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

                                    FORM 10-Q

[ X ]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

                For the quarterly period ended: October 31, 1999
                                                ----------------

[   ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)


                        Commission file number: 000-20688
                        ---------------------------------

                              Datatec Systems, Inc.
                              ---------------------
             (Exact name of Registrant as specified in its charter)

            Delaware                                             94-2914253
-------------------------------                              ----------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                             Identification No.)


23 Madison Road, Fairfield, NJ                                    07006-2371
-------------------------------                                  ----------
(Address of principal executive                                  (Zip Code)
offices)

                                 (973) 808-4000
               --------------------------------------------------
               Registrant's telephone number, including area code


Check whether the Registrant  (1) has filed all reports  required to be filed by
Section 12 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such shorter period that the Registrant was required to file such
reports) and (2) has been subjected to such filing  requirements for the past 90
days. Yes X No   .
         --   --
The number of shares of  Registrant's  Common Stock  outstanding  on October 31,
1999 was 31,254,345.


<PAGE>
                              DATATEC SYSTEMS, INC.
                                    FORM 10-Q
                       THREE MONTHS ENDED OCTOBER 31, 1999


                                      INDEX
                                      -----




PART I:   FINANCIAL INFORMATION

                                                                            Page
          Item 1:     Consolidated Financial Statements

                      Balance Sheets at April 30, 1999 (audited) and
                       October 31, 1999                                      3

                      Statements of Income for the three months ended
                      October 31, 1998 and 1999                              4

                      Statements of Income for the six months ended
                      October 31, 1998 and 1999                              5

                      Statements of Comprehensive Income for the
                      six months ended October 31, 1998 and 1999             6

                      Statements of Cash Flows for the six months ended
                      October 31, 1998 and 1999                              7

                      Notes to Unaudited Consolidated Financial Statements   8

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


PART II:  OTHER INFORMATION

          Item 4:     Submission of Matters to a Vote of Security Holders   11

          Item 6:     Exhibits and Reports of Form 8-K                      12

                                       2
<PAGE>
                              DATATEC SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                       April 30,      October 31, 1999
                                                         1999           (unaudited)
                                                      ----------      -----------------

<S>                                                  <C>              <C>
ASSETS

CURRENT ASSETS:

   Cash and cash equivalents                         $    234,000     $    139,000
   Accounts receivable, net                            20,661,000       24,908,000
   Inventory                                            3,252,000        3,703,000
   Prepaid expenses and other current assets            2,970,000        1,279,000
   Net assets from discontinued operations                447,000                0
                                                     ------------     ------------
               Total current assets                    27,564,000       30,029,000
Property and equipment, net                             5,200,000        5,090,000
Goodwill, net                                           3,539,000        3,320,000
Other assets                                            4,300,000        5,582,000
                                                     ============     ============

               Total assets                          $ 40,603,000     $ 44,021,000
                                                     ============     ============

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

   Short-term borrowings                             $  8,623,000     $ 11,545,000
   Current portion of long-term debt                    1,783,000        1,144,000
   Accounts payable                                     9,943,000        9,940,000
   Accrued and other liabilities                        3,866,000        3,289,000
   Due to related parties                               1,052,000        1,052,000
                                                     ------------     ------------

               Total current liabilities               25,267,000       26,970,000
                                                     ------------     ------------

Long-term debt                                            607,000          384,000
                                                     ------------     ------------

Commitments and contingencies

Shareholders' equity:

   Preferred stock                                           --               --
   Common stock                                            30,000           31,000
   Additional paid-in capital                          34,317,000       34,589,000
   Accumulated deficit                                (19,275,000)     (17,607,000)
   Accumulated other comprehensive loss                  (343,000)        (346,000)
                                                     ------------     ------------

      Total shareholders' equity                       14,729,000       16,667,000
                                                     ============     ============

       Total liabilities and shareholders' equity    $ 40,603,000     $ 44,021,000
                                                     ============     ============
</TABLE>


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

                                       3
<PAGE>
                              DATATEC SYSTEMS, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (unaudited)

                                                   For the Three Months Ended
                                                           October 31,
                                                   --------------------------
                                                       1998           1999
                                                   -----------    -----------


Revenues                                           $25,574,000    $25,503,000

Cost of revenues                                    16,538,000     15,746,000
                                                   -----------    -----------

Gross profit                                         9,036,000      9,757,000

Selling, general and administrative expenses         8,005,000      8,459,000
                                                   -----------    -----------

Operating income                                     1,031,000      1,298,000

Interest expense                                       472,000        475,000
                                                   -----------    -----------
 Income before provision (benefit) for income
  taxes                                                559,000        823,000

Provision (benefit) for income taxes                      --             --
                                                   -----------    -----------

 Net income                                        $   559,000    $   823,000
                                                   ===========    ===========

 Income per share (Note 3):


 Basic and diluted                                 $       .02    $       .03
                                                   ===========    ===========


 WEIGHTED AVERAGE COMMON SHARES - BASIC             29,110,000     31,232,000
                                                   ===========    ===========
  WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
    SHARES  - DILUTED                               29,931,000     31,956,000
                                                   ===========    ===========

