UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                    FORM 10-Q


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

                  For the quarterly period ended June 30, 1999

                         Commission file number: 0-30162



                        RECKSON SERVICE INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)


Delaware                                                  11-3383642
(State other jurisdiction of
incorporation of organization)             (IRS. Employer Identification Number)

10 East 50th Street, New York, NY                             10022
(Address of principal executive office)                     (zip code)

                                 (212) 931-8000
               (Registrant's telephone number including area code)



         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) Yes X No __,
   and (2) has been subject to such filing requirements for the past 90 days.
                                   Yes X No .



       This company has only one class of common stock, issued at $.01 par
     value per share with 25,361,834 shares outstanding as of August 10, 1999










                        Reckson Service Industries, Inc.
                                Quarterly Report
                    For the Three Months Ended June 30, 1999

                                Table of Contents

     Index                                                                Page
     ----------------- -------------------------------------------------------
     Part I.  Financial Information
     -------------------------------------------------------------------------

     Item 1.Financial Statements


            Consolidated  Balance  Sheets of Reckson  Service  Industries,
            Inc. as of June 30, 1999 (unaudited) and December 31, 1998---------3


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

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


            Notes  to  the  Consolidated   Financial  Statements  of  Reckson
            Service Industries, Inc (unaudited)--------------------------------6

     Item 2.
            Management's  Discussion  and Analysis of Financial  Condition
            and Results of Operations-----------------------------------------19
     Item 3.
            Quantitative and Qualitative Disclosures about Market Risk--------25

     ---------------------------------------------------------------------------
     Part II. Other Information
     ---------------------------------------------------------------------------

     Item 1.     Legal Proceedings--------------------------------------------26
     Item 2.     Changes in Securities and Use of Proceeds....................26
     Item 3.     Defaults Upon Senior Securities..............................26
     Item 4.     Submission of Matters to a Vote of Securities Holders........26
     Item 5.     Other Information............................................26
     Item 6.     Exhibits and reports on Form 8-K.............................26

     ----------------- ------------------------------------------------ --------
     Signatures                                                               26
     ----------------- ------------------------------------------------ --------




Part 1 - Financial information
Item 1 - Financial statements

                        Reckson Service Industries, Inc.
                          Consolidated Balance Sheets
<TABLE>
<S>                                                                                      <C>                       <C>

                                                                                  June 30, 1999            December 31, 1998
                                                                              ----------------------     ----------------------
                                                                                    (Unaudited)                (Note 1)
Assets:
Cash and cash equivalents.....................................                      $       192,714             $    2,025,527
Equity investments (Note 3)...................................                           76,372,758                 45,837,711
Affiliate receivables (Notes 3 and 5).........................                            1,951,182                  9,396,070
Equipment (net of depreciation of $35,013 and $15,337 at
June 30, 1999 and December 31, 1998, respectively) ...........                              203,986                     99,928
Other assets..................................................                            2,060,217                  1,483,427
                                                                              ----------------------     ----------------------
    Total Assets..............................................                     $     80,780,857            $    58,842,663
                                                                              ======================     ======================

Liabilities and Shareholders' Equity:
Accounts payable and accrued expenses.........................                     $      5,839,029            $     1,893,657
Credit facilities with related parties (Note 5) ..............                           67,006,239                 40,981,500
                                                                              ----------------------     ----------------------

     Total Liabilities........................................                           72,845,268                 42,875,157
                                                                              ----------------------     ----------------------


Commitments and Contingencies.................................                                  ---                        ---

Shareholders' Equity: (Notes 1 and 4)
Preferred stock, $.01 par value, 25,000,000 shares authorized,
   None issued and outstanding................................                                  ---                        ---
Common stock, $.01 par value, 100,000,000 shares authorized,
24,811,834 and 24,685,514 shares issued and outstanding, at
June 30, 1999 and December 31,1998, respectively..............                              248,118                    246,855
Additional paid in capital....................................                           27,883,897                 24,126,341
Accumulated deficit...........................                                          (20,196,426)                (8,405,690)
                                                                              ----------------------     ----------------------

    Total Shareholders' Equity................................                            7,935,589                 15,967,506
                                                                              ----------------------     ----------------------

    Total Liabilities and Shareholders' Equity................                     $     80,780,857            $    58,842,663
                                                                              ======================     ======================

