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, 1999
                                       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
                          COMFORCE Corporation: 1-6081
                       COMFORCE Operating, Inc.: 333-43341

                            COMFORCE Corporation and
                            COMFORCE Operating, Inc.
             (Exact name of registrant as specified in its charter)

                                       COMFORCE Corporation:        36-23262248
                  Delaware             COMFORCE Operating, Inc.:    11-3407855
 (State or other jurisdiction of         (IRS Employer Identification No.)
  incorporation or organization)

        415 Crossways Park Drive, P.O. Box 9006, Woodbury, New York 11797
              (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (516) 437-3300

                                 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 29, 1999
-------------------------------          ----------------------------
COMFORCE Corporation:
   Common stock, $.01 par value           16,395,263 shares
COMFORCE Operating, Inc.:                 100 shares
   Common stock, $.01 par value             (all owned by COMFORCE Corporation)



<PAGE>



                            COMFORCE Corporation and
                            COMFORCE Operating, Inc.



                                      INDEX

                                                                            Page
                                                                          Number
                                                                          ------

PART I    FINANCIAL INFORMATION

Item 1.   Financial Statements

          Consolidated Balance Sheets June 30, 1999
          and December 31, 1998 (unaudited)....................................3

          Consolidated Statements of Operations for the three and
          six months ended June 30, 1999 and 1998 (unaudited)..................4

          Consolidated Statements of Cash Flows for the six months
          ended June 30, 1999 and 1998 (unaudited).............................5

          Notes to Consolidated Financial Statements...........................6

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

Item 3.   Quantitative and Qualitative Disclosure about Market Risk...........13

PART II   OTHER INFORMATION...................................................13

Item 1.   Legal Proceedings...................................................13

Item 2.   Changes in Securities and Use of Proceeds...........................13

Item 3.   Defaults Upon Senior Securities (not applicable)....................13

Item 4.   Submission of Matters to a Vote of Security Holders.................14

Item 5.   Other Information (not applicable)..................................14

Item 6.   Exhibits and Reports on Form 8-K   .................................14


SIGNATURES....................................................................15




                                        2

<PAGE>




                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                      COMFORCE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                     (in thousands except per share amounts)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                             June 30,    December 31,
                                                               1999         1998
                                                             ---------    ---------
<S>                                                          <C>          <C>
ASSETS:
Current assets:
     Cash and cash equivalents                               $   7,163    $   4,599
     Accounts receivable, net                                   55,993       47,727
     Funding and service fee receivable, net                    37,491       33,953
     Prepaid expenses and other current assets                   3,584        3,342
     Deferred income taxes                                       2,306        2,306
                                                             ---------    ---------
              Total current assets                             106,537       91,927

Property and equipment, net                                     10,800        9,256
Intangible assets, net                                         139,907      138,847
Deferred financing costs                                         5,636        6,052
                                                             ---------    ---------
              Total assets                                   $ 262,880    $ 246,082
                                                             =========    =========


LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:
     Borrowings under revolving line of credit               $   4,000    $   4,000
     Accounts payable                                            6,855        4,296
     Accrued expenses                                           22,872       18,068
                                                             ---------    ---------
              Total current liabilities                         33,727       26,364

Long-term debt                                                 184,738      174,579
Deferred income taxes                                              224          224
Other liabilities                                                  524          581
                                                             ---------    ---------
              Total liabilities                                219,213      201,748
                                                             ---------    ---------

Commitments and contingencies
Stockholders' equity:
     Series F convertible preferred stock, $0.01 par value,
       10,000 shares authorized, no shares issued and
       outstanding                                                --           --
     Common stock, $.01 par value; 100,000,000 shares
       authorized; 16,395,255 shares and 16,129,322 shares
       issued and outstanding at June 30, 1999 and
       December 31, 1998, respectively                             164          161
     Additional paid-in capital                                 48,327       47,464
     Accumulated deficit since January 1, 1996                  (4,824)      (3,291)
                                                             ---------    ---------
              Total stockholders' equity                        43,667       44,334
                                                             ---------    ---------
              Total liabilities and stockholders' equity     $ 262,880    $ 246,082
                                                             =========    =========
</TABLE>

