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, 2000
                                                                  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 0-27412

                                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 August 10, 2000 there were 15,225,368 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 June 30, 2000 (Unaudited)
            and March 31, 2000                                                     3
         Consolidated Statements of Operations for the Three Months Ended
            June 30, 2000 and 1999 (Unaudited)                                     4
         Consolidated Statements of Cash Flows for the Three Months Ended
            June 30, 2000 and 1999 (Unaudited)                                     5
         Notes to Consolidated Financial Statements (Unaudited)                    6



Item 2. Management's Discussion and Analysis of
         Financial Condition and Results of Operations                            10

Item 3. Quantitative and Qualitative Disclosures About Market Risk                12


                           Part II - Other Information


Item 6. Exhibits and Reports on Form 8-K                                          12

Signatures                                                                        13
</TABLE>
                                       2

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

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

<TABLE>
<CAPTION>
                                                                           June 30,              March 31,
                                                                             2000                  2000
                                                                       -----------------     ------------------
                                                                         (Unaudited)
                             ASSETS
<S>                                                                    <C>                   <C>

Current assets:
   Cash and cash equivalents..................................          $        45,913       $          4,794
   Accounts receivable, including unbilled accounts of $4,960.
      and $5,716 and net of allowance for doubtful accounts...
      of $1,662 and $1,880, respectively......................                   20,255                 23,435
   Deferred income taxes......................................                       -                     564
   Current portion of notes receivable from officers and......
      related party...........................................                      456                    505
   Prepaid expenses and other.................................                    8,931                  2,289
   Net assets of discontinued operations......................                       -                  84,721
                                                                       -----------------     ------------------
     Total current assets.....................................                   75,555                116,308
Property and equipment, net...................................                    8,809                  5,697
Goodwill, net of accumulated amortization of $2,224 and
        $1,913, respectively..................................                   34,929                 35,236
Notes receivable from officers................................                      685                  1,119

Other assets..................................................                    5,080                  1,050
                                                                       -----------------     ------------------
     Total assets.............................................          $       125,058       $        159,410
                                                                       =================     ==================

              LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Short-term debt and current maturities of long-term debt...          $           154       $         48,958
   Accounts payable...........................................                    2,723                  2,055
   Accrued compensation and related payroll liabilities.......                   11,607                  6,312
   Income taxes payable.......................................                    1,914                  1,957
    Amounts due sellers of acquired business..................                       -                   8,386
    Deferred income taxes.....................................                      519                     -
   Other accrued liabilities..................................                   20,430                  5,710
                                                                       -----------------     ------------------
     Total current liabilities................................                   37,347                 73,378
Long-term debt................................................                       50                     52
                                                                       -----------------     ------------------
     Total liabilities........................................                   37,397                 73,430
                                                                       -----------------     ------------------

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, 15,183,431 and 15,065,400 shares issued and...
    outstanding, respectively.................................                      152                    151
   Additional paid-in capital.................................                   86,128                  85,442
    Notes receivable from stockholders........................                   (6,036)                 (6,149)
   Retained earnings..........................................                    7,417                   6,536
                                                                      ------------------     -------------------
     Total stockholders' equity...............................                   87,661                  85,980
                                                                      ------------------     -------------------
     Total liabilities and stockholders' equity...............         $        125,058       $         159,410
                                                                      ==================     ===================

</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 June 30,
                                                                        ----------------    -----------------
                                                                             2000                  1999
                                                                        ----------------    -----------------
<S>                                                                     <C>                 <C>
Revenues...............................................                  $       23,753      $        26,806
Cost of services.......................................                          16,500               17,056
                                                                        ----------------    -----------------
        Gross profit...................................                           7,253                9,750
Selling, general and administrative expenses...........                          12,526                9,880
Depreciation and amortization of goodwill..............                           1,042                  723
                                                                        ----------------    -----------------
Operating loss.........................................                          (6,315)                (853)
Other income (expense):
  Interest expense.....................................                          (1,556)                (652)
  Interest income......................................                              49                  118
  Other................................................                              49                  (60)
                                                                        ----------------    -----------------
        Total other expense............................                          (1,458)                (594)
                                                                        ----------------    -----------------
        Loss from continuing operations before income..
        taxes..........................................                          (7,773)              (1,447)
Income tax benefit.....................................                           2,643                  507
                                                                        ----------------    -----------------
        Loss from continuing operations................                          (5,130)                (940)
                                                                        ----------------    -----------------
Operating income (loss) from discontinued operations...
net of income tax (benefit) of $1,551 and $(7,906).....                           1,615              (15,394)