          (See accompanying Notes to Consolidated Financial Statements)
</TABLE>




                        Reckson Service Industries, Inc.
                      Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<S>                                                        <C>                <C>                 <C>                 <C>
                                                     For the three       For the three        For the six         For the six
                                                     months ended         months ended        months ended       months ended
                                                     June 30, 1999       June 30, 1998       June 30, 1999       June 30, 1998
                                                    ----------------    ----------------     ---------------    ----------------

Revenues:

Interest income........................                 $   739,010          $   94,271        $  1,187,620         $   140,932
Management fee income (Note 5)........                       83,334             166,666             166,667             166,666

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

    Total Revenues                                          822,344             260,937           1,354,287             307,598
                                                    ----------------    ----------------     ---------------    ----------------

Loss on equity investments................               (1,163,871)            (82,306)         (1,535,302)           (506,659)
                                                    ----------------    ----------------     ---------------    ----------------


Expenses:
Professional fees.....................                      257,284                ----             457,543                 ---
General and administrative expenses............           7,092,705             282,863           7,776,904             485,698
Terminated transaction and related costs..........          400,001                ----             413,908                 ---
Interest expense (Note 5).................                1,744,121             312,244           2,961,366             440,926
                                                    ----------------    ----------------     ---------------    ----------------


Total Expenses......................                      9,494,111             595,107          11,609,721             926,624
                                                    ----------------    ----------------     ---------------    ----------------


Net Loss...........................                    $ (9,835,638)        $  (416,476)       $(11,790,736)       $ (1,125,685)
                                                    ================    ================     ===============    ================

Basic and diluted net loss per weighted average
        common share.............                        $    (0.40)        $    (0 .09)         $    (0.48)         $    (0.27)
                                                    ================    ================     ===============    ================

Basic and diluted weighted average common
        shares outstanding....................           24,712,383           4,513,975          24,699,285           4,191,068

                                                    ================    ================     ===============    ================

</TABLE>



          (See accompanying Notes to Consolidated Financial Statements)



                        Reckson Service Industries, Inc.
                      consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<S>                                                                                          <C>                       <C>

                                                                                         Six months               Six months
                                                                                           ended                    ended
                                                                                         June 30, 1999          June 30, 1998
                                                                                    ---------------------    ---------------------

Cash  Flows from Operating Activities:
Net Loss                                                                                $   (11,790,736)          $   (1,125,685)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
     Amortization and depreciation..............................................                 19,676                   20,992
     Loss on equity investments.................................................              1,535,302                  506,659
     Non-cash compensation......................................................              3,719,372                     ----
Changes in operating assets and liabilities:
     Other assets...............................................................              (576,790)                (254,502)
     Purchase of equipment......................................................              (123,734)                 (37,431)
     Organization and pre-acquisition costs.....................................                   ----                (333,768)
     Accounts payable and accrued expenses......................................              3,945,374                  439,516
     Affiliate receivables......................................................              7,444,888                (783,426)
                                                                                    ---------------------     ---------------------

Net cash provided by (used in) operating activities.............................              4,173,352              (1,567,645)
                                                                                     ---------------------    ---------------------

Cash Flows From Investing Activities:
     Investment in and convertible loans to On-Site Ventures, LLC...............            (5,247,077)              (3,109,332)
     Investment in and advances to RSVP Holdings, LLC...........................           (14,504,971)              (9,642,000)
     Investment in and advances to VANTAS and predecessor entities..............           (12,318,301)              (1,069,326)
     Other investments..........................................................                   ----                (278,985)

                                                                                     ---------------------    ---------------------
Net cash used in investing activities...........................................           (32,070,349)             (14,099,643)
                                                                                     ---------------------    ---------------------

Cash Flows From Financing Activities:
    Issuance of Common Stock....................................................                135,445                     ----
    Net proceeds from credit facilities with related parties....................             26,024,739                     ----
    Net proceeds from affiliate loans...........................................                   ----               16,287,032
    Costs of capital............................................................               (96,000)                (701,050)
                                                                                     ---------------------    ---------------------
Net cash provided by financing activities.......................................             26,064,184               15,585,982
                                                                                     ---------------------    ---------------------
Net decrease in cash and cash equivalents.......................................             (1,832,813)                 (81,306)

Cash and cash equivalents at beginning of period................................              2,025,527                  129,704
                                                                                     ---------------------    ---------------------