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


                                        3

<PAGE>




                      COMFORCE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands except per share amounts)
                                   (unaudited)


<TABLE>
<CAPTION>
                                             Three Months Ended          Six Months Ended
                                                  June 30,                    June 30,
                                              1999         1998         1999         1998
                                            ---------    ---------    ---------    ---------
<S>                                         <C>          <C>          <C>          <C>
Revenue:
      Net sales of services                 $ 111,119    $ 118,110    $ 218,194    $ 230,118
                                            ---------    ---------    ---------    ---------

Costs and expenses:
      Cost of services                         89,529       96,174      176,925      187,881
      Selling, general and administrative      14,296       14,373       28,362       28,321
      Depreciation and amortization             1,745        1,360        3,405        2,697
                                            ---------    ---------    ---------    ---------

              Total costs and expenses        105,570      111,907      208,692      218,899
                                            ---------    ---------    ---------    ---------

Operating income                                5,549        6,203        9,502       11,219
                                            ---------    ---------    ---------    ---------

Other income (expense):
      Interest expense                         (5,464)      (5,443)     (10,757)     (10,602)
      Other income, net                            10            8           12           24
                                            ---------    ---------    ---------    ---------
                                               (5,454)      (5,435)     (10,745)     (10,578)
                                            ---------    ---------    ---------    ---------

Income (loss) before income taxes                  95          768       (1,243)         641
Income tax provision                              439          617          291          947
                                            ---------    ---------    ---------    ---------
              Net  income (loss)                 (344)         151       (1,534)        (306)
Dividends on preferred stock                     --              6         --             12
                                            ---------    ---------    ---------    ---------
     Net income (loss) applicable to
     common stockholders                    $    (344)   $     145    $  (1,534)   $    (318)
                                            =========    =========    =========    =========

Basic income (loss) per common share        $   (0.02)   $    0.01    $   (0.09)   $   (0.02)
                                            =========    =========    =========    =========
Diluted income (loss) per common share      $   (0.02)   $    0.01    $   (0.09)   $   (0.02)
                                            =========    =========    =========    =========
Basic weighted average shares                  16,291       15,911       16,232       15,629
                                            =========    =========    =========    =========
Diluted weighted average shares                16,291       17,368       16,232       15,629
                                            =========    =========    =========    =========
</TABLE>

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


                                        4

<PAGE>


                      COMFORCE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                         Six Months Ended
                                                                             June 30,
                                                                       --------------------
                                                                         1999        1998
                                                                       --------    --------
<S>                                                                    <C>         <C>
Net cash flows used in operating activities                            $ (1,011)   $ (3,760)
                                                                       --------    --------

Cash flows from investing activities:
  Acquisition,  net of cash acquired                                       --        (3,574)
  Purchases of property and equipment                                    (2,724)     (3,528)
  Payments of contingent consideration                                   (2,013)     (1,757)
  Restricted cash                                                          --           (32)
  Decrease in other assets                                                 --            21
                                                                       --------    --------
           Net cash flows used in investing activities                   (4,737)     (8,870)
                                                                       --------    --------

Cash flows from financing activities:
   Net proceeds on line of credit agreement                               8,427       9,872
   Reduction of capital lease obligation                                   (115)       (102)
   Proceeds from exercise of stock options                                 --           137
   Proceeds from exercise of warrants                                      --           458
   Payment of registration costs                                           --           (35)
   Dividends paid                                                          --           (12)
                                                                       --------    --------
           Net cash flows provided by financing
              activities                                                  8,312      10,318
                                                                       --------    --------
  Increase (decrease) in cash and cash equivalents                        2,564      (2,312)
  Cash and cash equivalents, beginning of period                          4,599       6,512
                                                                       --------    --------
           Cash and equivalents, end of period                         $  7,163    $  4,200
                                                                       ========    ========

Supplemental cash flow information: Cash paid during the period for:
   Interest paid                                                       $  8,501    $  8,627
   Income taxes paid                                                        462         106

