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: July 31, 2000
                                                  -------------

/   /       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                              07004
------------------------------------                ---------------------------
(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 July 31, 2000
was 33,494,558.


<PAGE>

                              DATATEC SYSTEMS, INC.
                                    FORM 10-Q
                        THREE MONTHS ENDED JULY 31, 2000


                                      INDEX


PART I:     FINANCIAL INFORMATION

                                                                            Page
            Item 1:  Consolidated Financial Statements

                     Balance Sheets at April 30, 2000 and
                     July 31, 2000                                            3

                     Statements of Operations for the three months ended
                     July 31, 1999 and 2000                                   4

                     Statements of Comprehensive Income for the
                     three months ended July 31, 1999 and 2000                5

                     Statements of Cash Flows for the three months ended
                     July 31, 1999 and 2000                                   6

                     Notes to Unaudited Consolidated Financial Statements     7

            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>

                                                                                                          July 31, 2000
                                                                           April 30, 2000                  (unaudited)
                                                                   -------------------------     --------------------------

ASSETS

CURRENT ASSETS:

<S>                                                                          <C>                           <C>
   Cash and cash equivalents                                                 $  10,077,000                 $   7,627,000
   Receivables, net                                                             23,849,000                    31,495,000
   Inventory                                                                     5,129,000                     5,571,000
   Prepaid expenses and other current assets                                     1,301,000                     1,174,000
                                                                   -------------------------     --------------------------

               Total current assets                                             40,356,000                    45,867,000

Property and equipment, net                                                      5,169,000                     5,137,000
Goodwill, net                                                                    3,102,000                     2,992,000
Other assets                                                                     6,435,000                     6,637,000
                                                                   -------------------------     --------------------------

               Total assets                                                  $  55,062,000                 $  60,633,000
                                                                   =========================     ==========================

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

   Short-term borrowings                                                     $   9,070,000                 $  14,282,000
   Current portion of long-term debt                                               776,000                       588,000
   Accounts payable                                                              9,480,000                    10,626,000
   Accrued and other liabilities                                                 3,482,000                     3,491,000
   Due to related parties                                                        1,390,000                     1,390,000
                                                                   -------------------------     --------------------------

               Total current liabilities                                        24,198,000                    30,377,000
                                                                   -------------------------     --------------------------
Long-term debt                                                                     226,000                       170,000
                                                                   -------------------------     --------------------------
Minority interest                                                                9,593,000                     9,614,000

Shareholders' equity:
   Common stock                                                                     33,000                        33,000
   Additional paid-in capital                                                   42,268,000                    42,620,000
   Accumulated deficit                                                         (20,908,000)                  (21,832,000)
   Accumulated comprehensive loss                                                 (348,000)                     (349,000)
                                                                   -------------------------     --------------------------

      Total shareholders' equity                                                21,045,000                    20,472,000
                                                                   -------------------------     --------------------------

       Total liabilities and shareholders' equity                            $  55,062,000                 $  60,633,000
                                                                   =========================     ==========================
</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 OPERATIONS
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                                  For the Three Months Ended
                                                                                           July 31,
                                                                       -------------------------------------------------
                                                                                   1999                        2000
                                                                       ---------------------       ---------------------


<S>                                                                            <C>                         <C>
Revenues                                                                       $ 25,556,000                $ 24,663,000

Cost of revenues                                                                 15,915,000                  15,194,000
                                                                       ---------------------       ---------------------

Gross profit                                                                      9,641,000                   9,469,000

Selling, general and administrative expenses                                      8,361,000                   9,897,000
                                                                       ---------------------       ---------------------

Operating income(loss)                                                            1,280,000                   (428,000)

Interest expense                                                                    436,000                     325,000
                                                                       ---------------------       ---------------------
 Income(loss) before minority interest                                              844,000                   (753,000)

Minority interest                                                                        --                   (171,000)
                                                                       ---------------------       ---------------------

 Net income(loss)                                                                 $ 844,000               ($   924,000)
                                                                       =====================       =====================

 Income(loss) per share (Note 3):
 Basic and diluted:

 Net income(loss)                                                                 $     .03         ($             .03)
                                                                       =====================       =====================


 WEIGHTED AVERAGE COMMON SHARES - BASIC                                          30,686,000                  33,463,000
                                                                       =====================       =====================

  WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES  - DILUTED                31,418,000                  33,463,000
                                                                       =====================       =====================
</TABLE>

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

                                       4

<PAGE>

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

<TABLE>
<CAPTION>

                                                                                         For the Three Months Ended
                                                                                                  July 31,
                                                                          ---------------------------------------------------------
                                                                                    1999                           2000
                                                                          -------------------------      --------------------------

<S>                                                                                     <C>                      <C>
     Net Income(loss)                                                                   $  844,000               ($       924,000)

