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

                  For the quarterly period ended June 30, 1997

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

      For the transition period from _______________ to ___________________

                          Commission file number 1-6081

                              COMFORCE CORPORATION
             (Exact name of registrant as specified in its charter)

              Delaware                                           36-2262248
   State or other jurisdiction                                 I.R.S. Employer
of incorporation or organization                              Identification No.

2001 Marcus Avenue Lake Success, New York                                11042
Address of principal executive offices                                  Zip Code



Registrant's telephone number, including area code:               (516) 328-7300


                                 Not Applicable
Former name, former address and former fiscal year, if changed since last report

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                                Yes X No

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.


               Class                               Outstanding at July 31, 1997
----------------------------------------           ----------------------------
Common stock, $.01 par value                                13,719,039



<PAGE>



                              COMFORCE CORPORATION


                                      INDEX


                                                                          Page
                                                                          Number
                                                                          ------
PART I     FINANCIAL INFORMATION                                            1

Item 1.    Financial Statements (Unaudited)                                 1

           Condensed Consolidated Balance Sheets
                   June 30, 1997 and December 31, 1996                      1

           Condensed Consolidated Statements of Operations
                   for the three months and six months ended
                   June 30, 1997 and June 30, 1996                          3

           Condensed Consolidated Statement of Changes in Stockholders'
                   Equity (Deficit) for the six months ended
                   June 30, 1997                                            4

           Condensed Consolidated Statements of Cash Flows
                   for the six months ended June 30, 1997
                   and June 30, 1996                                        5

           Notes to Condensed Consolidated Financial Statements             6

  Item 2.  Management's Discussion and Analysis of
                   Financial Condition and Results of Operations            11


PART II    OTHER INFORMATION

  Item 6.  Exhibits and Reports on Form 8-K                                 16



SIGNATURES                                                                  17




<PAGE>




                         PART I - FINANCIAL INFORMATION

Item 1.       Financial Statements

                      COMFORCE CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                            (Unaudited in thousands)

<TABLE>
<CAPTION>
                                                                      June 30,    December 31,
                                                                        1997          1996
                                                                       -------      -------
<S>                                                                    <C>          <C>    
                    ASSETS
Current assets:
   Cash and equivalents                                                $ 3,562      $ 3,608
   Restricted cash                                                       1,000         --
   Accounts receivable, net of allowance of doubtful accounts
     of $423 in 1997 and $213 in 1996                                   26,388       12,042
   Prepaid expenses                                                      1,160          243
   Deferred income tax                                                   2,028          278
   Deferred financing fees                                               1,762         --
   Income tax receivable                                                   889         --
   Other                                                                    20          373
                                                                       -------      -------
           Total current assets                                         36,809       16,544
                                                                       -------      -------

 Property, plant and equipment                                           1,763          890
 Less:  accumulated depreciation and amortization                          346          146
                                                                       -------      -------
                                                                         1,417          744
                                                                       -------      -------
 Other assets:
    Excess of cost over net assets acquired,  net of  accumulated
      amortization of $1,104 in 1997 and $526 in 1996                   39,034       24,756
    Other                                                                  181        1,322
                                                                       -------      -------
                                                                        39,215       26,078
                                                                       -------      -------
                           Total Assets                                $77,441      $43,366
                                                                       =======      =======
</TABLE>


The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.


                                        1

<PAGE>



                      COMFORCE CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                            (Unaudited in thousands)

<TABLE>
<CAPTION>
                                                                                     June 30,     December 31,
                                                                                       1997           1996
                                                                                     --------       --------
<S>                                                                                  <C>            <C>     
          LIABILITIES
 Current liabilities:
    Borrowings under revolving line of credit                                        $ 15,588       $  3,850
    Accounts payable                                                                    1,335          1,398
    Accrued expenses                                                                    7,507          1,961
    Payroll tax liabilities                                                             3,577            969
    Income taxes                                                                         --              354
                                                                                     --------       --------
                     Total current liabilities                                         28,007          8,532
                                                                                     --------       --------

 Deferred income tax                                                                       90             90
 Long-term debt                                                                        20,000           --
 Other liabilities                                                                        781           --
                                                                                     --------       --------
                     Total liabilities                                                 48,879          8,622
                                                                                     --------       --------

 Commitments and contingencies

        STOCKHOLDERS' EQUITY
 6% Series D convertible  preferred stock, $.01 par value; 15,000 authorized,
 7,002 issued and outstanding in 1996 
 Liquidation value of $1,000 per share ($7,002,000)                                      --                1

 5% Series F convertible  preferred  stock, $.01 par value; 10,000 shares
 authorized 500 shares issued and outstanding in
1997 and 3,250 shares issued and outstanding in 1996.  Liquidation
value of $1,000 per share ($500,000)                                                        1              1

 Common stock, $.01 par value; 100,000,000 shares authorized, 13,717,039 issued
 and outstanding in 1997 and 12,701,934 issued
 and outstanding in 1996                                                                  136            127

 Additional paid-in capital                                                            30,665         34,253
 Retained earnings (deficit) since January 1, 1996                                     (2,239)           362
                                                                                     --------       --------
 Total stockholders' equity                                                            28,563         34,744
                                                                                     --------       --------
 Total liabilities and stockholders' equity                                          $ 77,441       $ 43,366
                                                                                     ========       ========
</TABLE>

The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.


