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, 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  August 13,  1999  there  were  13,472,438  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, 1999 (Unaudited)
            and March 31, 1999                                                                     3
         Consolidated Statements of Operations for the Three Months Ended
            June 30, 1999 and 1998 (Unaudited)                                                     4
         Consolidated Statements of Cash Flows for the Three Months Ended
            June 30, 1999 and 1998 (Unaudited)                                                     5
         Notes to Consolidated Financial Statements                                                6



Item 2. Management's Discussion and Analysis of
         Financial Condition and Results of Operations                                             9


                           Part II - Other Information


Item 6. Exhibits and Reports on Form 8-K                                                          13


Signatures                                                                                        14
</TABLE>

                                       2
<PAGE>


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


<TABLE>
<CAPTION>


                                                                        June 30, 1999          March 31, 1999
                                                                       -----------------     ------------------
                                                                         (Unaudited)
                             ASSETS
<S>                                                                   <C>                    <C>
Current assets:
   Cash and cash equivalents....................................       $             617      $             972
   Accounts receivable, including unbilled accounts of $16,183
      and $9,331 and net of allowance for doubtful accounts of
      $1,606 and $1,449, respectively...........................                  66,329                 62,087
   Deferred tax assets..........................................                     960                    960
   Prepaid expenses and other...................................                   4,304                  4,971
                                                                       -----------------     ------------------
     Total current assets.......................................                  72,210                 68,990
Property and equipment, net.....................................                  12,650                 11,405
Goodwill, net of accumulated amortization of $2,508 and $1,861,
   respectively.................................................                  74,762                 95,200
Notes receivable from officers..................................                     895                    191
Deferred income taxes...........................................                   6,447                      -
Other assets....................................................                   1,241                  1,094
                                                                       -----------------     ------------------
     Total assets...............................................       $         168,205      $         176,880
                                                                       =================     ==================

              LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Short-term debt and current maturities of long-term debt.....       $             273      $             236
   Accounts payable.............................................                   9,060                  9,399
   Accrued compensation and related payroll liabilities.........                  16,593                 17,238
   Income taxes payable.........................................                   2,190                  5,702
   Other accrued liabilities....................................                  10,985                  7,460
                                                                       -----------------     ------------------
     Total current liabilities..................................                  39,101                 40,035
Long-term debt..................................................                  39,444                 28,191
Deferred tax liabilities........................................                      -                     821
                                                                       -----------------     ------------------
     Total liabilities..........................................                  78,545                 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,
     13,453,873 and 13,656,031 shares issued and outstanding,...
     respectively...............................................                     135                    137
   Additional paid-in capital...................................                  80,680                 82,517
   Retained earnings............................................                   8,845                 25,179
                                                                       -----------------     ------------------
     Total stockholders' equity.................................                  89,660                107,833
                                                                       -----------------     ------------------
     Total liabilities and stockholders' equity.................       $         168,205      $         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 June 30,
                                                             ---------------------------------------
                                                                    1999                 1998
                                                             ------------------    -----------------

<S>                                                          <C>                   <C>
Revenues...........................................           $         88,566      $        73,049
Cost of services...................................                     63,708               52,183
                                                             ------------------    -----------------
        Gross profit...............................                     24,858               20,866
Selling, general and administrative expenses.......                     22,585               14,756
Depreciation and amortization of goodwill..........                      1,504                  674
Impairment of long-lived assets....................                     20,000                    -
Restructuring charge...............................                      4,920                    -
                                                             ------------------    -----------------
Operating income (loss) ...........................                    (24,151)               5,436
Other income (expense):
   Interest expense................................                       (652)                 (22)
   Interest income.................................                        120                  332
   Other...........................................                        (64)                  (2)
                                                             ------------------    -----------------
     Total other income (expense)..................                       (596)                 308
                                                             ------------------    -----------------

Income (loss) before income taxes..................                    (24,747)               5,744
Provision (benefit) for income taxes...............                     (8,413)               2,229
                                                             ------------------    -----------------
Net income (loss)..................................           $        (16,334)     $         3,515
                                                             ==================    =================
Earnings (loss) per share
       Basic and diluted ..........................           $          (1.21)     $          0.25
                                                             ==================    =================
Weighted average shares outstanding
       Basic.......................................                 13,461,007           14,084,703
                                                             ==================    =================
       Diluted.....................................                 13,461,007           14,308,749
                                                             ==================    =================