Cash and cash equivalents at end of period......................................         $      192,714         $         48,398
                                                                                     =====================    =====================

Supplemental Disclosure of Cash Flow Information:
    Cash paid during the period for interest....................................         $    1,091,443         $           -----
                                                                                     =====================    =====================

Supplemental Disclosure of Non-Cash Transactions:
Contribution of assets from Interoffice SuperHoldings Corporation and
 Reckson Executive Centers, Inc. to VANTAS........................                       $  (21,409,152)        $           -----
                                                                                     =====================    =====================


</TABLE>






          (See accompanying notes to consolidated financial statements)




                        RECKSON SERVICE INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
                                   (UNAUDITED)

1.   Description of the Company

Reckson Service  Industries,  Inc. ("RSI" or the "Company"),  was formed on July
15, 1997,  to create a service  company  that  focuses on  providing  outsourced
business  services for small to medium sized companies.  RSI seeks to accomplish
this by identifying and acquiring  interests in operating  companies that engage
in such outsource  service  businesses or by forming and growing such businesses
internally.

     The  Company's  primary  business  is to  create  and  manage a  system  of
interrelated  outsource business services to be offered to small to medium sized
companies in the marketplace  through an e-commerce based  infrastructure.  Over
time,  RSI's  strategic  goal is to develop  and  package a bundle of  outsource
business  service  products  that it will  market as a "one  stop"  solution  to
satisfy the outsourcing needs of small to medium sized businesses.  RSI's growth
strategy is to acquire  businesses  or  significant  interests in  businesses in
targeted  business  service  sectors,  and,  where  appropriate,  to retain  the
existing  management of such businesses.  Specifically,  RSI seeks opportunities
for which  there is broad  demand  in the  marketplace,  strong  entrepreneurial
management,  a reputation for high quality  services and growth  potential.  The
Company seeks to add value by supporting  management,  offering strategic advice
and assisting in other aspects of developing the businesses  where  appropriate.
RSI pursues  growth  opportunities  in each business by (i)  accessing  small to
medium sized companies included in Reckson Associates Realty Corp. customer base
and in the general marketplace  nationwide,  (ii) integrating each business into
its  centralized  e-commerce  based  infrastructure  and (iii)  acquiring  other
businesses with complementary outsource service products.

     Reckson Strategic Venture Partners, LLC ("Reckson Strategic") was formed on
March  5,  1998 to  invest  in real  estate  and real  estate-related  operating
companies with  experienced  management teams in market sectors which are in the
early stages of their growth cycle or offer unique  circumstances for attractive
investments,  as well as platforms for future growth. Through RSVP Holdings, LLC
("Holdings"),  the  Company  is a  managing  member and 100% owner of the common
equity of Reckson  Strategic.  New World  Realty,  LLC,  an entity  owned by two
individuals  retained by Holdings,  (the "RSVP Managing  Directors"),  acts as a
managing member of Holdings,  and have a carried interest which provides for the
RSVP Managing  Directors to receive a share in the profits of Reckson  Strategic
after the  Company  and Paine  Webber  Real  Estate  Securities,  Inc.,  ("Paine
Webber") have received  certain minimum  returns and a return of capital.  Paine
Webber is a  non-managing  member and  preferred  equity owner who has committed
$200 million in capital (the "Preferred  Equity Facility") and shares in profits
and losses of Reckson Strategic with the Company,  subject to a maximum internal
rate of return of 16% of  invested  capital.  On April 24,  1998,  Paine  Webber
assigned 25% of its preferred equity interest in Reckson Strategic, representing
an  unfunded  capital  commitment  of $50  million to Stratum  Realty  Fund,  LP
("Stratum"). The assignment provided Stratum with similar rights and priorities.
On March  17,  1999,  Paine  Webber  transferred  all of its  rights,  title and
interest in its initial invested capital of to Stratum.  This transfer  included
the  right  to   distributions   based  upon  the   amount  of  funded   capital
contributions.  As a result of this transfer,  Stratum has funded its entire $50
million committment as of June 30,1999.




                        RECKSON SERVICE INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
                                   (UNAUDITED)

2.   Summary of Significant Accounting Policies

Basis of Presentation

     The accompanying  consolidated  financial  statements present the financial
position of the Company at June 30, 1999,  and December 31, 1998 and the results
of its  operations for the three and six months ended June 30, 1999 and 1998 and
its cash flows for the six  months  ended June 30,  1999 and 1998.  The  Company
accounts for its investments of less than controlling interests under the equity
method of accounting.  All significant  intercompany  balances and  transactions
have been eliminated in the consolidated financial statements.