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

                                       4

<PAGE>
                              DATATEC SYSTEMS, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (unaudited)

                                                     For the Six Months Ended
                                                            October 31,
                                                   -----------    -----------
                                                       1998           1999
                                                   -----------    -----------


Revenues                                           $50,721,000    $51,059,000

Cost of revenues                                    32,690,000     31,560,000
                                                   -----------    -----------

Gross profit                                        18,031,000     19,499,000

Selling, general and administrative expenses        16,047,000     16,921,000
                                                   -----------    -----------

Operating income                                     1,984,000      2,578,000

Interest expense                                       965,000        911,000
                                                   -----------    -----------
Income before provision (benefit) for income
  taxes                                              1,019,000      1,667,000

Provision (benefit) for income taxes                      --             --
                                                   -----------    -----------

 Net income                                        $ 1,019,000    $ 1,667,000
                                                   ===========    ===========

 Income per share (Note 3):


Basic                                              $       .04    $       .05
                                                   ===========    ===========


Diluted                                            $       .03    $       .05
                                                   ===========    ===========


 WEIGHTED AVERAGE COMMON SHARES - BASIC             29,082,000     30,959,000
                                                   ===========    ===========
  WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
    SHARES  - DILUTED                               30,232,000     31,687,000
                                                   ===========    ===========

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

                                       5
<PAGE>



                              DATATEC SYSTEMS, INC.
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                For the Six Months Ended
                                                                      October 31,
                                                          ------------------------------------
                                                                1998                1999
                                                          ------------          --------------

<S>                                                       <C>                    <C>
Net Income                                                $ 1,019,000            $ 1,667,000

Other comprehensive loss-                                     (10,000)                (3,000)
   Foreign currency translation adjustment
                                                          -----------            -----------

Comprehensive income                                      $ 1,009,000            $ 1,664,000
                                                          ===========            ===========
</TABLE>

                                       6
      The accompanying notes to unaudited consolidated financial statements
             are an integral part of these consolidated statements.


<PAGE>



                              DATATEC SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                                                  For the Six Months Ended
                                                                                                       October 31,
                                                                                            ----------------------------------
                                                                                                 1998               1999
                                                                                            -------------       --------------
<S>                                                                                          <C>                <C>
   CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income                                                                                 $ 1,019,000        $ 1,667,000

    Adjustments to reconcile net income to net cash used in operating activities --

       Depreciation and amortization                                                           1,527,000          1,601,000

       Changes in operating assets and liabilities:

           Increase in accounts receivable                                                    (4,236,000)        (4,247,000)

           Increase in inventory                                                                (808,000)          (451,000)

           (Increase) decrease in prepaid expenses and other assets                             (726,000)           100,000

           (Increase) decrease in net assets from discontinued operations                       (287,000)           447,000

           Increase (decrease) in accounts payable, accrued and other  liabilities               596,000           (580,000)
                                                                                             -----------        -----------

       Net cash used in operating activities                                                  (2,915,000)        (1,463,000)
                                                                                             -----------        -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

       Purchases of property and equipment                                                      (565,000)          (962,000)
                                                                                             -----------        -----------

       Net cash used in investing activities                                                    (565,000)          (962,000)
                                                                                             -----------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

        Net increase in short-term borrowings                                                  1,124,000          2,922,000

        Net payments of indebtedness                                                            (524,000)          (862,000)

         Net proceeds from common stock/warrant issuances                                      2,700,000            273,000
                                                                                             -----------        -----------

              Net cash provided by financing activities                                        3,300,000          2,333,000
                                                                                             -----------        -----------

              Net effect on foreign currency translation of cash                                 (10,000)            (3,000)
                                                                                             -----------        -----------

              Net decrease in cash                                                              (190,000)           (95,000)

Cash at beginning of period                                                                      317,000            234,000
                                                                                             ===========        ===========

Cash at end of period                                                                        $   127,000        $   139,000
                                                                                             ===========        ===========
</TABLE>

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


                                       7
<PAGE>



                              DATATEC SYSTEMS, INC.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1)         Business

       Datatec Systems,  Inc. and its subsidiaries  (the "Company" or "Datatec")
are in the  business  of  providing  rapid and  accurate  technology  deployment
services and licensing software tools to support  enterprises in the delivery of
complex IT solutions.

(2)         Basis of Presentation

       The consolidated financial statements include the accounts of the Company
and its  subsidiaries.  All  intercompany  accounts and  transactions  have been
eliminated.

       The accompanying  unaudited  consolidated  financial statements have been
prepared in conformity with generally accepted accounting  principles consistent
with those  applied  in, and should be read in  conjunction  with,  the  audited
financial  statements for the year ended April 30, 1999.  The interim  financial
information is unaudited,  but reflects all normal  recurring  adjustments  that
are, in the opinion of management, necessary for a fair statement of results for
the interim  periods  presented.  The results for the three and six months ended
October 31, 1999 are not necessarily  indicative of the results expected for the
full fiscal year.