     Other comprehensive loss-
        Foreign currency translation adjustment                                             (1,000)                        (1,000)
                                                                          -------------------------      --------------------------

     Comprehensive income(loss)                                                         $  843,000               ($       925,000)
                                                                          =========================      ==========================
</TABLE>


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

                                       5

<PAGE>

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

<TABLE>
<CAPTION>

                                                                                            For the Three Months Ended
                                                                                                     July 31,
                                                                              ------------------------------------------------------
                                                                                        1999                          2000
                                                                              -------------------------     ------------------------
   Cash Flows From Operating Activities

<S>                                                                           <C>                                <C>
  Net income(loss)                                                            $           844,000                ($     924,000)

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

       Depreciation and amortization                                                      786,000                     1,168,000

       Changes in operating assets and liabilities:

           Increase in accounts receivable                                             (2,845,000)                   (7,646,000)

           Increase in inventory                                                         (230,000)                     (442,000)

           Increase in prepaid expenses and other assets                                 (234,000)                     (572,000)

           Decrease in assets held for sale or disposition                                447,000                          ----

         Increase (decrease) in accounts payable, accrued and
         other  liabilities                                                            (1,293,000)                    1,155,000
                                                                              ---------------------     --------------------------

       Net cash used in operating activities                                           (2,525,000)                   (7,261,000)
                                                                              ---------------------     --------------------------

Cash flows from investing activities:

       Purchases of property and equipment                                               (430,000)                     (508,000)
                                                                              ----------------------    -------------------------

       Net cash used in investing activities                                             (430,000)                     (508,000)
                                                                              ---------------------     --------------------------

Cash flows from financing activities:

        Net borrowings of short-term borrowings                                         3,319,000                     5,212,000

        Net payments of indebtedness                                                     (590,000)                     (244,000)

         Net proceeds from common stock/warrant issuances                                 117,000                       352,000
                                                                              ---------------------     --------------------------

              Net cash provided by financing activities                                 2,846,000                     5,320,000

              Net effect on foreign currency translation on cash                           (1,000)                       (1,000)
                                                                              ---------------------     --------------------------

              Net decrease in cash                                                       (110,000)                   (2,450,000)

Cash and cash equivalents at beginning of period                                          234,000                    10,077,000
                                                                              ---------------------     --------------------------

Cash and cash equivalents at  end of period                                    $          124,000             $       7,627,000
                                                                              =====================     ==========================
</TABLE>

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

                                       6

<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.

         Certain  prior year  amounts have been  reclassified  to conform to the
current year financial statement presentation.

         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, 2000.  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 months ended July 31,
2000 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 months ended July 31, 1999 and 2000.
Diluted  earnings per share 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 months ended July 31, 1999 and
2000.  For the three  months  ended July 31,  2000  approximately  1,637,000  of
outstanding  options and warrants  have been excluded  from the  calculation  of
diluted earnings per share as their inclusion would have been anti-dilutive.

(4)      Supplemental Disclosure of Cash Flows

         Cash paid during the three months ended July 31:

                                          1999                      2000
                                       ---------                 ---------
             Interest Paid             $ 351,000                 $ 365,000


                                       7
<PAGE>

(5)      Segment Information
<TABLE>
<CAPTION>


                                                              2000
                                ------------------------------------------------------------------
                                  Deployment
                                   Services         eDeploy       Eliminations     Consolidated
                                ------------------------------------------------------------------

<S>                                 <C>               <C>             <C>              <C>
Revenues                            $23,584,000       $1,116,000       ($37,000)      $24,663,000

Cost of Revenues                     14,890,000          341,000        (37,000)      $15,194,000

                                ------------------------------------------------------------------
Gross profit                          8,694,000          775,000               -       $9,469,000

SG&A expenses                         8,487,000        1,410,000               -       $9,897,000

                                ------------------------------------------------------------------
Operating Income                        207,000        (635,000)               -        (428,000)

Interest expense, net                   120,000          226,000        (21,000)         $325,000

                                ------------------------------------------------------------------
Income before Minority Interest          87,000        (861,000)          21,000        (753,000)

Minority interest                             -                -       (171,000)       ($171,000)

                                ------------------------------------------------------------------
Net income                              $87,000       ($861,000)      ($150,000)       ($924,000)
                                ==================================================================
</TABLE>
<TABLE>
<CAPTION>

                                                                1999
                                ---------------------------------------------------------------------
                                   Deployment
                                    Services         eDeploy        Eliminations      Consolidated
                                ---------------------------------------------------------------------

<S>                                    <C>           <C>                          <C>       <C>
Revenues                             $25,496,000          $60,000                 -      $25,556,000

Cost of Revenues                      15,814,000          101,000                 -      $15,915,000