Gain on sale of discontinued operations, net of income.
taxes of $4,224........................................                           4,396                   -
                                                                        ----------------    -----------------
       Income (loss) from discontinued operations......                           6,011              (15,394)
                                                                        ----------------    -----------------
         Net income (loss).............................                  $          881      $       (16,334)
                                                                        ================    =================
Earnings per share:
  Basic -
  Income (loss) from continuing operations.............                  $        (0.34)     $         (0.07)
  Income (loss) from discontinued operations...........                            0.40                (1.14)
                                                                        ----------------    -----------------
         Net income (loss).............................                  $         0.06      $         (1.21)
                                                                        ================    =================
  Diluted -
  Income (loss) from continuing operations.............                  $        (0.34)     $         (0.07)
  Income (loss) from discontinued operations...........                            0.40                (1.14)
                                                                        ----------------    -----------------
         Net income (loss).............................                  $         0.06      $         (1.21)
                                                                        ================    =================
Weighted average number of shares outstanding
  Basic................................................                      15,123,639           13,461,007
                                                                        ================    =================
  Diluted..............................................                      15,124,960           13,461,007
                                                                        ================    =================

</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>



                                                                                 Three Months Ended June 30,
                                                                          -------------------    -------------------
                                                                                   2000                   1999
                                                                          -------------------    -------------------
<S>                                                                       <C>                    <C>
Cash flows from operating activities:
     Net income (loss)...............................................      $             881      $         (16,334)

     Adjustments to reconcile net income (loss) to net cash
     provided by (used in ) operating activities:
           Gain on sale of discontinued operations...................                 (4,396)                     -
           Operating (income) loss from discontinued operations......                 (1,615)                15,394
                Depreciation and amortization of goodwill ...........                  1,042                    723
                Deferred income taxes, net...........................                  3,133                   (821)
                Loss on disposal of property and equipment...........                     -                       7
                Provision for doubtful accounts......................                    324                    157
                Changes in current assets and liabilities:
                      Accounts receivable, net.......................                  2,856                 (5,959)
                      Prepaid expenses and other current assets......                 (2,217)                   959
                      Accounts payable and accrued expenses..........                 (1,343)                 4,580
                      Income taxes payable...........................                    (43)                (3,512)
                Changes in other assets..............................                    104                    (36)
                                                                          -------------------    -------------------
     Cash provided by (used for) operating activities                                 (1,274)                (4,842)
Cash flows from (used for) investing activities:
     Proceeds from sale of assets ...................................                    189                      6
     Purchase price adjustments for previously acquired companies....                     -                    (334)
     Purchases of property and equipment ............................                   (736)                  (978)
                                                                          -------------------    -------------------
     Cash provided by (used for) investing activities ...............                   (547)                (1,306)
Cash flows from financing activities:
     Borrowing under Credit Agreement................................                  9,111                 11,213
     Payments on Credit Agreement....................................                (57,890)                    -
     Payments on amounts due sellers of acquired business............                 (8,534)                    -
     Borrowing (payments) on capital lease obligations ..............                    (27)                    44
     Repayments (borrowing) on notes receivable from officers .......                    508                   (704)
     Net proceeds on issuance of stock ..............................                    228                    394
     Repurchase of common stock......................................                     -                  (2,233)
                                                                         --------------------    -------------------
     Cash provided by (used for) financing activities................                (56,604)                 8,714
Discontinued Operations:
     Cash provided by (used for) discontinued operations.............                (11,951)                (2,921)
     Proceeds from sale of IT staff augmentation business............                111,495                     -
                                                                          -------------------    -------------------
     Cash provided by (used) for discontinued operations.............                 99,544                 (2,921)
                                                                          -------------------    -------------------
Net increase (decrease) in cash......................................                 41,119                   (355)
Cash at beginning of period..........................................                  4,794                    972
                                                                          -------------------    -------------------
Cash at end of period................................................      $          45,913                    617
                                                                          ===================    ===================
Supplemental disclosures of cash flow information:
     Interest paid...................................................      $           1,906      $             394
     Income taxes paid...............................................      $              20      $           2,188
     Fair value of Common Stock issued to seller of acquired.........
     business........................................................      $             572      $              -
     Return of Common Stock previously issued to employee for........
     note receivable.................................................      $             113      $              -