(3)         Earnings per share:

      Basic earnings per share is calculated  using the weighted  average number
of shares  outstanding  for the three and six months ended  October 31, 1998 and
1999.  Diluted  earnings per shares is  calculated  using the  weighted  average
number  of  shares   outstanding  plus  the  incremental   shares  from  assumed
conversions  of options,  debt and preferred  stock for the three and six months
ended October 31, 1998 and 1999.

(4)         Supplemental Disclosure of Cash Flows

       Cash paid during the six months ended October 31:

                                             1998                 1999
                                        ---------------      --------------
                Interest Paid              $ 935,000           $ 746,000



<PAGE>
                              DATATEC SYSTEMS, INC.
                         PART I - FINANCIAL INFORMATION


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

Results of Operations - For the Three and Six Months Ended October 31, 1999
---------------------------------------------------------------------------

            Revenues.  Revenues for the three and six months  ended  October 31,
1999 were  $25,503,000 and  $51,059,000  compared to $25,574,000 and $50,721,000
for the three and six months ended October 31, 1998, respectively,  representing
a  decrease  of 0.3% and an  increase  of 0.1%  for the  three  and six  months,
respectively.  Included in revenues for the three and six months  ended  October
31, 1999 were e-Deploy.com revenues of $479,000 and $539,000, respectively.

            Gross  Profit.  Gross  profits  for the three and six  months  ended
October 31, 1999 were  $9,757,000  and  $19,499,000  compared to $9,036,000  and
$18,031,000  for the three and six months ended October 31, 1998,  respectively.
Gross  profits as a  percentage  of net sales were 38.3% and 38.2% for the three
and six months ended  October 31, 1999 compared to 35.3% and 35.6% for the three
and six months  ended  October 31,  1998,  respectively.  The  increase in gross
margin percentage is the result of the Company's  improved ability to manage its
projects and the transition to providing rapid technology deployment services.

            Selling, general and administrative  expenses.  Selling, general and
administrative expenses for the three and six months ended October 31, 1999 were
$8,459,000   and   $16,921,000,   respectively,   compared  to  $8,005,000   and
$16,047,000,  respectively, for the three and six months ended October 31, 1998,
respectively.  As a percentage  of sales,  selling,  general and  administrative
expenses  were 31.2% and 33.1% for the three and six months  ended  October  31,
1999, compared to 31.3% and 31.6% for the three and six months ended October 31,
1998.  The  increase  in  selling,  general  and  administrative  expenses  as a
percentage  of sales is the  result of the  Company's  continued  investment  in
supporting  its  ability to supply  nationwide  deployment  capabilities  to its
clients.  Included in selling, general and administrative expenses for the three
and six months ended October 31, 1999 were e-Deploy.com expenses of $231,000 and
$583,000, respectively.

            Interest  expense.  Interest  expense  for the three and six  months
ended  October 31, 1999 was  $475,000  and  $911,000,  compared to $472,000  and
$965,000,  respectively,  for the three and six months  ended  October 31, 1998,
respectively.

Financial Position
------------------

            During  the  six  months  ended  October  31,  1999,  cash  used  in
operations was $1,463,000 compared to a year-ago cash usage of $2,915,000.

            Cash used for  investing  activities  during the first six months of
the fiscal year ending April 30, 2000 was $962,000  compared to $565,000  during
the first six months of the fiscal year ended April 30, 1999.

                                       9
<PAGE>

            Cash  provided by financing  activities  during the six months ended
October 31, 1999 was $2,333,000  compared to $3,300,000 in the year-ago  period.
Included in the current  period were net proceeds of $273,000  from the issuance
of common stock related to the exercise of stock options and purchases under the
employee stock purchase plan.

            The Company's  working capital improved from $2,297,000 at April 30,
1999 to $3,059,000 at October 31, 1999.

            At  October  31,  1999,  total  debt  was  $13,073,000  compared  to
$11,013,000 at April 30, 1999.

            Shareholders'  equity  increased  $1,938,000  during  the six months
ended October 31, 1999,  principally  reflecting  net income of  $1,667,000  and
proceeds  from the issuance of common stock related to stock option and employee
stock purchase plans of $273,000.





                                       10
<PAGE>
                              DATATEC SYSTEMS, INC.
                                    FORM 10-Q
                           PART II - OTHER INFORMATION

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

            None


                                       11
<PAGE>



                              DATATEC SYSTEMS, INC.
                                    FORM 10-Q
                     PART II - OTHER INFORMATION - CONTINUED


Item 6:     Exhibits and Reports on Form 8-K

            (a)         Exhibit 27 - Financial Data Schedule

            (b)         Reports on Form 8-K

                                    None



                                       12
<PAGE>

                                   SIGNATURES


In accordance with the requirements of the Securities  Exchange Act of 1934, the
Registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                               DATATEC SYSTEMS, INC.
                                                           Registrant



Date:       December 14, 1999                  By: /s/ James M. Caci
                                                 -------------------------------
                                               James M. Caci
                                               Chief Financial Officer and Duly
                                               Authorized Officer