Supplemental schedule of noncash investing and financing activities:
   Common stock issued in connection with acquisitions                      867       1,900
   Dividends accrued but not paid                                          --             6
   Issuance of Senior Secured PIK Debentures in lieu of
       interest payment                                                   1,732       1,542
</TABLE>

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

                                        5

<PAGE>



                      COMFORCE CORPORATION AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.   GENERAL

     The accompanying  unaudited interim  consolidated  financial  statements of
COMFORCE  Corporation,  COMFORCE Operating,  Inc. ("COI") and their subsidiaries
(collectively,  the  "Company")  have been  prepared  pursuant  to the rules and
regulations of the Securities and Exchange  Commission.  Certain information and
note  disclosures  normally  included in annual  financial  statements have been
condensed or omitted pursuant to those rules and regulations.  In the opinion of
management,  all  adjustments,   consisting  of  normal,  recurring  adjustments
considered  necessary  for a fair  presentation,  have been  included.  Although
management  believes that the  disclosures  made are adequate to ensure that the
information  presented is not  misleading,  it is suggested that these financial
statements  be read in  conjunction  with the  financial  statements  and  notes
thereto included in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998. The results for the three and six months ended June 30,
1999 and 1998 are not  necessarily  indicative of the results of operations  for
the entire year.

2.   NEWLY-ISSUED ACCOUNTING STANDARDS

     In June 1998, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"). The FASB issued SFAS No. 137 in
June 1999 to delay the  effective  date of SFAS 133 to  fiscal  years  beginning
after June 15, 2000  (January  1, 2001 for the  Company).  The Company  does not
expect the  adoption of SFAS 133, as amended by SFAS 137, to have a  significant
effect on the Company's results of operations or its financial position.

3.   DEBT

     Notes  payable and  long-term  debt at June 30, 1999 and  December 31, 1998
consisted of the following (in thousands):


                                                          June 30,  December 31,
                                                            1999       1998
                                                          --------   --------

12% Senior Notes, due 2007
                                                          $110,000   $110,000

15% Senior Secured PIK Debentures, due 2009
                                                            24,894     23,162
Revolving line of credit, due November 26, 2002, with
interest payable monthly at LIBOR plus up to 2.0%
At June 30, 1999, the rate was 7.2%                         53,844     45,417

                                                           188,738    178,579
     Less, current portion                                   4,000      4,000
                                                          --------   --------

              Total long-term debt                        $184,738   $174,579
                                                          ========   ========


                                        6

<PAGE>


4.   EQUITY

     The increase in common stock  outstanding  during the six months ended June
30, 1999 relates  principally  to 55,554 shares issued on February 17, 1999 at a
price of $4.75 per share and 193,124 shares issued on May 20, 1999 at a price of
$3.125 per share. These shares were issued as contingent  payments in connection
with two of the Company's prior acquisitions.

5.   EARNINGS PER SHARE

     Basic  income  (loss) per common  share is computed by dividing  net income
(loss)  available  for common  stockholders  by the weighted  average  number of
shares of common stock outstanding during each period. Diluted income (loss) per
share is computed  assuming the  conversion of stock options and warrants with a
market  value  greater  than the  exercise  price to the extent such  conversion
assumption  is  dilutive.  The  following  represents  a  reconciliation  of the
numerators  and  denominators  for basic and diluted income (loss) per share for
the  three-month  and  six-month  periods  ended  June  30,  1999  and  1998 (in
thousands):

<TABLE>
<CAPTION>
                                            Three Months Ended        Six Months Ended
                                                 June 30,                  June 30,
                                            --------------------    --------------------
                                             1999         1998        1999       1998
                                            --------    --------    --------    --------
<S>                                           <C>         <C>         <C>         <C>
Numerator:
     Net income (loss)                      $   (344)   $    151    $ (1,534)   $   (306)
     Preferred stock dividends                  --            (6)       --           (12)
                                            --------    --------    --------    --------
     Numerator for basic and diluted
       income (loss) per share--income      $   (344)   $    145    $ (1,534)   $   (318)
       (loss) available to common
       Stockholders
                                            ========    ========    ========    ========
Denominator:
     Weighted-average shares                  16,291      15,911      16,232      15,629
Effect of dilutive securities:
     Employee stock options                     --           593        --          --
     Contingent stock - acquisitions            --           282        --          --
     Warrants                                   --           582        --          --
                                            --------    --------    --------    --------
Denominator for diluted income (loss) per
     share - adjusted weighted average
     shares and assumed conversions           16,291      17,368      16,232      15,629
                                            ========    ========    ========    ========
</TABLE>