</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"), a Delaware corporation, was
formed  in  February  1993 to  acquire,  own  and  operate  software  consulting
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 was inactive  until  February  1996 when it
acquired  four  companies   simultaneously  and  completed  its  initial  public
offering. Since that date, the Company has acquired 22 IT consulting businesses.
These  financial   statements  include  the  accounts  of  Cotelligent  and  its
subsidiaries.

During the fiscal year ended March 31,  2000,  the Company was  organized in two
practice groups,  Technology Solutions and Professional  Services (also known as
its IT staff  augmentation  business),  and  conducted  operations  from offices
across the United States and from international consultant recruiting offices in
Brazil and the Philippines.  Prior to March 31, 2000, the Company entered into a
plan to divest its IT staff  augmentation  business  and on June 30,  2000,  the
Company sold the majority of its IT staff  augmentation  business.  Accordingly,
the accompanying  consolidated  financial  statements and related footnotes have
been prepared to present as discontinued operations the remaining portion of the
Company's IT staff  augmentation  business that the Company has determined to be
non-strategic and that it intends to dispose of or shut down.

Note 2 - Summary of Significant Accounting Policies
The  accompanying  interim  financial  statements do not include all disclosures
included in the financial statements in Cotelligent's Annual Report on Form 10-K
for the year ended March 31, 2000 ("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  necessary for a fair
presentation of the financial position and the results of operations and of cash
flows for the interim periods presented. Certain balances of the prior year have
been reclassified to conform to 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, 2000....     15,065,400          151       $  85,442      $    (6,149)      $  6,536      $      85,980
Issuance of Common Stock.....         43,031            1             227               -              -                 228
Shares issued in connection..
with earn-out to sellers of..
acquired business............        100,000            1             571               -              -                 572
Cancellation of LSPP Note....        (25,000)          (1)           (112)             113             -                  -
Net income...................             -             -              -                -             881                881
                                  -----------     --------    ------------    -------------     ----------     --------------
Balance at June 30, 2000.....     15,183,431       $  152        $ 86,128      $    (6,036)      $  7,417             87,661
                                  ===========     ========    ============    =============     ==========     ==============


</TABLE>

                                       6

<PAGE>

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

Note 4 - Discontinued Operations
In  accordance  with  Accounting  Principle  Board Opinion No. 30, the following
financial  data  reflects  a summary  of  operating  results  for the  Company's
discontinued operations for the three months ended June 30, 2000 and 1999.