                                ---------------------------------------------------------------------
Gross profit                           9,682,000         (41,000)                 -       $9,641,000

SG&A expenses                          7,628,000          733,000                 -       $8,361,000

                                ---------------------------------------------------------------------
Operating Income                       2,054,000        (774,000)                 -        1,280,000

Interest expense, net                    168,000          268,000                 -         $436,000

                                ---------------------------------------------------------------------
Income before Minority Interest        1,886,000      (1,042,000)                 -          844,000

Minority interest                              -                -                 -               $0

                                ---------------------------------------------------------------------
Net income                            $1,886,000     ($1,042,000)                 -         $844,000
                                =====================================================================
</TABLE>


                                        8

<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 Months Ended July 31, 2000

            Revenues.  Revenues  for the three  months  ended July 31, 2000 were
$24,663,000  compared to  $25,556,000  for the three months ended July 31, 1999,
representing a decrease of 3.5%.  eDeploy.com  revenues were  $1,116,000 for the
three months ended July 31, 2000  compared to $60,000 for the three months ended
July 31,  1999.  Included in the three months ended July 31, 2000 is a sale of a
Master Agreement of $1,000,000.  Datatec Services  revenues were $23,584,000 for
the three  months  ended July 31,  2000  compared to  $25,496,000  for the three
months ended July 31, 1999, representing a decrease of 7.5%, which is attributed
to the transition from a direct sales model to an indirect model.

            Gross Profit. Gross profits for the three months ended July 31, 2000
were $9,469,000 compared to $9,641,000 for the three months ended July 31, 1999.
Gross  profits as a percentage of revenues were 38.4% for the three months ended
July 31,  2000  compared  to 37.7% for the three  months  ended  July 31,  1999.
Datatec  Services gross profits as a percentage of sales  decreased from 38% for
the three  months  ended July 31, 1999 to 36.9% for the three  months ended July
31, 2000.

            Selling, general and administrative  expenses.  Selling, general and
administrative expenses for the three months ended July 31, 2000 were $9,897,000
compared to  $8,361,000  for the three months ended July 31, 1999,  representing
40.1% and 32.7% of revenues,  respectively.  eDeploy.com's selling,  general and
administrative expenses for the three months ended July 31, 2000 were $1,410,000
compared to  $733,000  for the three  months  ended July 31,  1999.  The largest
contributing  factor to this increase is the number of  eDeploy.com  associates.
Datatec Services' selling,  general and administrative  expenses were $8,487,000
in the first  quarter of the fiscal  year  ending  April 30,  2001  compared  to
$7,628,000  for the first  quarter of the fiscal year ended April 30, 2000.  The
increase  of 11.3% is largely due to an increase in the number of and quality of
Datatec's  personnel,  primarily in the client  services and sales  groups.  The
commitment to employing  high quality,  dedicated  associates  will position the
Company to successfully deliver more complex services to its clients.

             Minority  interest.  For the three  months  ended July 31, 2000 the
company recorded minority interest expense of $171,000. Of this amount, $150,000
represents the 6% annual dividend on the $10 million  investment in eDeploy.com.
The  remainder,  $21,000,  represents  amortization  of deferred  financing fees
associated with the investment.

            Interest  expense.  Net interest  expense for the three months ended
July 31, 2000 was $325,000  compared to $436,000 for the three months ended July
31, 1999, representing a decrease of 25.5%. The decrease in net interest expense
is the result of the Company recording  interest income of $133,000 in the three
months ended July 31, 2000. Gross interest  expense  increased 5% as a result of
increased average debt balances.

                                       9

<PAGE>

Financial Position

            During the three months ended July 31, 2000 cash used in  operations
was $7,261,000,  reflecting growth in the Company's  receivables,  compared to a
year-ago cash usage of $2,525,000.

            Cash used for investing  activities  during the first quarter of the
fiscal year ending April 30, 2001 was $508,000  compared to $430,000  during the
first quarter of the fiscal year ended April 30, 2000.

            Cash provided by financing  activities during the three months ended
July 31, 2000 was $5,320,000  compared to $2,846,000 in the year-ago period. The
cash was provided by an increase in the Company's  borrowing under its revolving
credit facility to fund the increase in receivables.

            The  Company's  working  capital  was  $15,490,000  at July 31, 2000
compared to $16,158,000 at April 30, 2000.

            At July 31, 2000, total debt was $15,039,000 compared to $10,072,000
at April 30, 2000.

            Shareholders'  equity  decreased  $573,000  during the three  months
ended July 31, 2000, principally reflecting a loss of $924,000 and proceeds from
the issuance of common stock related to stock option and employee stock plans of
$352,000.



                                       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:       September 14, 2000            By: /s/ James M. Caci
                                              -------------------------------
                                              James M. Caci
                                              Chief Financial Officer and Duly
                                              Authorized Officer