Edgar Filing: COTELLIGENT INC

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

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

COTELLIGENT, INC.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required

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[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
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Notes:

COTELLIGENT, INC.
101 CALIFORNIA STREET, SUITE 2050
SAN FRANCISCO, CALIFORNIA 94111

______________________

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 12, 2001

To the Stockholders:

The Annual Meeting of Stockholders of Cotelligent, Inc. ("Cotelligent" or
the "Company") will be held at the Hyatt Regency in San Francisco, California on
the 12/th/ day of June at 9:00 a.m., Pacific Daylight Savings Time, for the
following purposes:

1. To approve an amendment to the Company's Certificate of Incorporation which
will effect a reverse stock split of the Company's common stock (such split
to combine a number of outstanding shares of common stock of up to four (4)
into one (1) share of common stock) upon a determination by the Board of
Directors that such a reverse stock split is advisable, and authorizing the
Board of Directors to select, in its discretion, the split ratio within the
range specified above and file such amendment.

2. To consider and act on the appointment of Arthur Andersen LLP as the
Company's independent certified public accountants.

3. To transact such other business as may properly come before the meeting or
any adjournments thereof.

Only stockholders of record as of the close of business on April 24, 2001
are entitled to receive notice of and to vote at the meeting. A list of such
stockholders shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
ten days prior to the meeting, at the principal executive offices of the
Company, which, as of May 18, 2001, will be located at 44 Montgomery Street,
Suite 4050, San Francisco, CA 94104. Prior to May 18, 2001, our principle
executive offices will be located at 101 California Street, Suite 2050, San
Francisco, California 94111.

By Order of the Board of Directors

/s/ Curtis J. Parker

Curtis J. Parker
Executive Vice President, Chief Financial Officer,
Treasurer & Assistant Secretary

San Francisco, California
April 30, 2001

WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE URGED TO FILL
IN, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
RETURN ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE YOUR SHARES OF
COMMON STOCK PERSONALLY EVEN IF YOU HAVE PREVIOUSLY SUBMITTED A PROXY.

COTELLIGENT, INC
101 CALIFORNIA STREET, SUITE 2050
SAN FRANCISCO, CALIFORNIA 94111

__________________

PROXY STATEMENT

__________________

INTRODUCTION

The accompanying Proxy is solicited by and on behalf of the Board of
Directors of Cotelligent, Inc., a Delaware corporation (the "Company" or
"Cotelligent"), for use only at the 2001 Annual Meeting of Stockholders (the
"Annual Meeting") to be held at the Hyatt Regency in San Francisco, California
on the 12/th/ day of June, 2001, at 9:00 a.m., Pacific Daylight Savings Time,
and at any adjournment thereof. The approximate date on which this Proxy
Statement and accompanying Proxy will first be given or sent to stockholders is
April 30, 2001.

In July 2000, the Company announced a change in its fiscal year end from
March 31 to December 31. Consequently, the Company's most recent fiscal period
is a nine-month transition period ending December 31, 2000 ("Transition
Period").

Each Proxy executed and returned by a stockholder may be revoked at any
time thereafter by written notice to that effect to the Company, attention of
the Assistant Secretary, before the Annual Meeting, or to the Assistant
Secretary or the Inspector of Election at the Annual Meeting, or by execution
and return of a later-dated Proxy, except as to any matter voted upon before
such revocation.

Proxies in the accompanying form will be voted in accordance with the
specifications made and, where no specifications are given, such Proxies will be
voted:

. FOR the approval of the amendment to the Company's
Certificate of Incorporation which will effect a reverse
stock split of the Company's common stock (such split to
combine a number of outstanding shares of common stock of up
to four (4) into one (1) share of common stock) upon a
determination by the Board of Directors that such a reverse
stock split is advisable, and authorizing the Board of
Directors to select, in its discretion, the split ratio
within the range specified above and file such amendment.

. FOR the appointment of Arthur Andersen LLP as the Company's
independent certified public accountants.

In the discretion of the proxy holders, the Proxies will also be voted FOR
or AGAINST such other matters as may properly come before the meeting.
Management of the Company is not aware of any other matters to be presented for
action at the meeting.

RECORD DATE AND VOTING SECURITIES

The Board of Directors has fixed the close of business on April 24, 2001 as
the record date for the determination of stockholders entitled to receive notice
of and to vote at the Annual Meeting. The outstanding stock of the Company on
April 24, 2001 consisted of 15,347,942 shares of Common Stock, each of which is
entitled to one vote. Shares of Common Stock held by the Company are not voted.

The presence, in person or by Proxy, of the holders of a majority of the
shares of Common Stock of the Company entitled to vote at the Annual Meeting
will constitute a quorum for the transaction of business at such meeting.
Abstentions and broker non-votes will be counted for purposes of determining the
presence or absence of a quorum.

The proposal to approve the appointment of Arthur Andersen LLP as the
Company's independent certified public accounts requires the affirmative vote of
the holders of a majority of the shares of the Common Stock present in person or
by Proxy at the Annual Meeting and entitled to vote on such proposal.

While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions and broker non-votes, the Company intends
to apply the principles set forth below. These principles also give effect to
the rules of the New York Stock Exchange, Inc. regarding the treatment of
abstentions and broker non-votes, which are in addition to those imposed by
Delaware law.

With respect to the proposals to approve the amendment to the Company's
Certificate of Incorporation to effect a reverse stock split of the Company's
Common Stock and to appoint Arthur Andersen LLP as the Company's independent
public accountant, abstentions and broker non-votes, if any, will have the same
effect as a vote against such proposal.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of April 24, 2001 information regarding
the beneficial ownership of the Common Stock of the Company by (i) each person
known to beneficially own more than 5% of the outstanding shares of Common
Stock, (ii) each of the Company's directors, (iii) each named executive officer
and each officer named in the Summary Compensation Table and (iv) all executive
officers and directors as a group. All persons listed have an address c/o the
Company's principal executive offices and have sole voting and investment power
with respect to their shares unless otherwise indicated.

Shares Beneficially Owned
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Name Number Percent
-------------------------------------------------------------------- -------------- ---------------

Wellington Management Company, LLP (1)............................ 1,039,000 6.77%
James R. Lavelle.................................................. 905,308 5.90%
Daniel E. Jackson................................................. 849,473 5.53%
Curtis J. Parker (2).............................................. 18,492 0.12%
Anthony M. Frank.................................................. 72,156 0.47%
Harvey L. Poppel.................................................. 62,928 0.41%
Edward E. Faber................................................... 9,200 0.06%
Lorraine E. Vega (3).............................................. 0 0.00%
Jeffrey B. Van Horn (4)........................................... 0 0.00%
All executive officers and directors as a group (8 persons) (2)... 1,917,557 12.49%

(1) The address of the stockholder is 75 State Street, Boston, Massachusetts,
02109. Data obtained from the stockholder's Schedule 13G, filed with the
Securities and Exchange Commission, on February 13, 2001.

(2) Includes 12,500 shares issuable upon exercise of options exercisable within
60 days of April 24, 2001.

(3) Ms. Vega resigned as Vice President, General Counsel and Secretary on July
31, 2000.

(4) Mr. Van Horn resigned as Executive Vice President, Chief Financial Officer
and Treasurer on December 20, 2000.

BOARD OF DIRECTORS

The number of directors on the Board of Directors is currently fixed at
nine. Pursuant to the Company's Certificate of Incorporation and By-laws, the
Board of Directors has been divided into three classes serving staggered three-
year terms. One class of directors has been elected at each annual meeting of
stockholders to serve for the following three years. Currently there are two
directors whose terms expire in 2003, three directors whose terms expire in 2002
and one director, B. Tom Green, whose term will expire at the Annual Meeting.
Mr. Green is not standing for reelection at this meeting. Accordingly, the
Company is not nominating a director candidate at this meeting. The Company's
Executive Committee of the Board of Directors is searching for appropriate
persons to fill these director vacancies. If such person(s) are identified and
elected by the Board of Directors in between annual meetings, it is the
Company's intention to have such placed before the stockholders for election at
the immediately following annual meeting.