                                        2

<PAGE>

                      COMFORCE CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)


<TABLE>
<CAPTION>
                                                         Three Months Ended June 30,    Six Months Ended June 30,
                                                         ---------------------------    -------------------------
                                                             1997           1996           1997           1996
                                                           --------       --------       --------       --------
<S>                                                        <C>            <C>            <C>            <C>     
Net Sales                                                  $ 55,669       $  9,893       $ 91,477       $ 13,158
                                                           --------       --------       --------       --------

Costs and expenses:
       Cost of goods sold                                    48,666          8,424         79,751         11,002
       Selling, general and administrative                    4,278            731          7,339          1,173
       Depreciation and amortization                            461            151            802            228
                                                           --------       --------       --------       --------
                                                             53,405          9,306         87,892         12,403
                                                           --------       --------       --------       --------
Operating income (loss)                                       2,264            587          3,585            755
                                                           --------       --------       --------       --------

Interest expense:
       Bridge financing costs                                (4,385)          --           (5,822)          --
       Other interest, net of interest income                  (747)           (50)        (1,019)           (51)
       Other income                                            --               13            344             16
                                                           --------       --------       --------       --------
                                                             (5,132)           (37)        (6,497)           (55)
                                                           --------       --------       --------       --------

Earnings (loss) before income taxes                          (2,868)           550         (2,912)           720
Credit (provision) for income taxes                           1,095           (198)         1,037           (268)
                                                           --------       --------       --------       --------
Net income (loss)                                            (1,773)           352         (1,875)           452

Dividends on preferred stock                                    592           --              726           --
                                                           --------       --------       --------       --------
       Income (loss) available to common stockholders        (2,365)           352         (2,601)      $    452
                                                           ========       ========       ========       ========

Earnings (loss) per share                                  ($  0.18)      $   0.03       ($  0.20)      $   0.03
                                                           ========       --------       --------       --------
         Net earnings (loss)                               ($  0.18)      $   0.03       ($  0.20)      $   0.03
                                                           ========       --------       ========       ========

Weighted average number of shares of common stock and
      common stock equivalents outstanding                   13,280         13,291         13,050         13,819
                                                           ========       ========       ========       ========
</TABLE>


The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.


                                        3

<PAGE>



                      COMFORCE CORPORATION AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENT OF CHANGES
                             IN STOCKHOLDERS' EQUITY
                 (Unaudited in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                                             Retained
                                                              Series D               Series F                Earnings
                                      Common Stock         Preferred Stock       Preferred Stock             (Deficit)     Total
                                 ---------------------    ------------------    ----------------  Additional   Since   Stockholders'
                                                                                                   Paid-in   January 1,    Equity
                                    Shares     Dollars    Shares    Dollars     Shares   Dollars   Capital     1996      (Deficit)
                                    ------     -------    ------    -------     ------   -------   -------     ----      ---------
<S>                              <C>             <C>       <C>           <C>    <C>           <C>  <C>       <C>         <C>    
Balance at December 31, 1996     12,701,934      $127       7,002        $1      3,250        $1   $34,253      $362     $34,744
  Exercise of stock options         122,000         1        --        --         --        --         139      --           140
  Exercise of stock warrants         40,000      --          --        --         --        --         121      --           121
  Redemption of Series F               --        --          --
  preferred stock                      --        --          --        --       (2,750)     --      (3,162)     --        (3,162)
  Conversion of Series D        
   preferred stock                  583,500         6      (7,002)       (1)      --        --          (5)     --          --
  Issuance of common stock      
   as inducement to effect      
   Series D conversion               87,750         1        --        --         --        --         492      (493)       --
  SEC Registration fees                --        --          --        --         --        --        (388)     --          (388)
  Issuance of warrants in              --        --
   connection with debt                --        --
   placement                           --        --          --        --         --        --       1,004      --         1,004
  Issuance of common stock             --        --          --        --
   in connection with payment          --        --          --        --
   right                            385,591         4        --        --         --        --          (4)     --          --
                                
  Issuance of common stock as          --        --          --        --         --        --        --        --          --
   consideration for interest          --        --          --        --         --        --
   owed on debt                     118,145         1        --        --         --        --         632      --           633
  Redemption of common stock       (321,867)       (4)       --        --         --        --      (2,417)     --        (2,421)
  Redemption of partial shares          (14)     --          --        --         --        --        --        --          --
  of common stock               
  Net earnings                         --        --          --        --         --        --        --      (1,875)     (1,875)
  Dividends                            --        --          --        --         --        --        --        --          --
   Series D preferred stock            --        --          --        --         --        --        --        (195)       (195)
   Series F preferred stock            --        --          --        --         --        --        --         (38)        (38)
                                 ----------    ------    --------   -------  ---------   -------   -------   -------     -------
  Balance as of June 30, 1997    13,717,039      $136           0        $0        500        $1   $30,665   ($2,239)    $28,563
                                 ==========    ======    ========   =======  =========   =======   =======   =======     =======
</TABLE>                       


The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.


                                        4

<PAGE>



                      COMFORCE CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                            (Unaudited in thousands)

<TABLE>
<CAPTION>
                                                                             Six Months Ended
                                                                                 June 30,
                                                                           --------------------
                                                                             1997        1996
                                                                           --------    --------
<S>                                                                        <C>         <C>      
Net cash flows used by operating activities                                $   (792)   $ (3,318)
                                                                           --------    --------
Cash flows from investing activities:
   Acquisition payments, net of cash acquired                               (14,355)     (7,450)
   Officer loans                                                                 30        (331)
   Restricted cash                                                           (1,000)       --
   Additions to property, plant and equipment                                  (392)       (323)
                                                                           --------    --------
Net cash flows (used by) from investing activities                          (15,717)     (8,104)
                                                                           --------    --------
Cash flows from financing activities:
   Proceeds from revolving lines of credit                                   49,535       1,500
   Repayment on revolving lines of credit                                   (43,081)       --
   Proceeds from short-term debt                                             20,628        --
   Payment of short-term debt                                               (27,930)       (500)
   Proceeds from long-term debt                                              20,000        --
   Repurchase of common stock                                                (2,300)       --
   Issuance of Preferred Stock Series E                                        --         4,636
   Issuance of Preferred Stock Series D                                        --         6,416
   Proceeds from exercise of stock options                                      140        --
   Proceeds from exercise of warrants                                           121         999
   Payment of registration costs                                               (388)       --
   Dividends paid                                                              (262)       --
                                                                           --------    --------
Net cash flows from financing activities                                     16,463      13,051
                                                                           --------    --------
Increase (decrease) in cash and cash equivalents                                (46)      1,629
Cash and equivalents, beginning of period                                     3,608         649
                                                                           --------    --------
Cash and equivalents, end of period                                        $  3,562    $  2,278
                                                                           ========    ========
Supplemental cash flow information: Cash paid during the period for:
    Interest                                                               $    416    $     51
    Income taxes paid                                                           164        --
Supplemental schedule of noncash investing and financing activities:
   Quasi-reorganization                                                        --       (93,848)
   Common stock issued to settle liabilities                                    633        --
   Issuance of short-term debt to redeem Series F preferred stock             3,162        --
   Accrued dividends                                                             75        --
   Amounts assumed by ARTRA                                                    --         1,537
   Warrants issued in connection with the sale of convertible debentures        734        --
   Warrants issued in connection with short-term loan                           100        --
   Warrants issued in connection with credit facility                           170        --
</TABLE>

The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.