Summary of Operating Results of Discontinued Operations:

<TABLE>
<CAPTION>
                                                                                      Three Months Ended
                                                                        -----------------------------------------------
                                                                              June 30,                  June 30,
                                                                                2000                      1999
                                                                        ----------------------   ---------------------
<S>                                                                     <C>                       <C>
Revenues....................................................             $             57,368      $           61,760
Cost of services............................................                           42,243                  46,652
                                                                        ----------------------    --------------------
      Gross profit..........................................                           15,125                  15,108
Selling, general and administrative expenses................                           11,102                  12,705
Depreciation and amortization of goodwill...................                              875                     781
Impairment of goodwill......................................                                -                  20,000
Restructuring charge........................................                                -                   4,920
                                                                        ----------------------    --------------------
      Operating income (loss)...............................                            3,148                 (23,298)
Other income (expense)......................................                               18                      (2)
                                                                        ----------------------    ---------------------
Income (loss) before provision for income taxes.............                            3,166                 (23,300)
Provision (benefit) for income taxes........................                            1,551                  (7,906)
                                                                        ======================    =====================
Income (loss) from discontinued operations..................             $              1,615      $          (15,394)
                                                                        ======================    =====================

</TABLE>

On June 30, 2000,  the Company  sold the  majority of its IT staff  augmentation
business  for  $111,495  in cash paid at closing and the  assumption  of certain
liabilities  totaling  approximately  $10,000.  In  addition,  $5,000 is held in
escrow  for one year to cover  potential  contingent  claims by the  buyer.  The
Company may also be entitled to a  contingent  payment of up to $5,000  based on
the  operating  results of the sold business for the three months ended June 30,
2000. The Company agreed to assist the acquirer for up to one year following the
close of the sale.  The Company  also took  responsibility  and has reserves for
certain aged receivables greater than 90 days. In addition, Cotelligent is still
the lessee under certain leases on property.

On July 14,  2000,  the Company  sold its IT staff  augmentation  operations  in
Orlando  for  a  cash  payment  of  $650  and  approximately   $385  of  assumed
liabilities.  The Company has written down the remaining value of the net assets
related to this sale, including goodwill, to zero during the first quarter.

The  Company  anticipates  that  it  will  dispose  of the  remaining  IT  staff
augmentation  businesses in discontinued operations at a loss prior to March 31,
2001. Consequently,  the Company has written down the remaining value of the net
assets,  including goodwill, of these discontinued businesses to zero during the
first quarter.

The net gain on the  disposal  of these IT  staff  augmentation  businesses  was
$4,400 for the quarter ended June 30, 2000.

                                       7
<PAGE>
                                COTELLIGENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (Dollar amounts in thousands)
                                   (Unaudited)

Note 5 - Earnings (loss) Per Share
Earnings (loss) per share were as follows:
<TABLE>
<CAPTION>


                                                                    For the Three Months Ended June 30, 2000
                                                             -------------------------------------------------------
                                                                                                        Per Share
                                                               Income (loss)           Shares             Amount
                                                             ------------------     --------------     -------------
<S>                                                          <C>                    <C>                <C>
   Basic earnings (loss) per share-
   Loss from continuing operations.....................       $         (5,130)        15,123,639       $     (0.34)
   Income from discontinued operations.................                  6,011         15,123,639              0.40
                                                             ------------------                        -------------

   Net income available to common stockholders ........       $            881         15,123,639       $      0.06


                                                                                                          Per Share
                                                               Income (loss)           Shares               Amount
                                                             ------------------     --------------     -------------
   Diluted earnings (loss) per share-
   Loss from continuing operations.....................                 (5,130)        15,124,960       $     (0.34)
   Income from discontinued operations.................                  6,011         15,124,960              0.40
                                                             ------------------                        -------------

   Net income available to common stockholders ........       $            881         15,124,960       $      0.06



                                                                    For the Three Months Ended June 30, 1999
                                                             -------------------------------------------------------
                                                                                                        Per Share
                                                               Income (loss)           Shares             Amount
                                                             ------------------     --------------     -------------
   Basic and diluted loss per share-
   Loss from continuing operations........................               (940)         13,461,007       $    (0.07)
   Loss from discontinued operations......................            (15,394)         13,461,007            (1.14)
                                                             ------------------                        -------------

   Net loss available to common stockholders .............    $       (16,334)         13,461,007       $    (1.21)

</TABLE>

Note 6 - Property and Equipment
In  connection  with the  disposal  of the  majority of the  Company's  IT staff
augmentation business,  certain technology fixed assets were included in the net
assets of discontinued  operations at March 31, 2000.  During the first quarter,
the Company  determined  that a portion of these assets will be retained for use
in continuing operations and has reclassified $3,107 into property and equipment
at June 30, 2000.