The following sets forth information concerning each director whose term
continues, including his name, age, principal occupation or employment during at
least the past five years and the period during which such person has served as
a director of the Company.

MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Members whose terms expire at the Annual Meeting in 2002:

Edward E. Faber is 68 years old and is Vice Chairman of the Board of
Directors of the Company. Mr. Faber joined the Company as a director in March
1993 and served as Chairman from August 1995 to April 1996. From 1990 through
1992, he was Vice Chairman, President and Chief Executive Officer of Supercuts,
Inc., a company specializing in hairstyling. Mr. Faber was founding President
and Chief Executive Officer of Computerland Corporation ("Computerland"), a
company specializing in the sale of computer equipment and accessories, from
1976 through 1983. He retired from Computerland in 1983 and returned in 1985 as
Chairman of the Board and Chief Executive Officer, serving in that capacity
until 1987 when he again retired. Mr. Faber is a director of Discover Resorts,
Inc., Employer Services.com and Outdoor Broadcasting TV.com. Mr. Faber has a
bachelor of science degree from Cornell University and served as an officer in
the United States Marine Corps.

Harvey L. Poppel is 63 years old and is a director of the Company. He
joined the Company in that capacity in October 1995. From 1985 to December 1996,
Mr. Poppel was Managing Director of Broadview Associates, LLC (now Broadview
International, LLC), a firm specializing in mergers and acquisitions in the
information technology field. Mr. Poppel retired from Broadview Associates
effective December 31, 1996. Prior to joining Broadview Associates, LLC, Mr.
Poppel spent 18 years at Booz, Allen & Hamilton, during which time he held a
number of positions, including Executive Vice President and Managing Officer of
the Information Industry Practice and as a member of its board of directors. He
is a director of Larscom, Inc. Mr. Poppel is a Certified Management Consultant
and received a bachelors degree and a Master of Science degree from Rensselaer
Polytechnic Institute.

Daniel E. Jackson is 40 years old and is a director of the Company, as well
as its President and Chief Operating Officer. Mr. Jackson has served as a
director of the Company since September 1999. Mr. Jackson was promoted to the
position of Chief Operating Officer and President in July 2000. Mr. Jackson
served as Executive Vice President, Chief Financial Officer and Treasurer from
June 1999 until July 2000. From May 1998 until June 1999, Mr. Jackson served in
the capacities of Executive Vice President, Corporate Development and General
Counsel. Mr. Jackson served as Executive Vice President of Corporate Development
and General Counsel since September 1995, as Secretary from September 1996 until
September 1997 and as Chief Financial Officer from November 1996 until January
1998. From 1994 to 1995, Mr. Jackson served as Vice President and General
Counsel of an affiliate of Notre Venture Capital, Ltd., a partnership
specializing in industry consolidation transactions. Prior thereto, he was
Corporate Counsel and Secretary of Sanifill, Inc., an environmental services
company, from its founding in 1990 through 1994. From 1986 until 1990, Mr.
Jackson was an associate at Morgan, Lewis & Bockius LLP in New York, where he
practiced law in the areas of securities and mergers and acquisitions. Mr.
Jackson received a bachelor of science degree in business administration from
The Ohio State University and a Juris Doctor degree from the University of
Pennsylvania.

Members whose terms expire at the Annual Meeting in 2003:

Anthony M. Frank is 69 years old and is a director of the Company. He
joined the Company in that capacity in March 1993. In September 1994 Mr. Frank
became co-founding General Partner and Chairman of Belvedere Capital Partners,
the general partner of the California Community Financial Institutions Fund the
primary purpose of which is investing in California community banks. From 1992
to 1994, Mr. Frank was an independent financial consultant and venture
capitalist. From March 1988 to March 1992, Mr. Frank served as the Postmaster
General of the United States. From 1971 until 1988, he served as Chairman and
Chief Executive Officer of First Nationwide Bank. Mr. Frank is a graduate of
Dartmouth College and was an overseer of the Tuck School of Business. He is also
a director of several companies, including The Charles Schwab Corporation,
Crescent Real Estate Equities Ltd., General American Investors, Temple Inland
Corporation, and Bedford Properties Investors.

James R. Lavelle is 50 years old and is the founder, Chairman of the Board
and Chief Executive Officer of the Company. Mr. Lavelle has served as Chief
Executive Officer since he founded the Company in 1993. From inception of the
Company until August 1995, Mr. Lavelle was also Chairman of the Board of the
Company, a position that he reassumed in April 1996. From 1985 to 1993, he was a
business consultant specializing in strategic marketing and organization
development. From 1983 to 1985, Mr. Lavelle was Senior Manager and Director of
Management Consulting Services for the San Francisco office of KPMG Main
Hurdman, an international accounting firm. Prior to that, he was Manager,
Management Consulting Services in the San Francisco office of Price Waterhouse
LLP, an international accounting firm. Mr. Lavelle has a bachelors degree from
University of California at Santa Barbara and a Master of Business
Administration degree from University of Santa Clara.

OTHER EXECUTIVE OFFICERS OF THE COMPANY

Name Age Position
---- --- --------

Curtis J. Parker.............. 46 Executive Vice President, Chief Financial Officer,
Treasurer & Assistant Secretary

Curtis J. Parker is 46 years old and is Executive Vice President, Chief
Financial Officer, Treasurer & Assistant Secretary of the Company. From
November 1996 until December 2000, Mr. Parker served as Vice President and Chief
Accounting Officer. From January 1996 until March 1996, he served as a
consultant to the Company and was appointed Corporate Controller in March 1996.
From 1988 through 1995, Mr. Parker was employed by Burns Philp Food Inc., a
manufacturer of food products, where he rose to the position of Vice President -
Finance for the Industrial Products Division. Mr. Parker has a Bachelor of
Commerce degree from the University of British Columbia and is a Certified
Public Accountant.

BOARD ORGANIZATION AND COMMITTEES

During the Transition Period, the Board held thirteen meetings. Each of the
Directors attended at least 75% of the meetings of the Board and the committees
on which he served during the Transition Period.

The Board of Directors has established committees to perform certain of its
functions, including the Audit Committee, the Compensation Committee and the
Executive Committee. The functions of each of these committees, and its members,
are set forth below.

Audit Committee

The Audit Committee reviews the internal controls of the Company, the
objectivity of its financial reporting and the environmental standards and
controls of the Company and meets with appropriate Company financial personnel
and the Company's independent certified public accountants in connection with
these reviews. The Audit Committee also recommends to the Board the appointment
of independent certified public accountants to serve as auditors for the
following year. During the Transition Period the Audit Committee met three
times. The Audit Committee currently consists of B. Tom Green, Edward E. Faber
and Harvey L. Poppel. Mr. Green isn't standing for reelection to the Board of
Directors.

Compensation Committee

The Compensation Committee advises and makes recommendations to the Board
with respect to salaries and bonuses to be paid to officers and other employees
of the Company. The Compensation Committee also administers the Company's 1998
Long-Term Incentive Plan, the 2000 Long Term Incentive Plan and the 1999
Leveraged Stock Purchase Plan. During the Transition Period, the Compensation
Committee met nine times. The Compensation Committee currently consists of
Edward E. Faber and Anthony M. Frank.