</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,
                                                                            -------------------------------------------
                                                                                   1999                    1998
                                                                            --------------------    -------------------
<S>                                                                         <C>                     <C>
Cash flows from operating activities:
     Net income (loss)...............................................        $         (16,334)      $           3,515
     Adjustments to reconcile  net income  (loss) to net cash
          provided by (used in) operating activities:
                Depreciation and amortization of goodwill ...........                    1,504                     674
                Impairment of long-lived assets .....................                   20,000                      -
                Deferred income taxes, net...........................                   (7,268)                     -
                Loss on disposal of property and equipment...........                       59                      16
                Provision for doubtful accounts......................                      157                     154
                Changes in current assets and liabilities:
                      Accounts receivable............................                   (4,399)                 (1,048)
                      Prepaid expenses and other current assets......                      667                     117
                      Accounts payable and accrued expenses..........                     (984)                 (1,072)
                      Income taxes payable...........................                   (3,512)                    850
                      Other accrued liabilities......................                    3,525                      -
                      Other assets...................................                     (147)                     -
                                                                            --------------------    -------------------
                           Net cash provided by (used in) operating
                                   activities........................                   (6,732)                  3,206
                                                                            --------------------    -------------------
Cash flows from investing activities:
     Proceeds from sale of assets ...................................                        6                     317
     Purchase price adjustments for previously acquired companies....                     (209)                     -
     Purchases of property and equipment.............................                   (2,167)                 (1,473)
                                                                            --------------------    -------------------
                          Net cash used in investing activities......                   (2,370)                 (1,156)
                                                                            --------------------    -------------------
Cash flows from financing activities:
     Net proceeds from long-term debt................................                   11,345                      -
     Payments on capital lease obligations...........................                      (55)                     -
     Net borrowings on short-term debt...............................                        -                      15
     Increase in notes receivable from officers, net ................                     (704)                     -
     Net proceeds from issuance of common stock .....................                      394                   1,073
     Repurchase of common stock .....................................                   (2,233)                     -
                                                                            --------------------    -------------------
                           Net cash provided by financing activities.                    8,747                   1,088
                                                                            --------------------    -------------------
     Net increase (decrease) in cash and cash equivalents............                     (355)                  3,138
     Cash and cash equivalents at beginning of period................                      972                  40,528
                                                                            --------------------    -------------------
     Cash and cash equivalents at end of period......................         $            617       $          43,666
                                                                            ====================    ===================
Supplemental disclosures of cash flow information:
     Interest paid...................................................         $            394       $              22
     Income taxes paid...............................................         $          2,188       $           1,454




</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 25 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 five practice  groups  consisting of
Technology Solutions, Professional Services, Alliance Services, Network Services
and IT  Education  and operates 32 offices  across the United  States along with
international  consultant  recruiting offices in Brazil and the Philippines.  At
June  30,  1999,  the  Company  had  approximately  3,200  employees,  including
technical staff of  approximately  2,700 IT professional  consultants  providing
services to approximately 800 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  contain  all
disclosures  included in the  financial  statements  included  in  Cotelligent's
Annual  Report to the  Securities  and Exchange  Commission on Form 10-K for the
fiscal 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 and other  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  1998  balances  have been
reclassified to conform with the current presentation.



Note 3 - Changes in Stockholders' Equity

<TABLE>
<CAPTION>


                                            Common Stock             Additional                            Total
                                      --------------------------       Paid-In         Retained        Stockholders'
                                        Shares        Amount           Capital         Earnings           Equity
                                      ------------    ----------    -------------    ------------    ----------------
<S>                                   <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......             36,242             -              394               -                 394
Net loss......................                  -             -                -         (16,334)            (16,334)
                                      ============    ==========    =============    ============    ================
Balance at June 30, 1999......         13,453,873      $    135      $    80,680       $   8,845      $       89,660
                                      ============    ==========    =============    ============    ================
</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 25 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.  The results of these
acquisitions  have been included in the Company's  results from their respective
acquisition dates. The following pro forma consolidated  statement of operations
for the three months ended June 30, 1998 gives effect to the acquisitions of the
companies  purchased in fiscal 1999 as if these  acquisitions were made on April
1, 1998. 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>