Outstanding   options  and  warrants  to  purchase   shares  of  common   stock,
representing  approximately 4.9 million shares of common stock on June 30, 1999,
were not included in the  computations of diluted (loss) per share for the three
months ended June 30, 1999 and for the six-month periods ended June 30, 1999 and
1998 because their effect would be anti-dilutive.

6.   INDUSTRY SEGMENT INFORMATION:

     The  Company  has   determined   that  its   reportable   segments  can  be
distinguished  principally  by the types of  services  offered to the  Company's
clients.


                                        7

<PAGE>



     Revenues  and profits in the Staff  Augmentation  segment are  generated by
providing   temporary   employees   to   client   companies   generally   on   a
time-and-materials  basis.  Staff  Augmentation  services  are  offered  through
several divisions.  Telecom provides  telecommunications  workers,  primarily to
telecommunications  companies;  Information  Technologies  provides programmers,
systems consultants, software engineers and other IT workers to a broad range of
companies  which  outsource  portions  of their IT  requirements;  and  Staffing
Services provides primarily technical workers,  including engineers,  scientists
and laboratory workers, to a variety of corporations and laboratories.

     Revenues  and  profits in the  Financial  Services  segment  are  generated
through  outsourcing  and consulting  services for client  companies.  Financial
Services is composed of two  distinct  activities:  The PrO  Unlimited  division
provides  confidential  consulting and conversion  services  related to clients'
employment  of  independent   contractors,   and  typically   involve  providing
non-recruited  payrolling  services  to those  clients.  Through  its THISCO and
Brentwood  divisions,  the Financial Services segment also includes  outsourcing
services to independent consulting and staffing companies,  in which the Company
provides payroll funding services and back office support to those clients.

     The accounting  policies of the segments are the same as those described in
the notes to the consolidated  financial  statements  contained in the Company's
Annual  Report on Form 10-K for the year ended  December 31,  1998.  The Company
evaluates the performance of its segments and allocates  resources to them based
on operating  contribution,  which represents segment revenues less direct costs
of operations,  excluding the allocation of corporate general and administrative
expenses.

     The  table  below  presents  information  on  the  revenues  and  operating
contribution  for each  segment for the three and six months ended June 30, 1999
and 1998,  and items  which  reconcile  segment  operating  contribution  to the
Company's reported pre-tax loss.

<TABLE>
<CAPTION>
                                       Three Months Ended         Six Months Ended
                                             June 30,                 June 30,
                                      --------------------    ----------------------
                                        1999        1998        1999          1998
                                      ---------   ---------   ---------    ---------
                                                    (in thousands)
<S>                                  <C>         <C>         <C>          <C>
Net sales of services:
     Financial Services              $  27,896   $  22,493   $  52,081    $  43,488
     Staff Augmentation                 83,223      95,617     166,113      186,630
                                      ---------   ---------   ---------    ---------
                                       111,119     118,110     218,194      230,118
                                     ---------   ---------   ---------    ---------
Operating contribution:
     Financial Services                  3,568       3,067       6,352        6,102
     Staff Augmentation                  7,608       8,464      14,592       15,726
                                        11,176      11,531      20,944       21,828
                                     ---------   ---------   ---------    ---------
Consolidated expenses:
     Interest                            5,464       5,443      10,757       10,602
     Depreciation and amortization       1,745       1,360       3,405        2,697
     Corporate general and
        administrative                   3,872       3,960       8,025        7,888
                                        11,081      10,763      22,187       21,187
                                     ---------   ---------   ---------    ---------

Income (loss) before income taxes    $      95   $     768   $  (1,243)   $     641
                                     =========   =========   =========    =========
</TABLE>


                                        8

<PAGE>


                                            At June 30,     At December  31,
Identifiable Assets:                            1999              1998
                                              --------          --------

      Financial Services                      $ 47,376          $ 39,967
      Staff Augmentation                        46,108            41,714
      Corporate                                 23,853            19,502
                                              --------          --------
                                              $117,337          $101,183
                                              ========          ========


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 of  COMFORCE
Corporation,   COMFORCE   Operating,   Inc.   ("COI")  and  their   subsidiaries
(collectively, the "Company").