Executive Committee

The Executive Committee serves as the nominating committee of the Board and
generally handles other matters that are time critical and cannot be handled in
a reasonable manner by the entire Board. The Executive Committee reviews the
size and composition of the Board of Directors, apportions the directors into
classes and makes recommendations with respect to nominations for election of
directors. The Executive Committee will consider recommendations from
stockholders for nominees to serve as directors if such proposals are submitted
in writing to the Company, 101 California Street, Suite 2050, San Francisco,
California 94111, Attention: Executive Committee. As of May 18, 2001, proposals
should be submitted in writing to the Company's offices which will be located at
44 Montgomery Street, Suite 4050, San Francisco, CA 94104, Attention: Executive
Committee. During the Transition Period, this committee did not meet. The
Executive Committee currently consists of James R. Lavelle, Anthony M. Frank, B.
Tom Green and Harvey L. Poppel. Mr. Green isn't standing for reelection to the
Board of Directors.

DIRECTOR COMPENSATION

Each director who is not an employee of the Company receives an annual
retainer fee of $20,000. Directors serving on a committee receive an annual fee
of $2,000 per committee membership, while directors serving on a committee as
chairperson receive an annual fee of $2,500 per committee chaired.

Effective January 1, 2001, the Directors voluntarily reduced their fees by
20% to help the Company during a difficult financial period. The Directors may
increase their fees back to their authorized levels at any time.

Each non-employee director receives an automatic annual option grant under
the 1998 Long-Term Incentive Plan to acquire 5,000 shares of Common Stock on the
date of each of the Company's annual meetings held after September 9, 1998. All
of such options have or will have an exercise price equal to the fair market
value of the Common Stock on the date of grant, are or will be exercisable
immediately except as limited by the rules and regulations of the Securities Act
of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and will expire ten years from the date
of grant. Directors are also reimbursed for out-of-pocket expenses incurred for
attending meetings of the Board of Directors or committees thereof, or for other
expenses incurred in their capacity as directors.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The following report of the Compensation Committee of the Board of
Directors of Cotelligent shall not be deemed incorporated by reference by any
general statement incorporating this proxy statement by reference into any
filing under the Securities Act, or under the Exchange Act, and shall not be
deemed filed under either of the Securities Act or the Exchange Act except to
the extent that Cotelligent specifically incorporates this information by
reference.

Overview

The key components of executive officer compensation are salary, bonus and
equity-based awards.

The members of the Compensation Committee hold primary responsibility for
determining executive officer compensation levels, subject to the terms of
executive employment agreements. The Compensation Committee is composed
entirely of independent outside directors of Cotelligent, none of whom are or
have been officers or employees of Cotelligent. The Compensation Committee has
adopted a compensation philosophy intended to align compensation with
Cotelligent's overall business strategy. The philosophy guiding the executive
compensation program is designed to link executive compensation and stockholder
value. The goals of the program are to:

. Compensate executive employees in a manner that aligns the employees'
interests with the interests of the stockholders;

. Encourage continuation of Cotelligent's entrepreneurial spirit;

. Reward executives for successful long-term strategic management;

. Recognize outstanding performance; and

. Attract and retain highly qualified and motivated executives.

The Compensation Committee believes that Cotelligent's executive
compensation program should consist primarily of base salaries, performance
bonuses and equity-based awards. The Compensation Committee has structured these
compensation elements to motivate and reward executive management for
performance that builds long-term shareholder value. In particular, base
salaries and discretionary bonuses have been designed to give Cotelligent's
executives the potential to earn in excess of competitive industry compensation
if certain subjective and objective operating and performance goals for
Cotelligent are achieved. Moreover, the Compensation Committee will continue
granting Cotelligent's executives and other key employees stock options and/or
other equity-based awards at current market value. Such options have no monetary
value to the executives unless and until the market price of Cotelligent's
Common Stock increases. In this manner, Cotelligent's executives will be
compensated as stockholder value increases. The Compensation Committee
anticipates that discretionary bonus payments and option grants made during the
Transition Period and thereafter were and will be based on multiple subjective
and objective measurements and criteria linked to building long-term stockholder
value.

The cash compensation paid to Cotelligent's executive officers during the
Transition Period was in accordance with arms-length negotiations between
Cotelligent and such executive officers. Stock option grants were based on
arms-length negotiations with the respective grantees and were approved by the
Compensation Committee.

Chief Executive Officer's Compensation

Mr. James R. Lavelle, the Company's Chairman and Chief Executive Officer,
is a party to a three-year employment agreement which was negotiated at arms-
length and became effective on January 5, 2000. This employment agreement
supercedes prior employment agreements that the Company had entered into with
Mr. Lavelle. Mr. Lavelle's employment agreement provides for a minimum base
salary of $450,000 (subject to increase by the Compensation Committee) and the
right to receive annually discretionary incentive bonuses

provided by the Compensation Committee and to receive stock option grants at the
discretion of the Compensation Committee. Mr. Lavelle may also participate in
Cotelligent's Long-Range Incentive Bonus Plan.

Mr. Lavelle was eligible for, but did not receive, a bonus during the
Transition Period of up to 100% of his base salary based upon the achievement of
performance objectives measured by certain quantitative and qualitative
criteria. Quantitative criteria consisted of: the stock price performance; the
earnings per share for the fiscal year; the operating profits for the fiscal
year; the market capitalization of the Company; and the number of stock analysts
covering the Company. Qualitative criteria consisted of: the progress of the
Company's branding program; Company restructuring; the integration of acquired
companies; management of executive personnel; and investor relations.

This report is submitted by the members of the Compensation Committee.

Compensation Committee

Edward E. Faber
Anthony M. Frank

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

All of the members of the Compensation Committee are non-employee Directors
of the Company and are not former officers of the Company or its subsidiaries.
No executive officer of the Company serves as a member of the board of directors
or on the compensation committee of a corporation for which any of the Company's
Directors serving on the Compensation Committee or on the Board of Directors of
the Company is an executive officer.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth certain information regarding the
compensation earned by or awarded to the Chief Executive Officer and remaining
executive officers of the Company for the twelve month period ended December 31,
2000, and each of the fiscal years ended March 31, 2000 and 1999.

SUMMARY COMPENSATION TABLE

Long Term
Compensation
Annual Compensation Awards
--------------------------------------------------------------------------------
Fiscal Options/
Name and Principal Position Year Salary($) (5) Bonus($) Other($) SARs(#)
-----------------------------------------------------------------------------------------------------------------------

James R. Lavelle.................. 2000(1) 450,000 0 18,000(6) 0
Chairman and Chief Executive 2000 450,000 0 18,000(6) 0
Officer 1999 350,000 0 12,000(6) 200,000

Daniel E. Jackson................. 2000(1) 375,000 0 18,000(6) 0
President and Chief Operating 5,470(7)
Officer 2000 368,750 0 18,000(6) 0
5,470(7)
1999 491,430 0 10,500(6) 150,000
8,443(7)

Curtis J. Parker.................. 2000(1) 175,000 100,000 0 25,000
Executive Vice President, Chief 2000 160,000 0 0 0
Financial Officer, Treasurer 1999 125,000 0 0 5,000
and Assistant Secretary (2)

Jeffrey B. Van Horn............... 2000(1) 136,561 0 0 200,000
Former Executive Vice President,
Chief Financial Officer and
Treasurer (3)

Lorraine E. Vega.................. 2000(1) 124,661 100,000 0 25,000
Former Vice President, General 2000 160,000 0 0 0
Counsel and Secretary (4) 1999 139,167 0 0 7,500

(1) Accordingly, for each of the following persons identified, compensation for
the period January 1, 2000 - March 31, 2000 is included in the twelve
months ended December 31, 2000 and the fiscal year ended March 31, 2000:
James R. Lavelle - $112,500, Daniel E. Jackson - $93,750, Curtis J. Parker
- $40,000, Lorraine E. Vega - $40,000.

(2) Mr. Parker became Executive Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary on December 20, 2000.

(3) Mr. Van Horn resigned as Executive Vice President, Chief Financial Officer
and Treasurer on December 20, 2000. Prior to his resignation as Executive
Vice President, Chief Financial Officer and Treasurer in December 2000,
Jeffrey B. Van Horn received an annual base salary of $325,000.