                                                                        Pro Forma
                                                                      Three Months
                                                                          Ended
                                                                      June 30, 1998
                                                                     ----------------

<S>                                                                  <C>
              Revenues......................................          $       86,579
              Cost of services..............................                  59,681
                                                                     ----------------
                     Gross profit...........................                  26,898
              Selling, general and administrative expenses..                  20,114
                                                                     ----------------
              Operating income .............................                   6,784
              Other expense ................................                    (709)
                                                                     ----------------
              Income before provision for income taxes......                   6,075
              Provision for income taxes....................                   2,460
                                                                     ----------------
              Net income ...................................          $        3,615
                                                                     ================
              Earnings per share -
                   Basic....................................          $         0.24
                                                                     ================
                   Diluted..................................          $         0.23
                                                                     ================
              Weighted average shares outstanding -
                   Basic....................................              15,300,759
                                                                     ================
                   Diluted..................................              15,524,805
                                                                     ================
</TABLE>


Note 5 - Earnings Per Share

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

                                                                     For the Three Months Ended June 30, 1999
                                                               -----------------------------------------------------
                                                                                                       Per Share
                                                                    Loss               Shares             Amount
                                                               ----------------     --------------     -------------
<S>                                                            <C>                  <C>                <C>
   Basic and diluted earnings per share-
   Net income (loss) available to common stockholders ....      $     (16,334)         13,461,007       $    (1.21)



                                                                     For the Three Months Ended June 30, 1998
                                                               -----------------------------------------------------
                                                                                                        Per Share
                                                                   Income              Shares             Amount
                                                               ----------------     --------------     -------------

   Basic earnings per share-
   Net income available to common stockholders ...........      $       3,515          14,084,703       $    0.25
   Options issued to directors and employees .............                                224,046
                                                                                    --------------

   Diluted earnings per share-
   Income available to common stockholders
       plus assumed conversions ..........................      $       3,515          14,308,749       $    0.25
                                                                                    ==============

</TABLE>

                                       7

<PAGE>

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




Note 6 - Capital Stock

       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% of
the then  outstanding  shares.  During the three months ended June 30, 1999, the
Company  completed the share  repurchase  program with the repurchase of 238,400
shares for a total cost of $2,233.


Note 7 - 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 Y2K 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 three months ended June 30, 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 8 - Restructuring of Operations

     As part of the  Company's  reorganization  into five 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 three months ended June 30, 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 June 30, 1999,  $4,731 of  restructuring
charges remained in accrued liabilities.

                                       8
<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  offers  services in five
consulting   practice   groups:   Professional   Services  -   including   staff
augmentation;  Technology Solutions - custom application  development;  Alliance
Services  -  national  partnerships  with many  leading  enterprise  application
software  companies;  Network  Design and  Management  - intranet  and  internet
application design and development; and Training and Education.

       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.  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,  three of the company's  practice
groups: technology solutions,  alliance services and network services, 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 part of its strategic  plan,  the Company  intends to acquire other IT
consulting  services  businesses.  Should the Company be successful in acquiring
such businesses, periods subsequent to the completion of an acquisition could be
adversely impacted by costs and activities  associated with the assimilation and
integration of the acquired company. In addition, there can be no assurance that
the acquired company will meet its revenue or profit expectations  following the
acquisition.  If the Company is  unsuccessful in its  acquisition  program,  the
period in which such  opportunities are written off could be adversely  impacted
by costs associated with such opportunity.

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

       The Company has conducted a comprehensive review of its internal computer
systems to identify  the systems that could be affected by the "Year 2000" issue
and has  concluded  that the Year  2000  problem  will not pose any  significant
operational issues for the Company. The Company does not expect the expenditures
related  to the Year  2000  issue to have a  material  effect  on its  financial
position or results of operations in any year.

       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 to the  Securities  and
Exchange  Commission  on Form 10-K for the fiscal  year ended March 31, 1999 and
other filings made with the Securities and Exchange Commission.