Overview

     The  Company  operates  its  Staff  Augmentation   business  through  three
divisions  --  Information  Technologies,  Telecom and  Staffing  Services.  The
Company's outsourcing and consulting services are provided through its Financial
Services division.

     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,  information  technology  and  financial  services  sectors.
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 employees of the Company.  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,  and
offers retirement plans to eligible employees.

Results of Operations

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

     Net sales of services  for the three months ended June 30, 1999 were $111.1
million as compared to $118.1  million for the three months ended June 30, 1998.
This 5.9%  decline in net sales of services  is  attributable  principally  to a
decrease in sales in the Staffing Services  division due to substantially  lower
sales at a  Staffing  Services  division  customer  that had been the  Company's
largest  customer.  The decrease was partially  offset by sales increases in the
Company's Financial Services and Telecommunications divisions.

     Cost of services  for the three months ended June 30, 1999 was 80.6% of net
sales of services  compared  to cost of  services of 81.4% for the three  months
ended June 30, 1998. The cost of services  decrease as a percentage of net sales
for the 1999 period is a result of the  strategies  undertaken  by management to
increase margins,  as well as the Company's business mix, which reflected growth
in the Company's  Telecommunications  and Financial  Services  divisions.  These
divisions have historically  generated higher gross margins than the more mature
Staffing Services division.


                                        9

<PAGE>



     Selling,  general and administrative expenses decreased by $77,000, or 0.5%
during  the  second  quarter of 1999 as  compared  to the prior year  comparable
quarter.  Due to the decline of net sales of services discussed above,  selling,
general and  administrative  expenses as a  percentage  of revenue  increased to
12.9% for the three months  ended June 30, 1999  compared to 12.2% for the three
months ended June 30, 1998.

     Operating income for the three months ended June 30, 1999 was $5.5 million,
compared to $6.2 million for the three months ended June 30, 1998. This decrease
was  principally  attributable  to the reduced  net sales of services  discussed
above.

     The Company's interest expense for the three months ended June 30, 1999 and
1998 is  attributable  to the interest on the  Company's  credit  facility  with
Heller Financial, Inc. (the "Credit Facility"),  COI's 12% Senior Notes due 2007
(the "COI Notes") and the Company's 15% Senior  Secured PIK  Debentures due 2009
(the "PIK Debentures"),  which obligations were incurred in 1997, principally in
connection with the funding of business acquisitions.

     The income  tax  provision  for the three  months  ended June 30,  1999 was
$439,000 on income before taxes of $95,000,  compared to an income tax provision
of $617,000 on income  before  taxes of $768,000 for the three months ended June
30, 1998. The difference  between the Federal  statutory income tax rate and the
Company's  effective  tax rate  relates  primarily  to the  nondeductibility  of
amortization   expense   associated   with  certain   intangible   assets,   the
nondeductibility  of a portion of the interest  expense  associated with the PIK
Debentures and state income taxes.

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

     Net sales of  services  for the six months  ended June 30, 1999 were $218.2
million as compared to $230.1  million for the six months  ended June 30,  1998.
This 5.2%  decline in net sales of services  is  attributable  principally  to a
decrease  in sales in the  Staffing  Services  division  due to lower sales at a
Staffing  Services  division  customer  that  had  been  the  Company's  largest
customer.  The decrease was partially offset by sales increases in the Company's
Financial Services and Telecommunications divisions.

     Cost of  services  for the six months  ended June 30, 1999 was 81.1% of net
sales of services compared to cost of services of 81.6% for the six months ended
June 30, 1998.  The cost of services  decrease as a percentage  of net sales for
the 1999  period is a result  of the  strategies  undertaken  by  management  to
increase margins,  as well as the Company's business mix, which reflected growth
in the Company's  Telecommunications  and Financial  Services  divisions.  These
divisions have historically  generated higher gross margins than the more mature
Staffing Services division.