(4) Ms. Vega resigned as Vice President, General Counsel and Secretary on July
31, 2000. Prior to her resignation as Vice President, General Counsel and
Secretary, on July 31, 2000, Ms. Vega received an annual base salary of
$200,000.

(5) Base salary and commissions earned. Effective January 1, 2001, Mr. Lavelle
and Mr. Jackson each voluntarily took a 20% reduction in base salary to
$360,000 and $300,000, respectively, to help the Company during a difficult
financial period. Mr. Lavelle and Mr. Jackson may each increase their
respective base salary back to its authorized level at any time.

(6) Represents payments made as an automobile allowance.

(7) Imputed interest on below market loans. See "Certain Transactions."

Stock Option Grants Table

The following table sets forth, as to the executive officers named in the
Summary Compensation Table, information related to the grant of stock options
pursuant to the Company's 1998 Long-Term Incentive Plan during the Transition
Period.

OPTIONS GRANTED IN THE TRANSITION PERIOD

Individual Grants
-----------------------------------------------------------------
Number of Percentage of Exercise or Potential Realizable
Securities Total Options Base Price Value At Assumed
Underlying Granted to Per Share Annual Rates of Stock
Name Options Employees in the ($/Share)(3) Price Appreciation For
Granted Transition Period Option Term ($) (4)
----------------------------------------------------------------------------------------------------------------------

5% 10%
-------- -------
James R. Lavelle 0 0% 0 0 0
Daniel E. Jackson 0 0% 0 0 0
Curtis J. Parker 25,000 1.7% 4.81 75,625 191,648
Jeffrey B. Van Horn (1) 200,000 13.6% 4.56 573,552 1,453,493
Lorraine E. Vega (2) 25,000 1.7% 4.81 75,625 191,648

(1) Mr. Van Horn resigned as Executive Vice President, Chief Financial Officer
and Treasurer on December 20, 2000.

(2) Ms. Vega resigned as Vice President, General Counsel and Secretary on July
31, 2000.

(3) The exercise price per share for all options granted is equal to the market
price of the underlying Common Stock as of the date of grant.

(4) The potential realizable value has been determined using market price on
the date the options were granted, compounded annually over seven years,
net of exercise price. These values have been determined based upon
assumed rates of appreciation and are not intended to forecast the future
value or trading prices of the Company's Common Stock. There can be no
assurance that the amounts reflected in this table will be achieved.

Stock Option Exercises and Year End Values Table

The following table shows, as to the executive officers named in the Summary
Compensation Table, information with respect to the unexercised options to
purchase Common Stock granted under the 1995 and 1998 Long-Term Incentive Plans
and held as of the Transition Period.

VALUE OF OPTIONS AT DECEMBER 31, 2000

Number of Number of Securities
Shares Value Underlying Unexercised Value of Unexercised
Acquired Realized Options Held In-the-Money Options
On Exercise ($) at December 31, 2000 at December 31, 2000 ($) (1)
----------------------------------------------------------------------------------------

Name Exercisable Unexercisable Exercisable Unexercisable
-------------------------------------- ---------------------------------------------------------

James R. Lavelle 0 0 333,334 66,666 0 0
Daniel E. Jackson 0 0 200,000 50,000 0 0
Curtis J. Parker 0 0 44,375 28,125 0 0
Jeffrey B. Van Horn (2) 0 0 50,000 50,000 0 0
Lorraine E. Vega(3) 0 0 0 0 0 0

(1) Options are "in-the-money" if the closing market price of the Company's
Common Stock exceeds the exercise price of the options. The value of the
unexercised options represents the difference between the exercise price of
such options and the closing market price ($0.94) of the Company's Common
Stock on the New York Stock Exchange on December 31, 2000.
(2) Mr. Van Horn resigned as Executive Vice President, Chief Financial Officer
and Treasurer on December 20, 2000.
(3) Ms. Vega resigned as Vice President, General Counsel and Secretary on July
31, 2000.

EMPLOYMENT AGREEMENTS; COVENANTS-NOT-TO-COMPETE

Effective January 5, 2000, the Company entered into a new employment agreement
with Mr. James R. Lavelle, Cotelligent's Chairman and Chief Executive Officer.
The employment agreement for Mr. Lavelle is for a term of three years and,
unless terminated or not renewed by him, continues thereafter on a year-to-year
basis on the same terms and conditions. Mr. Lavelle's employment agreement
provides that, in the event of termination of employment by the Company without
cause, he shall be entitled to receive from the Company an amount equal to (i)
three times his most recent base annual salary plus (ii) three times his most
recent annual bonus (not including any payments made under Cotelligent's Long-
Range Bonus Incentive Plan), without regard to whether he obtains subsequent
employment. His employment agreements provides that, in the event of a change in
control of the Company where he has not received at least five days notice of
such change in control, he will be deemed to have been terminated without cause
and shall be entitled to compensation as respectively described in the preceding
sentence. Additionally, in such event he will not be bound by any non-compete
terms in his employment agreement, as discussed below. If given at least five
days notice of such change in control, he may elect to terminate his employment
agreement and collect the respective compensation provided above.

Effective January 25, 2000, the Company entered into a new employment
agreement with Mr. Daniel E. Jackson, Cotelligent's President and Chief
Operating Officer. The employment agreement is for a term of two years and,
unless terminated or not renewed by him, continues thereafter on a year-to-year
basis on the same terms and conditions. Mr. Jackson's employment agreement
provides that, in the event of termination of employment by the Company without
cause, he shall be entitled to receive from the Company an amount equal to (i)
two times his most recent base annual salary plus (ii) two times his most recent
annual bonus (not including any payments made under Cotelligent's Long-Range
Bonus Incentive Plan), without regard to whether he obtains subsequent
employment. His employment agreements provides that, in the event of a change in
control of the Company where he has not received at least five days notice of
such change in control, he will be deemed to have been terminated without cause
and shall be entitled to compensation as respectively described in the preceding
sentence. Additionally, in such event he will not be bound by any

non-compete terms in his employment agreement, as discussed below. If given at
least five days notice of such change in control, he may elect to terminate his
employment agreement and collect the respective compensation provided above.

In the event of a change in control, Mr. Lavelle and Mr. Jackson are entitled
to reimbursement for any excise taxes the employee incurs under Section 4999 of
the Internal Revenue Code, as well as any interest or penalties related to the
excise tax and any entitlements outside of the employment agreement that are
described in Section 280G(b)(2)(A)(i) of the Internal Revenue Code. In the
employment agreements of both, a "change in control" is deemed to occur if: (1)
any person or entity, other than the Company, a corporation owned directly or
indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of the common stock of the Company, or an
employee benefit plan of Company or a subsidiary of Company, acquires directly
or indirectly Beneficial Ownership (as defined in Rule 13d-3 of the Exchange
Act) of any voting security of the Company and immediately after such
acquisition such person or entity is, directly or indirectly, the Beneficial
Owner of voting securities representing 30% or more of the total voting power of
all of the then-outstanding voting securities of the Company; (2) a change in
the composition of the individuals on the Board of Directors as a result of
which fewer than one-half of the incumbent directors are directors who either
(a) had been directors of Company on the date 24 months prior to the date of the
event that constitutes a change in control (the "original directors") or (b)
were elected, or nominated with the affirmative votes of at least a majority of
the aggregate of the original directors who were still in office at the time of
the election or nomination and the directors whose election or nomination was
previously so approved; (3) the consummation of a merger or consolidation of
Company with or into another entity or any other corporate reorganization, if
more than 50% of the combined voting power of the continuing or surviving
entity's securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who were not stockholders of Company
immediately prior to such merger, consolidation or other reorganization; or (4)
the sale, transfer or other disposition of all or substantially all of the
Company's assets.