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  Operating  results for the six month period ended June 30, 1999,
is not  necessarily  indicative of the results that may be expected for the year
ended December 31, 1999.

     The balance  sheet at December 31, 1998,  has been derived from the audited
financial  statements  at that date but does not include all of the  information
and footnotes required by generally accepted accounting  principles for complete
financial statements.

     For further information, refer to the consolidated financial statements and
footnotes  thereto  included in the Registrant  Company's  annual report on Form
10-K for the year ended December 31, 1998.

Use of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents

     The Company  considers  highly liquid  investments with a maturity of three
months or less when purchased to be cash equivalents.

Long-Lived Assets

     The Company  assesses the need to record  impairment  losses on  long-lived
assets used in  operations  when  indicators of  impairment  are present.  On an
on-going  basis,  management  reviews  the value and period of  amortization  or
depreciation  of  long-lived  assets,  including  excess  investments  of equity
investments.  During this  review,  the  Company  re-evaluated  the  significant
assumptions used in determining the original cost of long-lived assets. Although
the assumptions may vary from transaction to transaction, they generally include
revenue growth,  operating  results,  cash flows and other  indicators of value.
Management then determines whether there has been a permanent  impairment of the
value of  long-lived  assets  based  upon  events or  circumstances  which  have
occurred since acquisition. As of June 30, 1999, the Company has determined that
there has been no impairment on its long lived assets.

Stock Options and Grants

     The Company has elected to follow  Accounting  Principles Board Opinion No.
25,   "Accounting  for  Stock  Issued  to  Employees"  ("APB  25")  and  related
Interpretations  in accounting for its employee stock options and grants because
the alternative  fair value accounting  provided for under Financial  Accounting
Standards  Board  ("FASB")  Statement  No.  123,   "Accounting  for  Stock-Based
Compensation,"  ("FAS No. 123") requires the use of option valuation models that
were not developed for use in valuing employee stock options.







                        RECKSON SERVICE INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
                                   (UNAUDITED)

2.   Summary of Significant Accounting Policies (continued)

Income Taxes

     At  inception,  the  Company  adopted  Statement  of  Financial  Accounting
Standards  ("SFAS") No. 109,  "Accounting  for Income  Taxes"  ("SFAS No. 109"),
which  prescribes an asset and liability  method of accounting for income taxes.
Under SFAS No. 109, deferred tax assets are recognized for temporary  difference
that will result in deductible  amounts in future years and for carry forward. A
valuation  allowance  is  recognized  if it is more  likely  than not that  some
portion  or the  deferred  asset  will not be  realized.  At June  30,  1999 and
December  31, 1998,  any deferred tax assets have been  reserved for 100% due to
the uncertainty as to whether these assets will have benefit in future periods.

Derivative Instruments and Hedging Activities

     In June 1998, the FASB issued Statement No.133,  "Accounting for Derivative
Instruments  and Hedging  Activities",  which is required to be adopted in years
beginning  after June 15, 1999.  The Statement  permits early adoption as of the
beginning of any fiscal quarter after its issuance. The Company expects to adopt
the new Statement  effective  January 1, 2001.  The Company does not  anticipate
that the  adoption  of this  Statement  will have any  effect on its  results of
operations or financial position.

Reclassifications

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



                        RECKSON SERVICE INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
                                   (UNAUDITED)

3.   Investments

The Company's equity investments are summarized as follows:
<TABLE>
<S>                                                    <C>                 <C>                      <C>                    <C>


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

RSVP Holdings, LLC...................             $  28,112,162          $   15,560,896
Convertible loans to On-Site Ventures, LLC.....      12,278,500               7,101,330
VANTAS and predecessor entities............          35,982,096              23,175,485
                                               -----------------    --------------------


Total equity investments.............             $  76,372,758          $   45,837,711
                                               =================    ====================



         The following are the Company's summarized earnings/(losses) on
               equity investments:

                                                  For the three          For the three           For the six          For the six
                                                   months ended          months ended           months ended          months ended
                                                  June 30, 1999          June 30, 1998          June 30, 1999        June 30, 1998
                                               -----------------    --------------------    ------------------    -----------------
RSVP Holdings, LLC.................             $  (1,344,538)          $     (75,062)        $  (1,953,705)        $   (618,474)
On-Site Ventures, LLC..................               (47,903)                 (4,733)              (69,907)              (4,733)
VANTAS and predecessor entities............           228,570                 (2,511)               488,310              (2,511)
Other investments.................                       ----                    ----                  ----              119,059

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

Net loss on equity investments.............      $  (1,163,871)          $     (82,306)        $  (1,535,302)        $   (506,659)
                                               =================    ====================    ==================    =================

</TABLE>




                        RECKSON SERVICE INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
                                   (UNAUDITED)

3.       Investments (continued)

     The Company's significant investments are summarized as follows:


RSVP Holdings, LLC

         Summarized financial information of RSVP Holdings, LLC and the
         Company's investment in, advances to and share of loss of RSVP
                          Holdings, LLC is as follows:
<TABLE>
<S>                                                                                        <C>                     <C>

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

Assets:

Investment in Dominion Venture Group, LLC.................                        $     38,979,848           $     29,288,973
Other equity investments......................                                          17,751,585                  5,970,983
Deferred compensation...........................                                         4,349,839                  4,938,539
Other assets................................                                             5,507,424                  4,552,917
                                                                              ---------------------     ----------------------


     Total Assets...............................                                  $     66,588,696            $    44,751,412
                                                                              =====================     ======================


Liabilities and Members' Equity:

Due to affiliates................................                                 $      1,591,459            $     1,591,459
Other liabilities..............................                                          1,471,501                  1,397,412
                                                                              ---------------------     ----------------------

      Total Liabilities............................                                      3,062,960                  2,988,871
                                                                              ---------------------     ----------------------

Minority Interest..............................                                         40,413,574                 31,201,645
Preferred capital offering costs..........................                              (5,000,000)                (5,000,000)

RSI's investment in and advances to Holdings..................                          28,112,162                 15,560,896
                                                                              ---------------------     ----------------------


     Total Liabilities and Members' Equity.................                       $     66,588,696            $    44,751,412
                                                                              =====================     ======================
</TABLE>

            In connection with the Preferred Equity Facility, Reckson
         Strategic paid a commitment fee of $5 million, which represents
                 2.5% of the total preferred equity commitment.



                        RECKSON SERVICE INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
                                   (UNAUDITED)
3.     Investments (continued)
<TABLE>
<S>                                                        <C>                 <C>                    <C>             <C>

Statements of Operations
                                                     For the three        For the three         For the six    For the period from
Revenues:                                            months ended          months ended         months ended    February 26, 1998
                                                     June 30, 1999        June 30, 1998        June 30, 1999     to June 30, 1998
                                                   ------------------    -----------------    ----------------  --------------------

Other income....................                        $       ----          $   254,746          $      ----        $     254,746
Interest income...................                            84,466               52,114              147,582               52,547
                                                   ------------------    -----------------    -----------------   ------------------

     Total Revenues................                           84,466              306,860              147,582              307,293
                                                   ------------------    -----------------    -----------------    -----------------


Equity in earnings/(loss) on equity investments

Dominion Venture Group, LLC...........                      123,879                 ----               84,375                 ----
Other equity investments.................                (2,019,243)            (117,148)          (2,631,604)            (117,148)

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

       Net loss on equity investments.........           (1,895,364)            (117,148)          (2,547,229)            (117,148)
                                                   ------------------    -----------------    -----------------    -----------------


Expenses:
Operating expenses.................                          240,170              219,848              369,439              400,196
General and administrative expenses.........               1,017,182            1,019,233            1,899,449            1,292,649
Interest expense....................                         238,207              229,694              305,721              278,524
Depreciation and amortization..............                   15,248               32,950               24,803               74,201
                                                   ------------------    -----------------    -----------------    -----------------


     Total Expenses..................                      1,510,807            1,501,725            2,599,412            2,045,570
                                                   ------------------    -----------------    -----------------    -----------------


Minority Interest share of loss.............             (1,977,167)          (1,236,951)          (3,045,354)          (1,236,951)
                                                   ------------------    -----------------    -----------------    -----------------


RSI's share of net loss of RSVP Holdings, LLC.....    $  (1,344,538)         $   (75,062)       $  (1,953,705)      $     (618,474)
                                                   ------------------    -----------------    -----------------    -----------------
</TABLE>