                                        5

<PAGE>




                      COMFORCE CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

The  accompanying   condensed  consolidated  financial  statements  of  COMFORCE
Corporation  ("COMFORCE"  or  the  "Company"),  formerly  The  Lori  Corporation
("Lori"),  are  presented  on a going  concern  basis,  which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of  business.  The  Company  currently  operates  in one  industry  segment as a
provider of  telecommunications  and computer  technical staffing and consulting
services worldwide.

Effective January 1, 1996, the Company effected a  quasi-reorganization  through
the  application of $93,847,000 of its  $95,993,000  Additional  Paid in Capital
account to eliminate its  Accumulated  Deficit.  The Company's  Board decided to
effect a  quasi-reorganization  given that the  Company  achieved  profitability
following its entry into the technical staffing business and  discontinuation of
its unprofitable jewelry business.

As discussed in Note 3, on February 28, 1997,  the Company  purchased all of the
stock of RHO Company  Incorporated  ("RHO"). RHO is in the business of providing
contract employees to other businesses.

These condensed  consolidated  financial  statements are presented in accordance
with the  requirements  of Form 10-Q and  consequently  do not  include  all the
disclosures  required in the Company's Annual Report on Form 10-K.  Accordingly,
the Company's  Annual Report on Form 10-K for the fiscal year ended December 31,
1996, as filed with the  Securities and Exchange  Commission,  should be read in
conjunction  with  the  accompanying  consolidated  financial  statements.   The
condensed  consolidated  balance  sheet as of December 31, 1996 was derived from
the audited consolidated  financial statements in the Company's Annual Report on
Form 10-K.

Reported  interim results of operations are based in part on estimates which may
be subject to year-end  adjustments.  In addition,  these  quarterly  results of
operations are not necessarily indicative of those expected for the year.

2.   STATEMENT OF FINANCIAL ACCOUNTING STANDARDS

In February 1997, the Financial  Accounting Standards Board issued Statements of
Financial  Accounting  Standards No. 128, "Earnings per Share" ("SFAS No. 128"),
which  establishes  standards for computing  and  presenting  earnings per share
(EPS).  SFAS No.  128 will be  effective  for  financial  statements  issued for
periods  ending after December 15, 1997.  Earlier  application is not permitted.
Management  has not yet  evaluated  the effects of this change on the  Company's
financial statements.

3.   CERTAIN ACQUISITIONS

On February 28, 1997,  the Company  purchased  all of the stock of RHO for $14.8
million payable in cash, plus a contingent payout to be paid over three years on
future  earnings  of RHO payable in stock in an  aggregate  amount not to exceed
$3.3 million.  The maximum number of shares issuable under the contingent payout
is 386,249  shares.  The acquisition of RHO was accounted for under the purchase
method  and,  accordingly,  RHO's  operations  are  included  in  the  Company's
statement of operations  from the date of  acquisition.  The cash portion of the
purchase  price paid at closing was  principally  funded  through the  Company's
offering  of  Subordinated  Convertible  Debentures.  See Note 4.  RHO  provides
specialists  primarily in the technical  services and IT sectors.  In connection
with the closing of the RHO  acquisition  and in  recognition  of the efforts of
James  L.  Paterek,  Chairman  of the  Company,  Christopher  P.  Franco,  Chief
Executive  Officer of the  Company,  and Michael  Ferrentino,  President  of the
Company,  including  providing their personal guarantees on certain loans to the
Company through the pledging of their shares of Company stock,  the Company paid
each of these officers $75,000.


                                        6

<PAGE>



4.   DEBT

At June 30, 1997, current and long-term debt (in thousands) consists of:

<TABLE>
<CAPTION>
                                                                     June 30,           December 31,
                                                                       1997                 1996
                                                                       ----                 ----
<S>                                                                   <C>                  <C>
Current debt
    Revolving line of credit, due in July 1998, with interest
    payable monthly at the bank's prime rate plus .75%.  At
    June 30, 1997,  the bank's prime rate was 8.5%.                   $15,588              $3,850

Long-term Debt
   Term  loan with interest payable at the bank's prime rate
   plus 1.75%.  At June 30, 1997, the bank's prime rate was 8.5%.     $20,000
</TABLE>

From  February  27 to March 21, 1997 (each date of sale a "Closing  Date"),  the
Company  sold  $25.2  million  of  its   Subordinated   Convertible   Debentures
("Debentures")  to certain  institutional  investors for cash or in exchange for
shares of the  Company's  Series F  Preferred  Stock.  In the case of the shares
exchanged, the Company effected the repurchase of 2,750 of the 3,250 outstanding
shares of its Series F Preferred  Stock by issuing  Debentures  in the  original
principal  amount of 115% of the  liquidation  value of the  Series F  Preferred
Stock to the holders  thereof (the "Series F Holders"),  which  premium had been
included as an accretive dividend in December 1996. The Debentures bore interest
at the rate of 8% per annum,  and were to bear  interest  at the rate of 10% per
annum  commencing  180 days after each Closing Date.  Interest on the Debentures
was  payable  quarterly  in cash  or in  common  stock  of the  Company,  at the
Company's  option.  Warrants to purchase  302,400 shares of the Company's common
stock at prices  ranging from $6.85 to $7.65 per share were issued in connection
with this  financing,  which were valued at $734,000.  In  connection  with this
financing,  the Company incurred costs of approximately  $5.8 million which were
expensed during the first half of 1997.

On June 25,  1997,  the Company  completed a $40 million  credit  facility  (the
"Credit Facility") with Fleet National Bank, as lender and agent ("Fleet"),  and
U.S. Bank,  Washington,  as lender (U.S. Bank)  (collectively,  "Lenders").  The
Credit Facility consists of a revolving credit facility of up to $20 million and
a $20 million term loan.