The employment agreements of Mr. Lavelle and Mr. Jackson contain a covenant-
not-to-compete with the Company for a period of two years immediately following
the termination of employment; or, in the case of a termination without cause,
for a period of one year following the termination of his employment; or, in the
case of a change in control in which the employee is not given at least five
days notice of such change in control, the covenant not-to-compete does not
apply for any period of time. If any court of competent jurisdiction determines
that the scope, time or territorial restrictions contained in the covenant are
unreasonable, the covenant-not-to-compete shall be reduced to the maximum period
permitted by such court. The compensation to which such employee is entitled
shall nonetheless be paid to the employee.

Annual base salary paid to Mr. Lavelle for the period from April 1, 2000
through December 31, 2000 was $450,000. For the Transition Period, he was
eligible for, but did not receive, a bonus. In the year 2001, he is eligible to
receive a bonus based upon achieving certain performance objectives and upon the
operating results of the Company, which objectives and results are established
by the Compensation Committee. Pursuant to the Long-Range Bonus Incentive Plan,
Mr. Lavelle is eligible for bonuses in fiscal years 2003 and 2006 based upon the
operating results of the Company.

Effective January 1, 2001, Mr. Lavelle voluntarily took a 20% reduction in
base salary to $360,000 to help the Company during a difficult financial period.
Mr. Lavelle may increase his base salary back to its authorized level at any
time.

Annual base salary paid to Daniel E. Jackson for the transition period was
$375,000. For the fiscal year 2000, he was eligible for, but did not receive, a
bonus. In the fiscal year 2001, he is eligible to receive a bonus based upon
achieving certain performance objectives and upon the operating results of the
Company, which objectives and results are established by the Compensation
Committee. Pursuant to the Long-Range Bonus Incentive Plan, Mr. Jackson is
eligible for bonuses in fiscal years 2003 and 2006 based upon the operating
results of the Company.

Effective January 1, 2001, Mr. Jackson voluntarily took a 20% reduction in
base salary to $300,000 to temporarily help the Company during a difficult
financial period. Mr. Jackson may increase his base salary back to its
authorized level at any time.

Mr. Curtis J. Parker executed a Change of Control Agreement with the Company
in January 2000. Other than the Change of Control Agreement, the Company has
not entered into a written employment agreement with him. The Change of Control
Agreement provides that in the event of a change in control of the Company where
the employee has not received written notice at least five days prior to the
anticipated closing date of the transaction giving rise to the change in control
from the successor that such successor is willing and able to confirm continued
employment of the employee, or where the successor notifies the employee that
they will be deemed or their duties will be significantly limited and the
employee notifies the successor that he does not accent such changes in duties,
said person shall receive a lump sum payment equal to the amount of their then
annual base salary, and all options then unvested to the employee shall vest.

In the event of a change in control, Mr. Parker is entitled to reimbursement
for any excise taxes the employee incurs under Section 4999 of the Internal
Revenue Code. In the employment agreement, a "change of control" is deemed to
occur if: (1) any person or entity, other than the Company, a corporation owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of the common stock of the Company, or any
employee benefit plan of Company or a subsidiary of Company, acquires directly
or indirectly Beneficial ownership (as defined in Rule 13d-3 of the Exchange
Act) of any voting security of the Company and immediately after such
acquisition such person or entity is, directly or indirectly the Beneficial
Owner of voting securities representing 50% or more of the total voting power of
all the then-outstanding voting securities of the Company: (2) the individuals
(a) who, as of the effective date of the Company's registration statement with
respect to its initial public offering, constitute the Board (the "Original
Directors"), or (b) who thereafter are elected to the Board and whose election,
or nomination for election, to the Board was approved by a vote of at least two-
thirds (2/3) of the Original Directors then still in office (such Directors
becoming "Additional Original Directors" immediately following their election)
or (c) who are elected to the Board and whose election, or nomination to
election, the Board has approved by a vote of at least two-thirds (2/3) of the
Original Directors and Additional Original Directors then still in office (such
directors also becoming "Additional Original Directors" immediately following
their election) (such individuals being the "Continuing Directors"), cease for
any reason to constitute a majority of the members of the Board: (3) the
stockholders of the Company approve a merger, consolidation, recapitalization,
or reorganization of the Company, a reverse stock split of outstanding voting
securities, or if any transaction is consummated and stockholder approval is
not sought or obtained, other than any such transaction which would result in at
least 75% of the total voting power represented by the voting securities of the
surviving entity outstanding immediately after such transaction being
Beneficially Owned by at least 75% of the holders of outstanding voting
securities of the Company immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such continuing holders
not substantially altered in the transaction; or (4) the liquidation of the
Company or sale, transfer or other disposition of all or substantially all of
the Company's assets.

PERFORMANCE GRAPH

The following chart compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock from March 31, 1996
through December 31, 2000, with the cumulative total return on the Russell 2000
Index and the NASDAQ Composite Index. The comparison assumes $100, as of
February 14, 1996, the date of the Company's initial public offering (the
"Offering") was invested in the Company's Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends, as applicable.
Cotelligent's Offering price of $9.00 was used as the beginning price of the
Common Stock. Dates on the following chart represent the last day of the
indicated fiscal year. Cotelligent has paid no dividends during the periods
shown.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN

[GRAPH APPEARS HERE]

-------------------------------------------------------------------------------------------------------------------------
Company/Index March 31, March 31, March 31, March 31, March 31, December 31,
1996 1997 1998 1999 2000 2000
-------------------------------------------------------------------------------------------------------------------------

Cotelligent, Inc. $130.55 $102.78 $329.17 $ 98.61 $ 64.59 $ 10.42
-------------------------------------------------------------------------------------------------------------------------
Russell 2000 Index $103.21 $106.52 $149.47 $123.65 $167.63 $150.36
-------------------------------------------------------------------------------------------------------------------------
NASDAQ Composite Index $101.23 $112.01 $168.30 $225.67 $419.26 $226.51
-------------------------------------------------------------------------------------------------------------------------

CERTAIN TRANSACTIONS

From May 1996 through early July 1996, the Company advanced to Daniel E.
Jackson, President and Chief Operating Officer, $250,000 to facilitate
relocation of his residence to Northern California. Of the amount due, there is
a remaining balance of $82,500. The remaining balance is evidenced by a demand
note. The note is non-interest bearing and the principal balance is due July
15, 2001 or upon termination of employment if prior to the due date. Since the
beginning of the 2000 fiscal year, the Company has advanced to Mr. Jackson an
aggregate amount of approximately $480,000, evidenced by five separate unsecured
demand promissory notes, three dated August 11, 1999, one dated September 30,
1999, and one dated November 23, 1999. The purpose of such advances was to cover
margin calls made on brokerage accounts held by Mr. Jackson which are secured by
shares of the Company. The August 11/th/ notes bear interest

annually at a rate of 7.75%, while the two later notes bear interest at 8% and
8.75%, respectively. On May 5, 2000, Mr. Jackson repaid $68,270 of principal and
$31,730 of interest.

On March 31, 1996, the Company advanced to James R. Lavelle, Chairman of the
Board and Chief Executive Officer of the Company, $37,902, evidenced by an
unsecured demand promissory note bearing interest annually at a rate of 6%. The
entire amount of such advance remains outstanding. Since the beginning of the
2000 fiscal year, the Company has advanced to Mr. Lavelle an aggregate amount of
$619,000, evidenced by seven separate unsecured demand promissory notes, four
dated August 11, 1999, one dated September 7, 1999, one dated October 4, 1999
and one dated October 4, 2000. The purpose of such advances was to cover margin
calls made on brokerage accounts held by Mr. Lavelle which are secured by shares
of the Company. Two of the August 11th notes bear interest annually at a rate
of 7.75%, and two bear interest annually at a rate of 8%. The September 7th and
October 4th notes each bear interest at 8.25%. On May 1, 2000, Mr. Lavelle
repaid $15,330 of principal and $34,670 of interest.