Dominion Venture Group,LLC

     On August 27, 1998,  the Company  formed a joint  venture  between  Reckson
Strategic and Dominion,  an  Oklahoma-based,  privately owned group of companies
that  focuses  on the  development,  acquisition  and  ownership  of  government
occupied office buildings and correctional facilities. The new venture, Dominion
Venture Group, LLC (the "Dominion  Venture"),  is owned by RSVP-Dominion  LLC, a
subsidiary of Reckson  Strategic and by Burgess  Services,  LLC, an entity owned
and  controlled  by Calvin  Burgess,  President and Chief  Executive  Officer of
Dominion. The Dominion Venture engages primarily in acquiring, developing and/or
owning government occupied office buildings and privately operated  correctional
facilities  and  related  activities.  Under the  operating  agreement,  Reckson
Strategic  is to invest up to $100  million,  some of which may be  invested  by
Reckson Operating Partnership,  LP ("Reckson") for capital requirements approved
by Reckson Strategic. Reckson Strategic funded its total capital contribution of
approximately $8.5 million through draws under its $200 million Preferred Equity
Facility and a $100 million Reckson Strategic Facility with Reckson. Reckson has
contributed approximately $15.6 million in connection with the Dominion Venture.




                        RECKSON SERVICE INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
                                   (UNAUDITED)



Other

     On April 26, 1999,  Reckson Strategic  acquired interests in joint ventures
in two lodging resorts.  Reckson Strategic  invested  approximately $5.7 million
for  interests  in both  properties. The  objective of these  investments  is to
participate in the economic  revitalization  of Sullivan County,  New York which
includes the Catskill Mountains area.

     As of June 30,1999,  Reckson Strategics'  investment in the assisted living
industry,  which has a carrying value of $2.6 million,  is currently  being held
for sale. No loss has been recognized as a result of this decision.


Executive Office Suites

     On January 8, 1999, Interoffice Superholdings  Corporation  ("Interoffice")
(36  executive  office  suite  centers)  and  Reckson  Executive  Centers,  Inc.
("Reckson  Executive") (8 executive  office suite centers)  merged with Alliance
National Incorporated,  a holding company which owned and operated approximately
90 nationally located executive office suite centers (the "Merger").  The merged
entity changed its name to VANTAS.  The  stockholders of Interoffice and Reckson
Executive received Series C Preferred Stock of VANTAS representing approximately
40% of the equity  interest in VANTAS of which  approximately  23% of VANTAS was
owned by the  Company as of the  merger.  The  holders of the Series C Preferred
Stock  have  the  right  to  appoint  four of the ten  members  of the  board of
directors of VANTAS,  including  Chairman of the Board and specified  preemptive
rights and other specified rights. RSI and the other stockholders of Interoffice
hold the Series C Preferred  Stock  received in respect of the Merger  through a
limited liability company of which RSI is the sole manager.

     RSI acquired  certain  ownership  rights  related to the Series C Preferred
Stock of VANTAS from a stockholder  of  Interoffice  which  provided the Company
with enhanced governance rights for approximately $6.5 million. In addition, the
Company paid $3.5 million to another stockholder of Interoffice for an option to
purchase that  stockholder's  effective interest in the Series C Preferred Stock
for a  purchase  price of $6.75  million.  If the option is not  exercised,  the
stockholder  has the right to sell such  interests to the Company at fair value,
as determined in accordance with the applicable agreement.  A significant number
of items presented to the Board of Directors  require the separate approval of a
majority of the  representatives of the Series C Preferred Stock on the Board of
Directors,  including  significant  acquisitions,  sale or  leasing  of  assets,
approval of VANTAS'  annual  operating  budget,  certain  borrowings and capital
expenditures by VANTAS, the hiring or termination of senior executives and other
matters.  The holders of Series C Preferred Stock also have the right to appoint
half of the  members  of the  executive  and  audit  committees  of the Board of
Directors.  The  preferred  stockholders  of VANTAS  (including  the  holders of
VANTAS' Class A Preferred  Stock,  Class B Preferred Stock and Class C Preferred
Stock)  were  granted  super-majority  voting  rights  with  respect  to certain
corporate actions,  including the issuance of equity securities,  changes to the
charter documents of VANTAS and other matters.