     Selling, general and administrative expenses increased by $41,000, or 0.1%,
during  the six  months  ended  June 30,  1999 as  compared  to the  prior  year
comparable  period. Due to the decline of net sales of services discussed above,
selling,  general  and  administrative  expenses  as  a  percentage  of  revenue
increased to 13.0% for the six months ended June 30, 1999  compared to 12.3% for
the six months ended June 30, 1998.

     Operating  income for the six months ended June 30, 1999 was $9.5  million,
compared to operating  income of $11.2 million for the six months ended June 30,
1998.  This decrease was  principally  attributable  to the reduced net sales of
services discussed above.

     The Company's  interest  expense for the six months ended June 30, 1999 and
1998 is  attributable  to the interest on the  Company's  credit  facility  with
Heller Financial, Inc. (the "Credit Facility"),  COI's 12% Senior Notes due 2007
(the "COI Notes") and the Company's 15% Senior  Secured PIK  Debentures due 2009
(the "PIK Debentures"),  which obligations were incurred in 1997, principally in
connection with the funding of business acquisitions.

     The  income  tax  provision  for the six  months  ended  June 30,  1999 was
$291,000  on a loss  before  taxes of $1.2  million,  compared  to an income tax
provision of $947,000 on income before taxes of $641,000 for the six months


                                       10

<PAGE>



ended June 30, 1998. The  difference  between the Federal  statutory  income tax
rate  and  the   Company's   effective   tax  rate  relates   primarily  to  the
nondeductibility  of amortization  expense  associated  with certain  intangible
assets,  the  nondeductibility  of a portion of the interest expense  associated
with the PIK Debentures and state income taxes.

Financial Condition, Liquidity and Capital Resources

     The Company pays its billable  employees  weekly for their services  before
receiving payment from its customers. In addition, certain statutory payroll and
related taxes as well as other fringe benefits are generally paid by the Company
before  the  Company  receives  payment  from  its  customers.  Consequently,  a
significant  portion of the  Company's  cost of services is normally paid by the
Company  prior  to  receiving  payment  from  its  customers.  Increases  in the
Company's net sales of services, resulting from expansion of existing offices or
establishment of new offices, will require additional cash resources.

     The debt service costs  associated with the borrowings  under the COI Notes
and the Credit Facility have significantly reduced the Company's liquidity.  The
debt service costs  associated with the PIK Debentures may be satisfied  through
the issuance of new notes. To date, the Company has chosen to issue new notes to
pay these costs.

     Management of the Company believes that, based on the results of operations
and anticipated growth,  including growth through  acquisitions,  cash flow from
operations and funds  anticipated to be available under the Credit Facility will
be  sufficient  to  service  the  Company's  indebtedness,  to  fund  growth  at
anticipated levels and to meet anticipated working capital  requirements for the
foreseeable  future.  However,  various  factors,  including  those described or
referenced  under  "Forward-Looking  Statements"  and "Year 2000" in this Item 2
could prevent the Company from realizing these objectives.

     As of June 30, 1999, the Company had outstanding $24.9 million in principal
amount of PIK Debentures  bearing  interest at a rate of 15%,  $110.0 million in
principal  amount  of COI  Notes  bearing  interest  at a rate of 12% and  $53.8
million  outstanding  under the Credit Facility  bearing  interest at an average
rate of 7.2% per annum.

     As of June  30,  1999,  approximately  $139.9  million,  or  53.2%,  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  approximately  $4.4 million.  Various
factors could impact the Company's ability to generate the earnings necessary to
support  this  amortization   schedule,   including  the  factors  described  or
referenced under "Forward-Looking Statements" and "Year 2000" in this Item 2.

     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.  The maximum amount of the
remaining  potential  earn-out  payments is $2.9  million in cash payable in the
three-year  period from 1999 to 2001.  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.