Mr. Lavelle and Mr. Jackson each held during the Transition Period a 25% share
in, and were each directors of, Lexar Capital Management, LLC, which was the
general partner of Lexar Capital Partners I ("LCP I"), a small venture capital
fund. In September 1998, LCP I became a 33% shareholder in MarketDrive
Interactive, Inc. ("MarketDrive"), an internet technology company. Messrs.
Lavelle and Jackson served as directors of MarketDrive. In January 1999,
Cotelligent USA, Inc., a wholly owned subsidiary of the Company, entered into an
agreement (the "Agreement") with MarketDrive to provide certain consulting
services to MarketDrive. The Agreement, negotiated at arms length, provided for
the provision of services at rates typical of those charged to other clients of
the Company for comparable services. In September 1999, the Company invested
$250,000 in MarketDrive, acquiring shares of MarketDrive's Class A common stock
in return. In April 2000, MarketDrive was acquired by Classified Ventures, Inc.
("Classified Ventures"), an independent company unaffiliated with Mr. Lavelle,
Mr. Jackson or the Company, and Mr. Lavelle, Mr. Jackson and the Company each
received shares in Classified Ventures, Inc. in return for their interests in
MarketDrive. The shares of Mr. Lavelle, Mr. Jackson and the Company in
Classified Ventures, taken separately or added together, are a minority interest
in Classified Ventures, unable to exert control over it.

On September 8, 1999, the stockholders approved the Cotelligent, Inc. 1999
Leveraged Stock Purchase Plan (the "LSPP") which authorizes the purchase of
shares of Common Stock by eligible employees who are selected by the
Compensation Committee of the Board (the "Committee") to participate in the LSPP
on terms and conditions determined by the Committee. Since the LSPP's inception
through March 31, 2000, Mr. Lavelle has been issued 750,000 shares of Common
Stock and Mr. Jackson has been issued 736,842 shares of Common Stock. Shares
issued under the LSPP resulted in notes receivable from Mr. Lavelle for
$2,671,875 at 5.93% interest, and from Mr. Jackson for $2,625,000 at 5.93%
interest. The total principal amount of the notes remains outstanding. The
notes (1) are secured by the pledge of Cotelligent Common Stock issued; (2) are
full recourse as to the employee, except that in the case of death, disability,
termination by the Company without cause or a change of control of the Company,
recourse against the employees is limited to the pledged stock; and (3) have a
term of five years from date of issuance, provided that if the stock is sold,
the loan shall be prepaid, and if the stock is not sold, the loan may not be
prepaid. The Common Stock issued under the LSPP is restricted from sale in the
open market for a period of two years from the date of issuance, provided,
however, that in the case of death, disability, termination by the Company
without cause or change of control of the Company, the Common Stock may be sold
and the proceeds used to repay the loan.

APPROVAL OF REVERSE SPLIT AMENDMENT
-----------------------------------

On April 24, 2001, the last reported sale price of the Common Stock on the New
York Stock Exchange (the "NYSE") was $0.73 per share.

The Company has been notified by the NYSE that it is not in compliance with
the Listing Standards relating to minimum share value, total market
capitalization and total stockholders' equity. The Listing Standards require
NYSE listed companies to maintain an average closing price for its shares,
calculated over a period of thirty (30) consecutive trading days, of at least
$1.00 per share (the "Minimum Price Condition"). The average closing price for
the Company's Common Stock over the thirty (30) trading-day period ending April
24, 2001 was approximately $0.66 per share. The Company is considering the
Reverse Stock Split, along with several other alternatives, as a means of
increasing the per share market price of the Common Stock above $1.00 and as
part of its overall business plan to comply with the Listing Standards. Because
the Board of Directors is not currently in a position to decide which of these
alternatives to undertake, the Company is asking for the authority to complete a
Reverse Stock Split when and if the Board of Directors decides that the Reverse
Stock Split is the best course of action for the Company and its stockholders to
satisfy the Minimum Price Condition.

In addition to the Minimum Price Condition, the Company is also currently not
in compliance with the total market capitalization and total stockholders'
equity components of the Listing Standards. The Listing Standards require
companies listed on the NYSE to maintain (i) a total stockholders' equity or
--
total market capitalization of at least $50 million and (ii) an average market
---
capitalization, calculated over a period of 30 consecutive trading days, of at
least $15 million. The Company's total stockholders' equity as of December 31,
2000 was approximately $45 million and the Company's average market
capitalization over the 30 trading-day period ending April 24, 2001 was
approximately $10 million. In accordance with the Listing Standards, the Company
submitted a business plan to the NYSE which describes the steps the Company is
taking to bring the Company into conformity with such Listing Standards within
the next 18 months. While the Company believes that its business plan, together
with its ongoing restructuring of operations which was previously announced,
will enable the Company to come into compliance with the Listing Standards,
there can be no assurance that the NYSE will find the business plan acceptable.
The NYSE may seek to delist the Common Stock in such a case. The Reverse Stock
Split will have no effect on the Company's compliance with the total market
capitalization and total stockholders' equity components of the Listing
Standards. In fact, the Reverse Stock Split could have an adverse affect on the
Company's total market capitalization.

On April 23, 2001, the Board of Directors authorized, subject to stockholder
approval, the Reverse Split Amendment to the Certificate of Incorporation which
will effect the Reverse Stock Split of the Common Stock, such split to combine a
number of outstanding shares of Common Stock of up to four (4) into one (1)
share of New Common Stock, depending upon a determination by the Board of
Directors that the Reverse Stock Split is advisable. In making such
determination, the Board of Directors will consider, among other things, whether
the Reverse Stock Split is an appropriate means of increasing the market price
of the Common Stock to a level sufficient to satisfy the NYSE's Listing
Standards and maintain the Company's listing on the NYSE.

Stockholders will, by voting to approve the Reverse Split Amendment, approve a
reverse stock split pursuant to which multiple shares of Common Stock will be
combined into one share of New Common Stock. The number of shares of Common
Stock to be combined into one share of New Common Stock will be a number
(including tenths of shares) up to four (4) (the "Split Ratio"), as determined
by the Board of Directors, which would result in the greatest likelihood of
increasing the market price of the Company's Common Stock to a level sufficient
to satisfy the Listing Standards, among other effects. THERE CAN BE NO ASSURANCE
THAT ANY OF THE INTENDED EFFECTS OF THE REVERSE STOCK SPLIT WILL OCCUR. By
approving the Reverse Split Amendment, stockholders will approve an amendment to
the Certificate of Incorporation effecting a Split Ratio, and authorize the
Board of Directors to select, in its discretion, a Split Ratio (as so-selected,
the "Selected Split Ratio") within such range and file an amendment to the
Certificate of Incorporation effecting such Selected Split Ratio. The Reverse
Split Amendment filed with the Secretary of State of the State of Delaware will
contain the Selected Split Ratio.

If approved by the stockholders, the Reverse Stock Split would become
effective as of 5:00 p.m., New York City time, on the date of filing the Reverse
Split Amendment with the Secretary of State of the State of Delaware (the
"Effective Time"). The Company believes that the discretion granted to the Board
of Directors by the Reverse Split Amendment is in compliance with the Delaware
General Corporation Law. Nevertheless, the Company has not received a written
opinion of counsel to this effect and there can be no assurance that the Reverse
Split Amendment is in compliance with the Delaware General Corporation Law.

The complete text of the Reverse Split Amendment is set forth in Exhibit A to
this Proxy Statement.