Note 7 - Credit Agreement
On June 30, 2000,  the Company used a portion of the cash proceeds from the sale
of the majority of its IT staff augmentation business to pay off all obligations
under  its  Amended  and  Restated  Senior  Secured  Credit  Agreement  ("Credit
Agreement"), dated March 12, 1999, with BankBoston N.A. and certain other banks.
Upon  settlement  of all  obligations  under the  Credit  Agreement,  the Credit
Agreement was terminated.

                                       8

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


Note 8 - Income Taxes
The effective tax rate varies from the U.S.  Federal  statutory tax rate for the
three months ended June 30, 2000, principally due to the following:

<TABLE>
<CAPTION>
                                                                           Continuing             Discontinued
                                                                           Operations              Operations
                                                                     ----------------------   -----------------------
<S>                                                                  <C>                      <C>
U.S. Federal Statutory Tax Rate............................                          34.0%                     34.0%
Consolidated state rate....................................                           3.0                       3.0
Meals and entertainment....................................                          (1.2)                      0.4
Amortization of non-deductible goodwill....................                          (1.5)                      0.0
Write-off of non-deductible goodwill.......................                             -                      11.7
                                                                     ----------------------    ----------------------
Effective tax rate.........................................                          34.3%                     49.1%
                                                                     ======================    ======================
</TABLE>

Note 9 - Subsequent Events
On July 19, 2000, the Company  elected to change its fiscal year end to December
31 from March 31. The Company will report the nine-month  period beginning April
1, 2000 and ending  December  31,  2000 as a  transition  period.  The first new
twelve-month fiscal year will begin January 1, 2001.

On July 18, 2000, the Company paid $2,000 to acquire a 35% ownership interest in
White Horse Interactive,  an integrated media agency. The Company is entitled to
appoint two of the five directors to the Board of White Horse Interactive.

On August 8, 2000, the Company executed its definitive  joint venture  agreement
with  bSmart.to  Technologies,  Inc.  Cotelligent  is required to contribute its
Philadelphia-based IT solutions staff and ASP data center and cash of $5,000, of
which $2,500 will be  distributed  to the  developer of certain  technology,  in
exchange  for a 50% interest in the joint  venture.  The Company will have equal
Board representation in the joint venture.

                                       9

<PAGE>

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

Except for  statements of  historical  fact  contained  herein,  any  statements
contained in this report may be deemed to be  forward-looking  statements within
the  meaning of Section  27A of the  Securities  Act of 1933,  as  amended,  and
Section 21E of the  Securities  Exchange Act of 1934,  as amended.  For example,
words such as "may", "will",  "should",  "estimates",  "predicts",  "potential",
"continue", "strategy", "believes", "anticipates", "plans", "expects", "intends"
and similar expressions are intended to identify forward-looking statements. All
such forward-looking statements are based upon current expectations that involve
risks and uncertainties.  Cotelligent's actual results and the timing of certain
events  may   differ   significantly   from  the   results   discussed   in  the
forward-looking  statements.  Factors that might cause or  contribute  to such a
discrepancy  include,  but are not  limited  to,  those  discussed  under  "Risk
Factors" in  Cotelligent's  Annual Report on Form 10-K for the fiscal year ended
March 31, 2000 as well as other  filings made with the  Securities  and Exchange
Commission. The following discussion is qualified in its entirety by, and should
be read in  conjunction  with,  the more detailed  information  set forth in our
financial  statements and the notes thereto  included  elsewhere in this filing.
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 of such forward-looking statements.

                                    OVERVIEW

Cotelligent  was  formed  in  February  1993  to  acquire,  own and  operate  IT
consulting  services   businesses.   During  the  year  ended  March  31,  2000,
Cotelligent acquired one company acquired on August 12, 1999 which was accounted
for under  the  purchase  method.  The  results  of this  acquisition  have been
included in the Company's results from its acquisition date.