     During the six months ended June 30, 1999, the Company's primary sources of
funds to meet  working  capital  needs  were from  borrowings  under the  Credit
Facility. Cash and cash equivalents increased $2.6 million during the six months
ended June 30, 1999. Cash flows used in investing activities of $4.7 million and
cash flows used in operating  activities of $1.0 million were less than the cash
flows  provided by  financing  activities  of $8.3  million.  Cash flows used in
investing  activities were principally  related to additions to fixed assets and
the  payment  of  earn-out  consideration.  Cash  flows  provided  by  financing
activities  were  principally  attributable  to net borrowings  under the Credit
Facility.


                                       11

<PAGE>



Year 2000

     The Company has  completed  a review of its  potential  Year 2000 issues by
examining all of its internal and third party  applications,  operating systems,
interfaces and hardware.  Independent of its Year 2000 compliance  program,  the
Company  initiated a major system conversion in early 1998, based principally on
industry-leading  PeopleSoft(R) software, in order to improve access to business
information through common, integrated computing systems nationwide. This system
is expected to make the Company's IT systems fully Year 2000 compliant. To date,
the Company has converted substantially all of its billing and payable functions
to the system,  and has converted the majority of its accounts  receivable.  The
remainder of these  conversions  are  expected to be completed by September  30,
1999. By that date,  all of the Company's  operations  will be employing the new
system,  with the sole  exception  of its Camelot  Group,  which was acquired in
1998. Camelot Group's systems have been certified as Year 2000 compliant.

     In assessing  potential  Year 2000 issues,  the Company  established a Year
2000 committee, a compliance program and a budget. The committee has divided the
Company's Year 2000 compliance program into four sections: (1) systems inventory
and assessment,  (2) systems testing evaluation and monitoring,  (3) third party
suppliers  and  (4)  contingency  planning.  Each of  these  sections  has  been
completed  except  monitoring  and  contingency  planning,  which will  continue
through  year-end.  The  Company  expects  that all of its IT systems and non-IT
systems will be Year 2000  compliant  prior to December  31,  1999.  The Company
estimates  the total  Year 2000  expenditures  that will have been  incurred  by
year-end  will not be  material.  Not  included  in these costs are the costs of
conversion  to the  new  integrated  computing  systems,  which  was  undertaken
independently of its Year 2000 compliance initiative.

     As a part of its Year 2000 compliance program, the Company has communicated
with its material  third-party  vendors and service providers in order to assess
their  Year  2000  readiness  and seek to  ensure  that  they  will be Year 2000
compliant.  The Company has  received  reasonable  assurances  from its material
vendors  that they are or will  before  year-end  be Year 2000  compliant.  With
respect to the purchases of computer systems,  or upgrades for existing computer
systems,  the Company's  policy is to receive Year 2000  certification  from the
vendor prior to completing the purchase.

     The  statements  above,  which express the Company's  belief that Year 2000
problems  will  not  have a  material  adverse  effect  on the  Company,  may be
forward-looking  statements.  Although  management believes that the Company has
acted with  appropriate  diligence to address  potential  Year 2000  issues,  no
assurance  can be given that Year 2000  issues  will not  materially  affect its
business or  operations.  Factors which could  potentially  cause the Company to
suffer  business  interruptions  or other losses include the failure of its Year
2000  project  team  to  identify  latent  or  other   non-compliant   codes  or
technologies, the failure of any of the customers, vendors, service suppliers or
financial  institutions  with which the Company  deals to address their own Year
2000 problems or the  ineffectiveness  of any contingency  plans put in place by
the Company to mitigate the effects of  interruptions  in its  businesses due to
Year 2000 problems.

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 in
the  telecommunications  and IT  sectors  is  typically  lower  during the first
quarter until customers' operating budgets are finalized.


                                       12

<PAGE>



Other Matters

     In June 1998, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"). The FASB issued SFAS No. 137 in
June 1999 to delay the  effective  date of SFAS 133 to  fiscal  years  beginning
after June 15, 2000  (January  1, 2001 for the  Company).  The Company  does not
expect the  adoption of SFAS 133, as amended by SFAS 137, to have a  significant
effect on the Company's results of operations or its financial position.

