the Company entered into a letter agreement
with  BankBoston  N.A.  whereby the lenders party to the Credit  Agreement  (the
"Lenders")  agreed to waive the defaults set forth above through March 31, 2000.
The letter  agreement  also amended the Credit  Agreement so as to (i) terminate
the obligation of the Lenders to make available  certain  revolving  acquisition
loans,  thereby reducing the credit facility by $42,600 to $57,400 (ii) obligate
the Company to deliver all cash presently held and hereafter generated by it and
its consolidated  subsidiaries to BankBoston N.A., to be used for satisfying the
Company's  obligations  under  the  Credit  Agreement  and (iii)  terminate  the
Company's  ability  to  elect  LIBOR  Rate  Loans  (as  defined  in  the  Credit
Agreement). In addition, the Company agreed (a) that no payments will be made to
the ISR sellers  from  working  capital  loans  advanced  pursuant to the Credit
Agreement  or from  cash  generated  from the  Company's  business  and any such
payments will be made  exclusively  from a capital  transaction and (b) that any
funds  received  from  such a  capital  transaction  will be used to pay the ISR
sellers  (and the  sellers due an earnout  payment as a result of the  Company's
acquisition of MD Technology, Inc.) in full and any remaining funds will be used
solely for  working  capital and not for  further  acquisitions.  Subject to the
foregoing,  the  Company  is  agreed to pay in full all  amounts  due to the ISR
sellers by March 5, 2000.  Finally,  the parties also agreed to meet in order to
negotiate a mutually acceptable forbearance agreement by March 31, 2000.

     Prior to the letter  agreement  dated  February 11, 2000, the interest rate
options  include  base rate  borrowings  at the lead  lender's  prime  rate plus
one-quarter  of one percent and LIBOR rate  borrowings at LIBOR plus  applicable
margin which fluctuates  based upon certain leverage ratios.  Effective with the
February 11, 2000 letter agreement, the LIBOR rate borrowing option is no longer
available.

     The Company's  primary  sources of liquidity are cash balances,  the Credit
Line and the collection of its accounts  receivable.  Total  receivables were 74
and 61 days of  quarterly  revenue  at  December  31,  1999 and March  31,  1999
respectively.  The  increase  was  primarily  the  result of  certain  customers
lengthening  the timing of their payments to Cotelligent  and the Company's move
to a centralized  collections  group.  Going forward the Company has a dedicated
national  credit and  collections  center  working to improve  collections.  The
Company  believes the existing  sources of liquidity  and funds  generated  from
operations  will  provide  adequate  cash to fund its  anticipated  cash working
capital needs at least through the next year.

     Cash used in  operating  activities  was $10.6  million for the nine months
ended December 31, 1999. The Company used  borrowings on its Credit Line to fund
cash  needs for its  operations.  At  December  31,  1999,  the  Company  had an
outstanding balance of $48.2 million under the Credit Line.

                                       15
<PAGE>


                           PART II - OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

         None.

(b)      Reports  on Form 8-K

         The following reports on Form 8-K were filed during the quarter ended
         December 31, 1999.

         Cotelligent,  Inc. filed with the Securities and Exchange  Commission a
         copy of the press  release dated September 24, 1999 announcing earnings
         expectations for the three months ending September 30, 1999.

         Cotelligent,  Inc. filed  with  the Securities and Exchange  Commission
         the  first  and  second  amendments  to the Amended and Restated Senior
         Secured Credit Agreement.
                                       16

<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, INC.




Date: February 14, 2000                              /s/ Daniel E. Jackson
                                                     ---------------------------
                                                     Daniel E. Jackson
                                                     Executive Vice President,
                                                     Chief Financial Officer and
                                                     Treasurer
                                       17