The Company  utilized  all of the proceeds of the term loan and a portion of the
availability  under the revolving  credit facility to redeem the Company's $25.2
million in outstanding principal amount of Debentures issued principally to fund
the Company's  acquisition of RHO Company Incorporated ("RHO") in February 1997.
Additional  funds  available  under the revolving  credit  facility were used to
retire the existing  $7.5  million  revolving  credit  facility of RHO with U.S.
Bank.  The Company  intends to use available  funds under the  revolving  credit
facility  for working  capital and general  corporate  purposes,  including  for
acquisitions,  subject to the satisfaction of the conditions therefore set forth
in the Credit  Facility.  Borrowings  under the  revolving  credit  facility are
subject to various financial  covenants and other conditions.  At June 30, 1997,
the Company was in compliance  with all  covenants and  conditions of the Credit
Facility.

The revolving credit facility and the term loan bear interest at a rate equal to
0.75% and 1.75%, respectively, in excess of Fleet's prime rate as announced from
time to time. The Company's obligations under the Credit Facility are secured by
substantially all of its assets. In addition,  James L. Paterek, the Chairman of
the Company,  Christopher P. Franco, the Chief Executive Officer of the Company,
and Michael  Ferrentino,  the  President  of the Company,  each pledged  500,000
shares of the  Company's  common  stock  held by them and all of the  options to
purchase  common stock held by them as additional  collateral  for the Company's
obligations  under the  Credit  Facility.  The  scheduled  maturity  date of the
revolving credit facility is July 10, 1998.  Subject to Fleet's right to issue a
call notice  requiring  repayment  of the term loan at any time on or after July
10,  1998,  the term loan is  payable  in  quarterly  installments  as  follows:
$750,000  on July 1,  1998 and at the end of each  calendar  quarter  thereafter
through and including December 31, 1999;  $1,475,000 at the end of each calendar
quarter  beginning March 31, 2000 and ending March 31, 2002, and a final balloon
payment equal to the sum of unpaid  principal plus accrued  interest on June 30,
2002.

The  Company  incurred  fees and  expenses  of  approximately  $1.7  million  in
connection with obtaining the Credit Facility,  which will be amortized over the
term of the Credit  Facility,  including  amounts  awarded  to Messrs.  Paterek,
Franco and  Ferrentino for pledging  their shares to further  collateralize  the
Company's obligations under the Credit Facility (see Note

                                        7

<PAGE>



9). In addition,  the Company  agreed to issue to Fleet warrants to purchase (i)
100,000  shares of common  stock at an exercise  price of $7.30 per share ($1.50
per share in excess of the  average  closing  price of the common  stock for the
five  business days ended June 24,  1997),  exercisable  until June 25, 2000 and
(ii) upon the  occurrence of certain  specified  conditions,  100,000  shares of
common  stock at an  exercise  price of $0.75 per share in excess of the average
closing price of the common stock for the five business days ending prior to the
date of the occurrence of the specified  conditions,  exercisable  commencing on
such date and for a period of three years thereafter (see Note 5).

5.   EQUITY

During the first six months of 1997,  options  were issued to  purchase  122,000
shares of common stock at a price of $1.125 per share.

During the first six months of 1997, the Company issued warrants with a value of
$734,000 to purchase 302,400 shares of common stock at prices ranging from $6.85
to $7.65 in connection with issuance of the Debentures and warrants with a value
of $170,000 to purchase  100,000  shares of common stock at a price of $7.30 per
share in connection with a long-term credit facility.

During the first six months of 1997, the Company issued 100,000  warrants with a
value of $100,000 in connection with a short-term loan made to the Company.

During the first six  months of 1997,  warrants  to  purchase  40,000  shares of
common stock were exercised at prices ranging from $2.062 to $3.375 per share.

During the first six months of 1997,  the Company  effected  the  repurchase  of
2,750 of the 3,250  outstanding  shares of its Series F  Preferred  Stock with a
value of $3,162,000 through the issuance of its Debentures. (See Note 4.)

During the first six months of 1997,  7,002  shares of Series D Preferred  Stock
were converted  into 671,250 shares of common stock under the conversion  terms.
Such common shares  included 87,750 shares with a market value of $493,000 given
to induce certain  conversions.  These additional shares have been accounted for
as a preferred stock dividend in the second quarter of 1997.

In June 1997,  118,145 shares of common stock were issued in  consideration  for
interest of $633,000 owed on the Debenture financing.

In December 1996, the Company sold 460,000 shares of its common stock,  together
with a related  payment  right  requiring  the  Company to make a payment to the
investors in either cash or common stock, at the Company's option,  equal to the
amount by which $10.00 per share exceeded the average  closing bid price for the
five trading days prior to April 1, 1997.  In addition,  in December  1996,  the
Company sold 350,000 shares of its common stock, together with a related payment
right requiring the Company to make a payment to the investors in either cash or
common stock, at the Company's  option,  equal to the amount by which $12.05 per
share exceeded the average  closing bid price for the five trading days prior to
April 1, 1997. On April 1, 1997, the Company  satisfied  these payment rights by
issuing 385,591 shares of its common stock.

In February 1997, in connection with its sale of its Debentures to the investors
who purchased  460,000  shares of the Company's  common stock in December  1996,
described  above,  the Company granted to such investors put options under which
the  Company  agreed to  repurchase  115,000  of the shares on each of April 28,
1997, May 28, 1997,  June 27, 1997 and July 27, 1997 made in satisfaction of the
payment right  described  above.  In the case of cash payments under the payment
right,  this adjustment is effected  through a reduction of the put option price
by the amount of the cash  payment.  In the case of  payments in stock under the
payment right,  this adjustment is effected through an increase in the aggregate
number of shares subject to the put option,  without adjustment of the aggregate
put  option  price.  On April 28 and May 28,  1997,  the  investors  elected  to
exercise the put option. As a result of the

                                        8

<PAGE>



Company's  satisfaction  of the payment  right through its issuance of shares of
common stock,  the number of shares the Company was required to  repurchase  has
been increased by 80,782 shares.  Consequently,  the Company repurchased 310,782
shares of its common stock for $2,300,000.