Forward Looking Statements

     The matters  discussed  below and elsewhere in this Report contain  forward
looking  statements that involve risks and  uncertainties,  many of which may be
beyond the Company's control.  See "Forward Looking Statements" in Item 1 of the
Company's Annual Report on Form 10-K for the year ended December 31, 1998, "Year
2000" in Part I, Item 2 herein and "Risk Factors" in the Company's  Registration
Statement on Form S-3 filed with the SEC on July 2, 1999 (Reg.  No.  333-82201).
These  disclosures may be accessed through the Website  maintained by the SEC at
"http://www.sec.gov" or, upon request made to Linda Annicelli, Vice President of
Administration at COMFORCE Corporation, 415 Crossways Park Drive, P.O. Box 9006,
Woodbury, NY 11797, telephone  516-437-3300.  The Company will provide a copy of
these disclosures without charge.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     The  preponderance of the Company's  borrowings are fixed rate obligations.
During  the six  months  ended  June 30,  1999,  only  approximately  17% of the
Company's interest expense was attributable to variable rate loans, all of which
were under the Credit Facility.  Consequently,  management does not believe that
any  adjustments  to the rate  under the  Credit  Facility  are likely to have a
material  impact on its  results of  operations  in the  immediate  future.  The
Company has not entered into any swap  agreements or other hedging  transactions
as a means of limiting its exposure to interest rate fluctuations.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

     Since the date of the filing of the  Company's  Annual  Report on Form 10-K
for the year ended  December  31,  1998,  there have been no material  new legal
proceedings   involving  the  Company  or  any  material   developments  to  the
proceedings described in such 10-K except for the following: In the suits before
the  Connecticut  Superior  Court  brought by Austin  Iodice and Anthony  Giglio
against the Company  concerning  whether stock options  issued by the Company to
the plaintiffs  remain in effect,  the parties have agreed to enter into binding
mediation to resolve all issues.

Item 2.  Changes in Securities and Use of Proceeds.

     On  May  20,  1999,  the  Company  issued  193,124  shares  to  the  former
shareholder of the Company's Rhotech  subsidiary under the terms of the earn-out
provisions of the agreement pursuant to which the stock of RHO Company, Inc. was
acquired by the Company.  In issuing these shares,  the Company  relied upon the
exemption  from  registration  under Section 4(2) of the Securities Act of 1933.
The Company subsequently registered these shares for resale under a registration
statement filed with the Securities and Exchange Commission.

Item 3.  Defaults Upon Senior Securities.

     Not applicable.


                                       13

<PAGE>


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

     On June 9, 1999, the annual meeting of the  stockholders of the Company was
held.  At this  meeting,  the  stockholders  voted  on the  election  of John C.
Fanning,  Harry Maccarrone,  Michael D. Madden,  Keith Goldberg,  Daniel Raynor,
Gordon  Robinett  and Kenneth J. Daley to the Board of Directors of the Company,
with  each to serve for a term of one (1) year.  All of these  individuals  were
elected upon the following vote:



    Nominee                              For                     Withheld
John C. Fanning                       13,072,193                  59,899
Harry Maccarrone                      13,072,212                  59,880
Michael D. Madden                     13,072,212                  59,880
Keith Goldberg                        13,072,189                  59,903
Daniel Raynor                         13,072,203                  59,889
Gordon Robinett                       13,072,212                  59,880
Kenneth J. Daley                      13,072,200                  59,892

Item 5.  Other Information.

     Not applicable.

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

(a) Exhibits.

27   Financial Data Schedule of COMFORCE Corporation.

(b) Reports on Form 8-K.

     On May 7, 1999,  the Company  filed a Current  Report on Form 8-K to report
under Item 4 a change in independent accountants.


                                       14

<PAGE>



                                   SIGNATURES

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


COMFORCE Corporation


By:  /s/ Robert H.B. Baldwin, Jr.
     -------------------------------------------------
     Robert H.B. Baldwin, Jr.,
     Senior Vice President and Chief Financial Officer

Date: August 12, 1999


COMFORCE Operating, Inc.

By:   /s/ Robert H.B. Baldwin, Jr.
     -------------------------------------------------
     Robert H.B. Baldwin, Jr.,
     Senior Vice President and Chief Financial Officer

Date: August 12, 1999



                                       15