Reasons for the Reverse Split Amendment

The trading market for the Common Stock is currently the New York Stock
Exchange. One of the requirements for continued listing on the New York Stock
Exchange is the Minimum Price Condition. The Company has been notified by the
NYSE that it is not in compliance with the Listing Standards relating to, among
other things, the Minimum Price Condition. In accordance with the Listing
Standards, the Company is required to satisfy the Minimum Price Condition by
August 28, 2001. The NYSE may delist the Common Stock if the Company fails to
satisfy the Minimum Price Condition by such date. Even if the Company is able to
satisfy the Minimum Price Condition by August 28, 2001, there can be no
assurance that the Common Stock would not be delisted as a result of the
Company's failure to maintain other components of the Listing Standards, such as
total stockholders' equity and total market capitalization (which, as discussed
above, the Company is currently not in compliance with).

If the Common Stock is delisted from the NYSE, the Company will seek to find
another public market, such as on the American Stock Exchange or on the Nasdaq
SmallCap Market, for the Common Stock. There can be no assurance, however, that
the Company will be able to list the Common Stock on another stock exchange or
through Nasdaq if the Common Stock is delisted from the NYSE. In either event,
delisting of the Common Stock from the NYSE may have a material adverse effect
on the ability of the Company to finance its operations in the future and on the
liquidity of the Common Stock.

The Board of Directors believes that the delisting of the Common Stock from
the New York Stock Exchange would have a negative impact on the liquidity of the
Common Stock while the Company believes that the increased share price expected
to result from the Reverse Stock Split could enable the Company to meet the
Minimum Price Condition, there can be no assurance that the Reverse Stock Split
will have such an effect or that, even with the Reverse Stock Split, the Company
will be able to maintain the listing of the New Common Stock on the New York
Stock Exchange.

In addition, there can be no assurance that the market price of the New Common
Stock immediately after implementation of the Reverse Stock Split will be
maintained for any period of time, that such market price will approximate any
particular multiple of the market price of the Common Stock before the Reverse
Stock Split, or that such market price will exceed or remain in excess of the
current market price of the Common Stock.

If the Board of Directors effects the Reverse Stock Split after receiving
stockholder approval, the total number of shares of Common Stock held by each
stockholder would be converted automatically into a right to receive a number of
shares of New Common Stock of the Company equal to the number of shares of
Common Stock owned immediately prior to the Reverse Stock Split divided by a
number up to four (4), as determined by the Board of Directors.

The number of shares of Common Stock issuable upon exercise or conversion of
all outstanding options, warrants, rights, and convertible securities would be
reduced by a factor equal to the Selected Split Ratio, automatically, at the
Effective Time. The Reverse Stock Split would also increase the exercise price
of such options and warrants by a factor of up to four (4), depending on the
Selected Split Ratio. At April 24, 2001, there were 228 holders of record of the
Company's Common Stock. The Company believes that there are more than 1,200
beneficial holders of the Company's Common Stock. The Reverse Stock Split would
not affect any stockholder's proportionate equity interest in the Company except
for minor differences resulting

from fractional shares. None of the rights currently accruing to holders of
Common Stock, or options or warrants to purchase Common Stock, will be affected
by the Reverse Stock Split.

The Reverse Stock Split would have no effect on the number of authorized
shares of Common Stock or the par value of the stock. The shares of New Common
Stock will be fully paid and non-assessable. The voting and other rights that
currently characterize the Common Stock will not be changed by the Reverse Stock
Split. The Reverse Stock Split will not result in any change in the business,
management, assets, liabilities or net worth of the Company.

The Reverse Stock Split will result in some stockholders holding odd lots of
the New Common Stock (blocks of less than 100 shares). Because broker/dealers
typically charge a higher commission to complete trades in odd lots of
securities, the transaction costs involved in selling the New Common Stock may
increase for those stockholders who will hold odd lots after the Reverse Stock
Split.

The Reverse Stock Split may be abandoned by the Board of Directors at any time
before, during or after the Annual Meeting and prior to the Effective Time,
whether or not the Company is otherwise in compliance with the Listing Standards
of the New York Stock Exchange.

Effective Time

If approved by the stockholders and determined by the Board of Directors to be
in the best interests of the Company and its stockholders, the Reverse Stock
Split would become effective as of the Effective Time. Without any further
action on the part of the Company or the stockholders, the shares of Common
Stock held by stockholders of record as of the Effective Time would be converted
at the Effective Time into the right to receive a number of shares of New Common
Stock equal to the number of their shares of Common Stock divided by a number of
up to four (4), as determined by the Board of Directors.

Exchange of Stock Certificates

If the Reverse Stock Split is effected by the Board of Directors, as soon as
practicable after the Effective Time, the Company will send a letter of
transmittal to each stockholder of record at the Effective Time for use in
transmitting certificates representing shares of Common Stock ("old
certificates") to the Company's transfer agent (the "Exchange Agent"). The
letter of transmittal will contain instructions for the surrender of old
certificates to the Exchange Agent in exchange for certificates representing the
appropriate number of whole shares of New Common Stock. No new certificates will
be issued to a stockholder until such stockholder has surrendered all old
certificates, together with a properly completed and executed letter of
transmittal, to the Exchange Agent.

Upon proper completion and execution of the letter of transmittal and return
thereof to the Exchange Agent, together with all old certificates, stockholders
of record will receive a new certificate or certificates representing the number
of whole shares of New Common Stock into which their shares of Common Stock
represented by the old certificates have been converted as a result of the
Reverse Stock Split. Until surrendered, outstanding old certificates held by
stockholders will be deemed for all purposes to represent the number of whole
shares of New Common Stock to which such stockholders are entitled as a result
of the Reverse Stock Split. Stockholders should not send their old certificates
to the Exchange Agent until they have received the letter of transmittal. Shares
not presented for surrender as soon as is practicable after the letter of
transmittal is sent shall be exchanged at the first time they are presented for
transfer.

The Company will not issue any fractional shares. Any fractional share which
a stockholder is entitled to receive as a result of the Reverse Stock Split will
be paid to such stockholder in cash.

No service charges will be payable by stockholders in connection with the
exchange of certificates, all expenses of which will be borne by the Company.

Effect of Reverse Stock Split

If the Reverse Stock Split is effected by the Company's Board of Directors,
the result will be that each stockholder of the Company who owns shares of
Common Stock will receive one share of New Common Stock in exchange for a number
of shares of Common Stock of up to four (4), as determined by the Board of
Directors.

Dissenting stockholders have no appraisal rights under Delaware law or under
the Company's Certificate of Incorporation or Bylaws in connection with the
Reverse Stock Split.

Vote Required

In order to approve the Reverse Split Amendment, a majority of the outstanding
shares of Common Stock must be voted in favor of such approval.

The Board of Directors recommends that you vote FOR the Reverse Split Amendment.

SELECTION OF ARTHUR ANDERSEN LLP AS CERTIFIED PUBLIC ACCOUNTANTS

On September 6, 2000, the shareholders of the Company approved the appointment
of Arthur Andersen LLP ("Arthur Andersen") to serve as the Company's independent
certified public accountants to audit the Company's financial statements for the
fiscal year ending March 31, 2001. In July 2000, the Company announced a change
in its fiscal year end from March 31 to December 31. Consequently, the Company's
most recent fiscal period is a nine-month transition period ending December 31,
2000. Arthur Anderson audited the Company's financial statements for the nine
month period ending December 31, 2000.

Since the appointment of Arthur Andersen, there have been no disagreements
between the Company and Arthur Andersen regarding any matter of accounting
principles or practices, financial statement disclosure or auditing scope and
procedure which, if not resolved to the satisfaction of Arthur Andersen, would
have caused Arthur Andersen to make reference to the subject matter of the
disagreement in connection with its report.

Representatives of Arthur Andersen are expected to be present at the Annual
Meeting, with the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.

The affirmative vote of a majority of the Common Stock of the Company present,
in person or by proxy, and entitled to vote at the meeting is required for the
approval of the selection of Arthur Andersen as the Company's independent
certified public accountants.