                                       9
<PAGE>



CONSOLIDATED RESULTS OF OPERATIONS


Three Months Ended June 30, 1999 Compared to Three Months Ended June 30, 1998


Revenues

       Revenues increased $15.6 million,  or 21.2% to $88.6 million in the three
months  ended June 30, 1999 from $73.0  million in the three  months ended June,
30, 1998.  The increase was  primarily  due to the  inclusion of revenues in the
first  quarter of fiscal 2000 from the  companies  acquired  under the  purchase
method of accounting during fiscal 1999 ("Fiscal Year 1999 Purchases"). Revenues
generated  from the Fiscal Year 1999 Purchases  aggregated  $11.0 million during
the first quarter of fiscal 2000.


Gross Profit

       Gross profit  increased  $4.0  million,  or 19.1% to $24.9 million in the
three  months  ended June 30, 1999 from $20.9  million in the three months ended
June 30, 1998 as a result of the  inclusion  of the Fiscal Year 1999  Purchases.
Gross  profit as a  percentage  of  revenues  decreased  to 28.1%,  from  28.6%,
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 $7.8 million,  or
53.1% to $22.6  million  in the three  months  ended  June 30,  1999 from  $14.8
million in three months ended June 30, 1998.  The increase was  primarily due to
the inclusion of selling,  general and  administrative  expenses  related to the
Fiscal Year 1999 Purchases,  increased compensation to existing staff, new staff
added in advance of anticipated continued growth, additional occupancy costs and
increased  marketing  and sales  activities  during the first  quarter of fiscal
2000.

       Selling, general and administrative expenses as a percent of revenue were
25.5% in the three  months  ended June 30,  1999  compared to 20.2% in the three
months ended June 30, 1998. The majority of the Fiscal Year 1999 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 continued growth 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 $0.8 million,  or
123.1% to $1.5 million in the three months ended June 30, 1999 from $0.7 million
in three  months ended June 30, 1998.  The  increase  was  primarily  due to the
inclusion of amortization of goodwill related to the Fiscal Year 1999 Purchases.


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 Y2K 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 three months ended June 30, 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 assets'
carrying value over the Company's estimate of its fair value.

                                       10
<PAGE>

Restructuring of Operations

       As part of the Company's  reorganization  into five 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 three  months  ended  June 30,  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 $0.5 million in
the three  months  ended June 30, 1999 as compared  to interest  income,  net of
interest  expense of $0.3 million in the three  months ended June 30, 1998.  The
increase is primarily due to interest  expense  recognized on the Company's line
of credit  during the first quarter of fiscal 2000.  The net interest  income in
the first  quarter 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 $8.4 million, or an effective
tax rate of 34% of  pre-tax  loss in the  three  months  ended  June  30,  1999,
compared to income tax expense of $2.2 million, or an effective rate of 38.8% of
pre-tax  income for the three months  ended June 30,  1998.  The decrease in the
effective  tax rate in the first quarter of fiscal 2000, as compared to the same
period of fiscal  year  1999,  reflects  the impact in a net loss  situation  of
non-deductible items to the effective tax rate.

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<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 March 12, 1999, the Company entered
into a $100 million  revolving  line of credit  facility  (the  "Credit  Line").
Interest rate options  include base  borrowings at the lead lender's  prime rate
and term loans at LIBOR plus an  applicable  margin.  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.

       The Company's primary sources of liquidity are cash balances,  the Credit
Line  and  the  collection  of  its  accounts  receivable.  Accounts  receivable
increased as the Company's  operations have grown. Total receivables were 66 and
61 days of  revenue  at June 30,  1999 and  March  31,  1999  respectively.  The
increase was primarily the result of certain customers lengthening the timing of
their payments to Cotelligent.  Should the Company be unable to bill and collect
for its services on a timely basis,  the Company could draw upon  available cash
or existing credit facilities to finance its operations.

       Cash used in operating  activities  was $6.7 million for the three months
ended June 30 1999. The Company used  borrowings on its Credit Line to fund cash
needs for its  operations.  At June 30,  1999,  the Company  had an  outstanding
balance of $39.3 million under the Credit Line.

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<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  report on Form 8-K was filed during the quarter  ended
         June 30, 1999.

         Cotelligent,  Inc. filed with the Securities and Exchange Commission a
         copy of the press  release  dated June 17,  1999  announcing  earnings
         expectations for the three months ended June 30, 1999.

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<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 16, 1999                             /S/ Daniel E. Jackson
                                                  -----------------------------
                                                  Executive Vice President,
                                                    Chief Financial Officer and
                                                    Treasurer

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