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 un-utilized  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) 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  investments.
Historically,  a majority of the Company's revenues were generated from IT staff
augmentation  activities.  Following the disposition of substantially all of its
IT staff augmentation  business,  the majority of the Company's revenues will be
generated  by  solutions  activities  which  require a higher  level of selling,
general and administrative infrastructure to generate revenues.

As a service  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.

                                       10
<PAGE>


                  CONSOLIDATED RESULTS OF CONTINUING OPERATIONS
                          (Dollar amounts in millions)

Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999

Revenues
Revenues decreased $3.1 million,  or 11.4%, to $23.8 million in the three months
ended June 30, 2000 from $26.8  million in the three months ended June 30, 1999.
The  decrease  was  primarily  due to a  general  reduction  in  demand  for the
Company's  services,  partially  offset by a 17.6%  increase in the average bill
rate.

Gross Profit
Gross profit  decreased  $2.5  million,  or 25.6%,  to $7.3 million in the three
months  ended June 30, 2000 from $9.8 million in the three months ended June 30,
1999.  The decrease was primarily  due to a general  reduction in demand for the
Company's services.  Gross profit as a percentage of revenues decreased to 30.5%
from 36.4%, primarily due to lower utilization of salaried employees.

Selling, General and Administrative Expenses
Selling,  general and administrative  expenses increased $2.6 million, or 26.8%,
to $12.5  million in the three  months  ended June 30, 2000 from $9.9 million in
the three  months  ended  June 30,  1999.  The  increase  was  primarily  due to
increases in employee  wages and benefits  incurred in the  Company's  effort to
move  towards  a  centralized  business  model  which  required  a  more  robust
infrastructure.  This  cost  structure  was put in place  prior to  management's
decision to divest the majority of its IT staff augmentation business. Also, the
increase in selling,  general and administrative expense was due to the addition
of a business acquired on August 12, 1999.

Selling, general and administrative expenses as a percent of revenues were 52.7%
in the three  months  ended June 30, 2000  compared to 36.9% in the three months
ended June 30, 1999.  Although the Company was in the process of divesting  part
of its operations during the three months ended June 30, 2000, selling,  general
and administrative expenses did not decrease as the Company continued to provide
the infrastructure and support for the divested operations.  With the completion
of the  divestiture  at the end of the  first  quarter,  the  Company  is in the
process of streamlining its operations commensurate with its lower revenue base.

Depreciation and Amortization of Goodwill
Depreciation and amortization of goodwill  increased $0.3 million,  or 44.1%, to
$1.0  million in the three  months  ended June 30, 2000 from $0.7 million in the
three  months  ended  June 30,  1999.  The  increase  was  primarily  due to the
increased  spending on technology  equipment  during the quarter and the related
depreciation  together with increased  amortization  of goodwill from a business
purchased on August 12, 1999.

Other Income (Expense)
Other income (expense) of $1.5 million  primarily  consists of interest expense,
net of interest  income.  Interest  expense was $1.6 million in the three months
ended June 30, 2000  compared to interest  expense of $0.7  million in the three
months ended June 30, 1999.  The increase was due to increased  borrowing  under
the  Company's  Credit  Agreement  and the accrual of interest on the  Company's
obligation under an earn-out agreement with the owners of a previously  acquired
business.

Benefit for Income Taxes
The Company  recorded an income tax benefit of $2.6  million for its  continuing
operations  in the three months  ended June 30, 2000 using an effective  rate of
34.0%  compared to a benefit of $0.5 million,  or an effective  rate of 35.0% of
pre-tax income, for the three months ended June 30, 1999.