6.   EARNINGS PER SHARE

Earnings per common share is computed by dividing  net  earnings  available  for
common stockholders by the weighted average number of shares of common stock and
common stock equivalents  (stock options and warrants),  outstanding during each
period.  Common  stock  equivalents  relate to  outstanding  stock  options  and
warrants.  For this  computation,  shares of the  Series F  Preferred  Stock are
anti-dilutive  and as such are not considered  common stock  equivalents and are
excluded from this  calculation.  The dividends of $592,000 and $688,000 accrued
or paid on the  Series D  Preferred  Stock for the three  months  and six months
ended June 30,  1997,  respectively,  and the  dividends  of $6,000 and  $38,000
accrued or paid on the Series F Preferred Stock have been deducted for computing
earnings available to common stockholders.  For the period June 30, 1997, common
stock  equivalents have not been included in this calculation as their effect in
antidilutive.  For the six month  periods ended June 30, 1997 and June 30, 1996,
fully  diluted  earnings  per share  have not been  presented  as the  result is
anti-dilutive or does not differ from primary earnings per share.

Primary earnings per share is calculated as follows (in thousands):

<TABLE>
<CAPTION>
                                             Three Months Ended June 30,   Six Months Ended June 30,
                                             ---------------------------   -------------------------
                                                  1997        1996             1997        1996
                                                --------    --------         --------    --------
<S>                                             <C>         <C>              <C>         <C>     
Earnings (loss) available for common                                       
 stockholders                                   $ (2,365)   $    352         $ (2,601)   $    452
                                                --------    --------         --------    --------
                                                                           
Weighted average number of shares outstanding                              
for the period                                    13,280       9,548           13,050       9,446
                                                                           
Dilutive effect of common stock equivalents         --         3,745             --         4,373
                                                --------    --------         --------    --------
                                                  13,280      13,293           13,050      13,819
                                                ========    ========         ========    ========
                                                                           
Primary earnings (loss) per share               $  (0.18)   $   0.03         $  (0.20)   $   0.03
                                                ========    ========         ========    ========
</TABLE>

7.   INCOME TAXES

In the three month and six month  periods  ended June 30, 1997,  the  difference
between the Federal  statutory  income tax rate and the Company's  effective tax
rate relates primarily to state income taxes and the nondeductibility of certain
intangible  assets.  The Company has recorded a benefit from income taxes in the
periods ended June 30, 1997 as it believes  that it will have taxable  income in
the second half of 1997 since the bridge  financing costs will not recur in this
period.

8.   LITIGATION

In January 1997,  Austin A. Iodice,  who served as the Company's Chief Executive
Officer,   President   and  Vice  Chairman   while  the  Company,   through  its
subsidiaries,  was engaged in the jewelry  business,  and  Anthony  Giglio,  who
performed  the  functions of the  Company's  Chief  Operating  Officer while the
Company was engaged in the jewelry  business,  filed  separate suits against the
Company in the Connecticut Superior Court alleging that the Company had breached
the terms of  management  agreements  entered into with them by failing to honor
options  to  purchase  common  stock  awarded  to them in  connection  with  the
management of the jewelry business under the terms of such management agreements
and the Company's  Long-Term  Stock  Investment  Plan. The suits allege that the
plaintiffs  are  entitled  to an  unspecified  amount of  damages.  The  Company
believes  that the option to  purchase  370,419  shares  granted  to Mr.  Iodice
(through  Nitsua,  Ltd., a  corporation  wholly-owned  by him) and the option to
purchase 185,210 shares granted to Mr. Giglio,  each having an exercise price of
$1.125 per share, expired in 1996, three months after Messrs.  Giglio and Iodice
ceased to be employed by the Company.  Messrs.  Giglio and Iodice  maintain that
they were agents and not employees of the Company and that the options  continue
to be  exercisable.  In March 1997, the Company filed motions to dismiss each of
these suits. The Company intends to vigorously defend these suits.

                                        9

<PAGE>



In a case filed in U.S. District Court, Central District of California,  against
RHO and Technical Staff Associates,  Inc. ("TSA"),  which was acquired by RHO in
1992, TSA's former insurance  carrier has alleged that TSA and RHO are obligated
to  repay  to it  approximately  $1.6  million  that it was  required  to pay in
connection  with an  injury  and  death  that  occurred  in  November  1992 to a
temporary  employee  of TSA.  The action has been  referred  to RHO's  insurance
carrier,  which is  defending  it with a  reservation  of  rights.  RHO has been
granted  summary  judgment with respect to all claims made in the action,  which
judgment is the subject of an appeal by the plaintiff.  Management believes that
the case is without substantial merit and intends to vigorously defend it.

Prior to its entry into the jewelry  business in 1985,  the Company  operated in
excess  of 20  manufacturing  facilities  for the  production  of,  inter  alia,
photocopy machines,  photographic  chemicals and paper coating. These operations
were sold or  discontinued  in the late 1970s and early 1980s.  Certain of these
facilities  may have used  and/or  generated  hazardous  materials  and may have
disposed of the hazardous substances,  particularly before the enactment of laws
governing the safe disposal of hazardous substances, at an indeterminable number
of sites.  Although the controlling  stockholders and current  management had no
involvement in such prior manufacturing operations, the Company could be held to
be responsible for clean-up costs if any hazardous  substances were deposited at
these manufacturing  sites, or at off-site waste disposal  locations,  under the
Comprehensive  Environmental  Response,  Compensation  and Liability Act of 1980
("CERCLA"),  or under other Federal or state environmental laws now or hereafter
enacted. However, except for the Gary, Indiana site described below, the Company
has not been notified by the Federal Environmental Protection Agency (the "EPA")
that it is a  potentially  responsible  party for,  nor is the Company  aware of
having disposed of hazardous substances at, any site.

In December  1994,  the Company was notified by the EPA that it is a potentially
responsible  party under CERCLA for the disposal of  hazardous  substances  at a
site in Gary, Indiana.  The alleged disposal occurred in the mid-1970s at a time
when the Company conducted operations as APECO Corporation.  In this connection,
in December 1994, the Company was named as one of approximately 80 defendants in
a case brought in the United States District Court for the Northern  District of
Indiana by a group of 14 potentially responsible parties who agreed in a consent
order  entered  into with the EPA to clean-up  this site.  The  plaintiffs  have
estimated the cost of cleaning up this site to be $45 million,  and have offered
to settle the case with the Company for  $991,445.  This amount  represents  the
plaintiffs'  estimate of the Company's pro rata share of the clean-up  costs. At
the direction of ARTRA, which, as described below, is contractually obligated to
the Company for any  environmental  liabilities,  the Company declined to accept
this settlement proposal, which was subsequently withdrawn.