The Board of Directors recommends that the stockholders of the Company approve
the selection of Arthur Andersen LLP as the Company's independent certified
public accountants for the fiscal year end December 31, 2001.

COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission (the "SEC"). Such persons are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by the Company
with respect to the Transition Period, or written representations from certain
reporting persons, to the best of the Company's knowledge, with the exception of
the acquisition of 10,000 shares by Mr. Anthony M. Frank on November 17, 2000,
as reported as delinquent on Form 5 dated February 14, 2000, all forms were
filed on a timely basis.

STOCKHOLDER PROPOSALS

Stockholders who intend to present proposals at the 2002 Annual Meeting under
SEC Rule 14a-8 must insure that such proposals are received by the Secretary of
the Company not later than December 31, 2001. Such proposals must meet the
requirements of the SEC to be eligible for inclusion in the Company's 2002 proxy
materials. In order for a proposal submitted outside of Rule 14a-8 to be
considered "timely" within the meaning of SEC Rule 14a-4 (c), such proposal must
be received prior to March 16, 2002.

GENERAL

Management does not intend to bring any business before the meeting other than
the matters referred to in the accompanying notice. If, however, any other
matters properly come before the meeting, it is intended that the persons named
in the accompanying proxy will vote pursuant to the proxy in accordance with
their best judgment on such matters.

A copy of the Company's most recent Annual Report on Form 10-K will be made
available without charge upon written request to: Cotelligent, Inc., 101
California Street, Suite 2050, San Francisco, California 94111, Attention:
Investor Relations Administrator. As of May 18, 2001, written requests should be
sent to the Company's new principle executive offices which will be located at
44 Montgomery Street, Suite 4050, San Francisco, CA 94104, Attention: Investor
Relations Administrator.

OTHER INFORMATION

The cost of solicitation of Proxies will be borne by the Company. Proxy cards
and materials will also be distributed to beneficial owners of Common Stock
through brokers, custodians, nominees and other like parties, and the Company
expects to reimburse such parties for their charges and expenses.

Curtis J. Parker
Executive Vice President, Chief Financial Officer, Treasurer & Assistant
Secretary

San Francisco, California
April 30, 2001

EXHIBIT A

PROPOSED AMENDMENT TO ARTICLE FOUR OF THE COMPANY'S
CERTIFICATE OF INCORPORATION
TO EFFECT THE REVERSE STOCK SPLIT

Paragraph (b) set forth in the following resolutions would be added to Article
Four of the Company's Certificate of Incorporation to effect the Reverse Stock
Split. Such paragraph would become effective only upon affirmative action by the
Board of Directors of the Company, setting the Selected Split Ratio at up to
one-for-four. The Board of Directors has the authority to determine not to make
such paragraph effective.

RESOLVED, that the Board of Directors hereby declares it advisable and in the
best interests of the Corporation and its stockholders that Article Four of the
Certificate of Incorporation of the Corporation be amended (the "Amendment") to
reclassify the existing provisions of Article Four as paragraph (a) thereof and
to add a new paragraph (b), which shall read as follows:

"(b) Effective as of 5:00 p.m., New York City time, on the date of filing
with the Secretary of State of the State of Delaware of a Certificate of
Amendment to the Certificate of Incorporation of this Corporation adding this
paragraph (b) to this Article Four (the "Effective Time"), each [] shares of
authorized Common Stock, par value $.01 per share, issued and outstanding
immediately prior to the Effective Time ("Old Common Stock") shall
automatically be combined into one (1) validly issued, fully paid and
nonassessable share of Common Stock, par value $.01 per share ("New Common
Stock"). Each holder of record immediately prior to the Effective Time of
shares of Old Common Stock shall at the Effective Time become the holder of
record of the number of whole shares of New Common Stock and fractional
shares, if any, as shall result from this reclassification and change. Each
such holder of record shall be entitled to receive, upon surrender at the
office of the transfer agent of this Corporation of the certificate or
certificates theretofore representing shares of Old Common Stock in such form
and accompanied by such documents, if any, as may be prescribed by the
transfer agent of this Corporation, (i) a new certificate or certificates
representing the number of whole shares of New Common Stock of which such
holder is the holder of record and (ii) with respect to fractional shares to
which such holder is entitled, if any, cash in an amount based on the average
closing price per share for the Old Common Stock on the New York Stock
Exchange for the ten most recent trading days ending on the third day prior to
the Effective Time, after giving effect to the provisions of this paragraph
(b) of this Article Four"

; and further

RESOLVED, that any time prior to the effectiveness of the foregoing amendment,
without further action by the stockholders, the Board of Directors may abandon
such amendment, or any part thereof authorizing a combination of shares of
Common Stock on a basis which the Board of Directors determines is not in the
best interests of the Corporation or its stockholders.

The certificate of amendment filed with the Secretary of State of the State of
Delaware will include the Split Ratio selected by the Board of Directors, in its
discretion. In accordance with these resolutions, the Board of Directors will
not implement any amendment providing for a Split Ratio other than the Selected
Split Ratio.

______________________________________
. By approving this proposal, stockholders will approve amendments combining any
number (including tenths) of shares of common stock up to and including four
(4) into one (1) share.

DETACH HERE

PROXY

COTELLIGENT, INC.

101 CALIFORNIA STREET, SUITE 2060
SAN FRANCISCO, CALIFORNIA 94111

This Proxy is solicited on behalf of the Board of Directors of Cotelligent,
Inc., a Delaware corporation (the "Company" or "Cotelligent") for use only at
the 2001 Annual Meeting of Stockholders (the "Annual Meeting") to be held at the
Hyatt Regency, San Francisco, 5 Embarcadero Center, California on the 12th day
of June, 2001 at 9.00 a.m. Pacific Daylight Time, and at any adjournments
thereof. The approximate date on which this Proxy and accompanying Proxy
Statement will first be given or sent to stockholders is April 30, 2001.

---------------- ----------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
---------------- ----------------

-------------------------- ---------------------------
Vote by Telephone Vote by Internet
-------------------------- ---------------------------

It's fast, convenient, and immediate! It's fast, convenient, and your vote
Call Toll-Free on a Touch-Tone Phone is immediately confirmed and posted
1-877-PRX-VOTE (1-877-779-8683)

----------------------------------------- -------------------------------------

Follow these four easy steps: Follow these four easy steps:

1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement/Prospectus and Proxy Card. Statement/Prospectus and Proxy
Card.

2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). For http://www.@proxyvote.com/cgz
shareholders residing outside the
United States call collect on a 3. Enter your 14-digit voter
touch-tone phone 1-201-536-8073. Control Number located on your
Proxy Card above your name.

3. Enter your 14-digit Voter Control 4. Follow the instructions
Number located on your Proxy Card provided.
above your name.

4. Follow the recorded instructions.
----------------------------------------- -------------------------------------
Your vote is important Your vote is important
Call 1-877-PRX-VOTE anytime Go to http://www.@proxyvote.com
/cgz anytime

Do not return your Proxy Card if you are voting by Telephone or Internet

DETACH HERE
ZCTLSA

----- Please mark
X votes as in
----- this example

1 To approve an amendment to the Company's
Certificate of Incorporation which will
effect a reverse stock spilt of the
Company's common stock (such spilt to
combine a number of outstanding shares FOR AGAINST ABSTAIN
of common stock of up to four (4) into 2 To approve the appointment [_] [_] [_]
one (1) share of common stock) upon a of Arthur Andersen LLP as the
determination by the Board of Directors Company's independent certified
that such a reverse stock spilt is advisable, public accountants
and authorizing the Board of Directors to
select, in its discretion, the spilt ratio
within the range specified above and file
such amendment.

FOR AGAINST ABSTAIN
[_] [_] [_]

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]

Signature _______________ Date ________ Signature ________________ Date ________