Income (Loss) from Discontinued Operations
Discontinued  operations is comprised of operations associated with the majority
of  the  Company's  IT  staff  augmentation   business.   The  net  income  from
discontinued operations of $6.0 million for the three months ended June 30, 2000
was comprised of $1.6 million of operating  income for these  operations (net of
income tax expense of $1.6  million) and net gain of $4.4 million (net of income
taxes  of $4.2  million)  related  to the  sale of a  majority  of the IT  staff
augmentation   business  and  the  write-down  of  the  remaining   discontinued
operations  to their net  realizable  value.  This  compares  to a net loss from
discontinued  operations  of $15.4  million for the three  months ended June 30,
1999,  largely  due to a  restructuring  charge of $4.9  million  and a goodwill
impairment charge of $20.0 million taken prior to year-end.

                                       11

<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 June 30, 2000,  the Company  sold the  majority of its IT staff  augmentation
business  for  $111.5  million  in cash paid at closing  and the  assumption  of
certain liabilities  totaling  approximately  $10.0 million.  In addition,  $5.0
million will be held in escrow for one year to cover potential contingent claims
by the buyer. The Company may also be entitled to a contingent  payment of up to
$5.0 million based on the  operating  results of the sold business for the three
months ended June 30, 2000. On June 30, 2000,  the Company used a portion of the
cash  proceeds  from  the  sale to pay  off all  obligations  under  the  Credit
Agreement  and to pay existing  earn-out  obligations  to sellers of an acquired
business.  Upon settlement of all obligations  under the Credit  Agreement,  the
Credit Agreement was terminated.

Cash used for operating  activities  was $1.3 million for the three months ended
June 30, 2000.  Historically,  the Company's  primary  sources of liquidity have
been the  collection  of accounts  receivable  and  borrowings  under the Credit
Agreement. Total receivables were 78 days of quarterly revenue at June 30, 2000.

With the termination of its borrowing  arrangements  under the Credit Agreement,
the Company's  primary sources of liquidity going forward will be cash balances,
if any, resulting from the sales of the components of the remaining discontinued
IT staff augmentation  business to be disposed of. The Company believes that the
remaining  cash  from  the  consummated  divestiture  transactions,   additional
proceeds from the  potential  sale(s) of the  remainder of its  discontinued  IT
staff augmentation business and any funds generated from operations will provide
adequate  cash to fund  its  anticipated  cash  working  capital  needs at least
through the next year.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Cotelligent  has invested its excess cash in highly liquid money market accounts
and  does  not  use  derivative  financial  instruments,   derivative  commodity
instruments   or  other  market  risk   sensitive   instruments,   positions  or
transactions.  Accordingly,  the Company  believes that it is not subject to any
material risks arising from changes in interest rates, foreign currency exchange
rates,  commodity  prices,  equity  prices or other  market  changes that affect
market risk sensitive instruments.  Cotelligent's policy is to invest its excess
cash in a  manner  that  provides  Cotelligent  with  the  appropriate  level of
liquidity  to enable the  Company  to meet its  current  obligations,  primarily
accounts payable, capital expenditures and payroll, recognizing that the Company
does not currently have outside bank funding available.

                           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 June 30, 2000.

               Cotelligent,   Inc.   filed  with  the  Securities  and  Exchange
               Commission,   on  May  12,  2000,  the  bSmart.to  LLC  Operating
               Agreement,  regarding  the  Company and  bSmart.to  Technologies,
               Inc.'s  formation of a joint venture  entity,  bSmart.to  LLC, to
               develop and market m-Commerce  solutions in the emerging wireless
               internet communications area.

               Cotelligent,   Inc.   filed  with  the  Securities  and  Exchange
               Commission,  on June 22, 2000,  a press  release  announcing  the
               Company  and  COMSYS  Information  Technology  Services,  Inc.'s,
               execution of an Asset  Purchase  Agreement  pursuant to which the
               Company divested  substantially all of its IT staff  augmentation
               business.
                                       12

<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: August 14, 2000                            /s/ Curtis J. Parker
                                                 --------------------
                                                 Curtis J. Parker
                                                 Vice President,
                                                 Chief Accounting Officer

                                       13