The evidence produced by the plaintiffs to date is the testamentary  evidence of
four former  employees of a waste disposal  company that deposited wastes at the
Gary,  Indiana  site  identifying  the  Company as a customer  of such  disposal
company,  and entries in such disposal  company's  bookkeeping  ledgers  showing
invoices to the  Company.  The  Company,  however,  has neither  discovered  any
records  which  indicate,  nor located any current or former  employees who have
advised,  that the  Company  deposited  hazardous  substances  at the site.  The
Company is  preparing  and  intends to file a motion to dismiss  the case on the
grounds that (i) there is no evidence that  hazardous  materials  were collected
from the  Company by this waste  disposal  company  and (ii) even  assuming  for
argument's sake that the materials collected by this waste disposal company from
the Company  were  hazardous,  there is no  evidence  that such  materials  were
deposited at the Gary,  Indiana site.  Management  and its counsel  cannot state
whether a  negative  outcome  is  probable  regarding  the  Company's  potential
liability at this site.

Under the terms of the Assumption  Agreement and a subsequent  agreement entered
into  between  ARTRA  and the  Company,  ARTRA has  agreed to pay and  discharge
substantially  all of the Company's  pre-existing  liabilities and  obligations,
including environmental  liabilities at any sites at which the Company allegedly
operated  facilities  or disposed of  hazardous  substances,  whether or not the
Company is currently  identified as a potentially  responsible  party  therefor.
Consequently, the Company is entitled to full indemnification from ARTRA for any
environmental  liabilities  associated with the Gary, Indiana site. In addition,
ARTRA has deposited  125,000  shares of the Company's  common stock in escrow as
collateral  to satisfy any judgment  adverse to the Company or to pay any agreed
upon  settlement  amount with respect to the Gary,  Indiana site, and to satisfy
certain other obligations assumed by ARTRA. Proceeds from the sale of the shares
held in escrow might not be  sufficient  to satisfy any such judgment or pay any
such  settlement  amount.  While ARTRA is obligated to indemnify the Company for
any  environmental  liabilities,  no  assurance  can be given that ARTRA will be
financially  capable of satisfying its obligations with respect to any liability
in connection with the Gary,

                                       10

<PAGE>



Indiana site or any other environmental  liabilities.  ARTRA has advised that it
intends to vigorously defend this case.

The Company is a party to routine  contract  and  employment-related  litigation
matters  in the  ordinary  course  of its  business.  No such  pending  matters,
individually  or in the  aggregate,  if  adversely  determined,  are believed by
management  to be material to the  business,  results of operations or financial
condition of the Company.  The Company maintains  general  liability  insurance,
property insurance,  automobile insurance, employee benefit liability insurance,
owner's and contractor's  protective insurance and exporter's foreign operations
insurance  with  coverage  of $1  million  on a per claim  basis and $2  million
aggregate  (with $3 million  umbrella  coverage).  The Company  insures  against
workers'  compensation in amounts required under applicable state law and in the
amount of $500,000 in the case of foreign  workers.  The Company also  maintains
fidelity  insurance  in the  amount of  $25,000  per claim  and  directors'  and
officers'  liability  insurance  in the  amount of $5  million.  The  Company is
presently soliciting quotations to obtain errors and omissions coverage.

9.   RELATED PARTY TRANSACTION

The Company paid L.H. Friskoff & Company,  a certified public accounting firm at
which Richard  Barber,  a Director of the Company,  is a partner,  approximately
$77,000 in fees during 1997 for tax-related advisory services.

As a condition to the funding of the Credit  Facility  (see Note 4), the Lenders
required James L. Paterek,  the Company's  Chairman,  Christopher P. Franco, the
Company's  Chief  Executive  Officer,  and  Michael  Ferrentino,  the  Company's
President,  to each  pledge as  additional  collateral  to secure the  Company's
obligations  under the Credit  Facility  500,000 shares of the Company's  common
stock owned by them and all of the options to purchase common stock held by them
(281,250 shares in the case of Messrs. Paterek and Ferrentino and 112,500 shares
in the case of Mr.  Franco),  which shares have a current market value in excess
of $12  million  as of August 6, 1997.  The board of  directors  of the  Company
engaged an independent valuation firm to value these pledges by the principals.

In recognition of both the  substantial  benefit  afforded to the Company by the
pledges  and the cost to the  principals  of making  the  pledges,  the board of
directors authorized the issuance of an aggregate consideration of approximately
$650,000 to these  principals,  which amount was  utilized to repay  outstanding
loans of such officers due to the Company and related payroll withholding taxes.
The board of directors  has deemed such  consideration  reasonable  based on the
valuation  of the  pledges  as  determined  by the  appraisal  performed  by the
independent   valuation  firm.  The  aggregate  amount  of  this  consideration,
approximately  $650,000, is included as a part of the fees and expenses incurred
in connection with the Credit Facility (as described in Note 4).

Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The  discussion  set  forth  below  supplements  the  information  found  in the
unaudited consolidated financial statements and related notes.

Overview

The October 1995 acquisition of COMFORCE Telecom marked the Company's entry into
the technical staffing  business,  followed by the acquisition of six additional
technical  staffing  businesses  through February 1997. The Company's results of
operations   and   financial   condition   reflect  its  rapid  growth   through
acquisitions.  Amortization  of  intangibles,  principally  goodwill,  has  also
increased as a result of acquisitions.

The Company serves customers in three principal  sectors --  telecommunications,
information technology and technical services. In the telecommunications sector,
the Company provides staffing for wireline and wireless  communications  systems
development,  satellite and earth station  deployment,  network  management  and
plant modernization.  In the information technology sector, the Company provides
staffing for  specific  projects  requiring  highly  specialized  skills such as
applications  programming and development,  client/server  development,  systems
software architecture and design,

                                       11

<PAGE>



systems engineering and systems  integration.  In the technical services sector,
the Company provides staffing for national  laboratory research in such areas as
environmental   safety,   alternative   energy  source   development  and  laser
technology,  and provides  highly-skilled labor meeting diverse commercial needs
in the  avionics and  aerospace,  architectural,  automotive,  energy and power,
pharmaceutical, marine and petrochemical fields.

Gross margins on staffing services can vary  significantly  depending on factors
such as the specific services being performed, the overall contract size and the
amount of recruiting  required.  Margins on the Company's sales in the technical
services   sector  are   typically   significantly   lower  than  those  in  the
telecommunications and information technology ("IT") sectors, although the trend
in the IT staffing sector has been toward lower gross margins  generally as this
sector matures and  consolidates.  Additionally,  in certain markets the Company
has  experienced  significant  pricing  pressure  from some of its  competitors.
Consequently,  changes in the Company's  sales mix can be expected to impact the
overall gross margins generated by the Company.

Staffing personnel placed by the Company are Company  employees.  The Company is
responsible for employee related expenses for its employees,  including workers'
compensation,  unemployment compensation insurance, Medicare and Social Security
taxes  and  general  payroll  expenses.   The  Company  offers  health,  dental,
disability and life insurance to its billable employees.

Results of Operations

Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996

Revenues of $55.7  million for the three  months  ended June 30, 1997 were $45.8
million,  or 463% higher than revenues for the three months ended June 30, 1996.
The  increase in 1997  revenues is  attributable  principally  to the  Company's
completion of five  acquisitions  since the end of the first quarter of 1996 and
growth in the various markets served by the Company.

Cost of revenues of the three  months  ended June 30, 1997 was 87.4% of revenues
compared to cost of revenues of 85.2% for the three  months ended June 30, 1996.
The  1997  cost  of  revenues  increase  of 2.2% is a  result  of the  Company's
expansion into more mature technical staffing markets.

Selling, general and administrative expenses as a percentage of revenue remained
consistent  at 7.7% for the three months  ended June 30, 1997,  compared to 7.4%
for the three months ended June 30, 1996.

Operating  income for the three  months  ended June 30,  1997 was $2.3  million,
compared to  operating  income of $587,000  for the three  months ended June 30,
1996. This increase was principally  attributable to the Company's completion of
five acquisitions since the end of the first quarter of 1996.

The  Company's  interest  expense  for the three  months  ended June 30, 1997 is
attributable  principally  to  amortization  of bridge  financing  costs and the
interest  payable  on  the  $25.2  million   principal  amount  of  Subordinated
Convertible  Debentures (the "Debentures") issued by the Company in February and
March  1997,  the  proceeds  of  which  were  used  to  partially  fund  the RHO
acquisition and for working capital purposes.  The Debentures were refinanced in
June 1997.

The income tax  provision  reflects a credit for the three months ended June 30,
1997 for $1.1 million on a loss before income taxes of $2.9 million, compared to
taxes of $198,000 on pretax  income of $550,000  for the three months ended June
30, 1996. The difference  between the Federal  statutory income tax rate and the
Company's  effective  tax rate  relates  primarily to state income taxes and the
nondeductibility of certain intangible assets.

Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996

Revenues  of $91.5  million  for the six months  ended June 30,  1997 were $78.3
million,  or nearly 600% higher than  revenues for the six months ended June 30,
1996. The increase in 1997 revenues is attributable principally to the Company's
completion of five  acquisitions  since the end of the first quarter of 1996 and
growth in the various markets served by the Company.


                                       12

<PAGE>



Cost of  revenues  of the six months  ended June 30,  1997 was 87.2% of revenues
compared to cost of revenues  of 83.6% for the six months  ended June 30,  1996.
The  1997  cost  of  revenues  increase  of 3.6% is a  result  of the  Company's
expansion into more mature technical staffing markets.

Selling, general and administrative expenses as a percentage of revenue was 8.0%
for the six months  ended  June 30,  1997,  compared  to 8.9% for the six months
ended  June  30,  1996.  The  decrease  is  principally   attributable   to  the
acquisitions  completed during 1996 and 1997 which  contributed  increased gross
profit with lower incremental selling, general and administrative costs.

Operating  income  for the six  months  ended  June 30,  1997 was $3.6  million,
compared to operating income of $755,000 for the six months ended June 30, 1996.
This increase was principally  attributable to the Company's  completion of five
acquisitions since the end of the first quarter of 1996.

The  Company's  interest  expense  for the six  months  ended  June 30,  1997 is
attributable  principally to the amortization of bridge finance costs payable on
the $25.2  million  principal  amount of  Debentures  issued by the  Company  in
February and March 1997,  the proceeds of which were used to partially  fund the
RHO acquisition and for working capital purposes. The Debentures were refinanced
in June 1997.

The income tax reflects a credit for the six months ended June 30, 1997 for $1.0
million on a loss  before  income  taxes of $2.9  million,  compared to taxes of
$268,000 on pretax  income of $720,000  for the six months  ended June 30, 1996.
Such credit assumes that the Company will have taxable income in the second half
of 1997 as the  bridge  financing  costs  will  not  recur in such  period.  The
difference  between  the  Federal  statutory  income tax rate and the  Company's
effective   tax  rate   relates   primarily   to  state  income  taxes  and  the
nondeductibility of certain intangible assets.

Financial Condition, Liquidity and Capital Resources

During the first half of 1997,  the Company's  primary  sources of funds to meet
working  capital needs were from  operations,  funds made available  through the
Company's  $25.2  million  offering of Debentures in February and March 1997 and
borrowings  under a short-term  credit  facility with U.S.  Bank of  Washington,
National  Association ("U.S. Bank") entered into in February 1997 which provided
for up to $7.5 million in  availability.  A portion of the net proceeds from the
offering of the Debentures  were also used to fund the Company's  acquisition of
RHO Company Incorporated ("RHO") in February 1997.

On June 25,  1997,  the Company  completed a $40 million  credit  facility  (the
"Credit Facility") with Fleet National Bank, as lender and agent ("Fleet"),  and
U.S. Bank, as lender (collectively,  "Lenders"). The Credit Facility consists of
a revolving  credit  facility of up to $20 million and a $20 million  term loan.
The Company  utilized  all of the proceeds of the term loan and a portion of the
availability  under the  revolving  credit  facility  to redeem the  Debentures.
Additional  funds  available  under the revolving  credit  facility were used to
retire the existing $7.5 million  revolving  credit facility with U.S. Bank. The
Company intends to use available  funds under the revolving  credit facility for
working  capital and general  corporate  purposes,  including for  acquisitions,
subject to the satisfaction of the conditions  therefore set forth in the Credit
Facility.  Borrowings under the revolving credit facility are subject to various
financial covenants and other conditions.

The revolving credit facility and the term loan bear interest at a rate equal to
0.75% and 1.75%, respectively, in excess of Fleet's prime rate as announced from
time to time. The Company's obligations under the Credit Facility are secured by
substantially all of its assets. Subject to Fleet's right to issue a call notice
requiring  repayment of the term loan at any time on or after July 10, 1998, the
term loan is payable in quarterly  installments as follows:  $750,000 on July 1,
1998 and at the end of each calendar  quarter  thereafter  through and including
December 31, 1999,  $1,475,000  at the end of each  calendar  quarter  beginning
March 31, 2000 and ending March 31, 2002,  and a final balloon  payment equal to
the sum of unpaid principal plus accrued interest on June 30, 2002.

The Company  typically  pays its billable  employees  weekly for their  services
before receiving  payment from its customers.  As new offices are established or
acquired,  or as existing offices expand and revenues are increased,  there will
be  greater   requirements  for  cash  resources  to  fund  current  operations.
Management believes that the Credit Facility

                                       13

<PAGE>



will be sufficient to meet the Company's  present working capital  requirements.
However,  if the Company acquires  additional  staffing  businesses,  additional
borrowing availability is expected to be required.

The Company is obligated under various  acquisition  agreements to make earn-out
payments  to  the  sellers  of  acquired  companies,  subject  to  the  acquired
companies'  meeting certain  contractual  requirements.  For calendar year 1997,
sellers are entitled to earn-out  payments of  $521,000,  all of which have been
paid.  The maximum  amount of the remaining  potential  earn-out  payments is $5
million in cash and $4.5 million in stock payable in the three-year  period from
1998 to 2000. The Company cannot currently estimate whether it will be obligated
to pay the  maximum  amount;  however,  the  Company  anticipates  that the cash
generated  by the  operations  of the acquired  companies  will provide all or a
substantial  part of the  capital  required  to fund  the  cash  portion  of the
earn-out payments.

Cash and cash equivalents decreased $46,000 during the six months ended June 30,
1997.  Cash flows of $792,000  used in  operating  activities  and cash flows of
$15,717,000  used by investing  activities were in excess of cash flows provided
by financing activities of $16,463,000.  Cash flows used by operating activities
were principally  attributable to the need to fund growth in accounts receivable
and  their  carrying  costs.  Cash  flows  used  in  investing   activities  are
principally related to the purchase of RHO. Cash flows from financing activities
were  principally  attributable  to net  proceeds  available  to the  Company in
connection  with its sale of  Debentures  (which were redeemed on June 25, 1997)
and net borrowings under the credit facility with U.S. Bank (which was repaid on
June 25, 1997).  The Debentures  were redeemed and the net borrowings  under the
credit  facility  with U.S.  Bank were  repaid  with  proceeds  from the  Credit
Facility (as described in Note 4).

As of June 30, 1997,  approximately $39.0 million, or 50% of the Company's total
assets were intangible assets. These intangible assets  substantially  represent
amounts  attributable  to goodwill  recorded in  connection  with the  Company's
acquisitions  and will be amortized over a five to 40 year period,  resulting in
an annual  charge of in excess of $1 million.  Various  factors could impact the
Company's   ability  to  generate  the   earnings   necessary  to  support  this
amortization  schedule,  including  fluctuations in the economy,  the degree and
nature of  competition,  demand for the  Company's  services,  and the Company's
ability to integrate the operations of acquired businesses, to recruit and place
staffing professionals, to expand into new markets and to maintain gross margins
in the face of  pricing  pressures.  The  failure  of the  Company  to  generate
earnings  necessary  to  support  the  amortization  charge  may  result  in  an
impairment of the asset.  The resulting  write-off could have a material adverse
effect on the Company's business, financial condition and results of operations.


                                       14

<PAGE>




Seasonality

The Company's  quarterly  operating results are affected primarily by the number
of billing days in the quarter and the seasonality of its customers' businesses.
Demand for services in the technical services sector has historically been lower
during the year-end  holidays  through  January of the following  year,  showing
gradual  improvement  over the remainder of the year.  Although less  pronounced
than in technical  services,  the demand for services of the  telecommunications
and IT sectors is typically  lower  during the first  quarter  until  customers'
operating  budgets  are  finalized.  The  Company  believes  that the effects of
seasonality  will be less  severe in the future as revenues  contributed  by the
information technology and telecommunications  sectors continue to increase as a
percentage of the Company's consolidated revenues.

Other Matters

In February 1997, the Financial  Accounting Standards Board issued Statements of
Financial  Accounting  Standards No. 128, "Earnings per Share" ("SFAS No. 128"),
which  establishes  standards for computing and  presenting  earnings per share.
SFAS No. 128 will be  effective  for  financial  statements  issued for  periods
ending after December 15, 1997. Earlier application is not permitted. Management
has not yet  evaluated  the  effects of this change on the  Company's  financial
statements.


                                       15

<PAGE>



                           PART II - OTHER INFORMATION

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

(a) Exhibits.

27.1  Financial  Data Schedule  (included in EDGAR  document only for use by the
      Securities and Exchange Commission).

(b) Reports on Form 8-K.

      On April 14, the Company filed Amendment No. 1 to a Current Report on Form
      8-K/A  to  include  the  financial  statements  and  pro  forma  financial
      statements required in connection with the completed RHO acquisition.

      On July 10,  1996,  the  Company  filed a  Current  Report on Form 8-K and
      Amendment  No. 1 thereto on Form 8-K/A to report  entering into the Credit
      Facility and to report the conversion of the Company's  Series D Preferred
      Stock into Common Stock.



                                       16

<PAGE>



                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunder duly authorized.



                                                      COMFORCE CORPORATION
                                                      --------------------------
                                                       Registrant


Dated: August 7, 1997                                    /s/ PAUL J. GRILLO
                                                      --------------------------
                                                       Vice President/Finance
                                                       Chief Financial Officer


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