     Subsequent to June 30, 1999, the Company  increased its ownership in VANTAS
to 28.7%,  on a fully diluted basis with a $23 million equity  investment.  With
this investment, RSI increases its percentage of "as if converted" voting shares
it controls to 52.4%  non-controlling  interest.  This  investment was made as a
part of a $30 million financing,  a further portion of which the Company intends
to purchase in the third quarter.

     As of June  30,  1999,  the  excess  of RSI's  equity  in  VANTAS  over its
investment  ("Investment Basis Adjustment") was approximately $9.9 million.  The
Investment  Basis  Adjustment is being  amortized as income over the life of the
investment estimated at 30 years.

     VANTAS and RSI have also entered into an intercompany agreement pursuant to
which RSI has the opportunity to be the exclusive  provider of certain  business
services  to VANTAS,  provided  certain  third party and  "most-favored  nation"
conditions are satisfied.

     Summarized financial  information of VANTAS and the Company's investment in
and advances to and share of income from VANTAS is as follows:
<TABLE>
<S>                                                                                           <C>

Balance Sheet
                                                                                       June 30, 1999
                                                                                    ---------------------
Assets:
     Current assets............................                                          $    18,792,681
     Property & Equipment, net of accumulated depreciation..........                          49,138,215
     Intangibles, net of accumulated amortization...................                         179,681,076
     Other Assets.............................                                                10,166,448
                                                                                    ---------------------
Total Assets................................                                            $    257,778,420
                                                                                    =====================


Liabilities and Stockholders' Equity
     Current liabilities...........................                                      $    32,069,308
     Long-term liabilities..........................                                         128,530,623
                                                                                    ---------------------

Total Liabilities...............................                                             160,599,931
                                                                                    ---------------------

Stockholders' Equity
     Common Stock.............................                                                   563,321
     Non RSI Preferred Stock.........................                                         56,225,968
     Preferred Stock Accretion........................                                         3,953,127
                                                                                    ---------------------

     RSI net investment in VANTAS.....................                                       35,982,096
     Less:  RSI purchase option.......................                                       (3,500,000)
     RSI advance to VANTAS............................                                       (6,000,000)
     Add:  Investment Basis Adjustment...................                                     9,953,977
                                                                                    ---------------------

     Net RSI basis in VANTAS Preferred Stock...............                                  36,436,073
                                                                                    ---------------------
Total Stockholders' Equity.......................                                            97,178,489
                                                                                    ---------------------
Total Liabilities and Stockholders' Equity................                             $    257,778,420
                                                                                    =====================
</TABLE>



                        RECKSON SERVICE INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
                                   (UNAUDITED)
3.   Investments (continued)
<TABLE>
<S>                                                                                            <C>                   <C>

Statements of Income                                                                   For the three           For the period
                                                                                        months ended         January 8, 1999 to
                                                                                       June 30, 1999            June 30, 1999
                                                                                    ---------------------    --------------------

Revenues
Rental income............................                                                $    30,571,559         $    57,636,857
Services income...........................                                                    19,532,452              37,020,706
Other income..............................                                                     2,484,051               4,705,505
                                                                                    ---------------------    --------------------

     Total Revenues............................                                               52,588,062              99,363,068
                                                                                    ---------------------    --------------------

Expenses
Rent...................................                                                       20,111,485              37,474,431
Services................................                                                       7,611,480              14,393,631
General and administrative........................                                            17,399,795              33,003,765
Depreciation and amortization.....................                                             3,498,629               6,544,226
Interest expense............................                                                   2,194,711               3,954,736
Other expense............................                                                      1,221,527               2,715,981
                                                                                    ---------------------    --------------------

     Total Expenses......................
                                                                                              52,037,627              98,086,770
                                                                                    ---------------------    --------------------

Net income as reported by VANTAS...................                                             550,435               1,276,298
Less:  Non-RSI share.............................                                              (406,221)               (956,700)
                                                                                    ---------------------    --------------------

RSI's share of net income..........................                                              144,214                 319,598
Add:  Investment Basis Adjustment.....................                                            84,356                 168,712
                                                                                    ---------------------    --------------------

Net income from VANTAS.........................                                           $      228,570           $     488,310
                                                                                    =====================    ====================


</TABLE>


                        RECKSON SERVICE INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
                                   (UNAUDITED)
3.   Investments (continued)

Telecommunications

     In May 1998,  the  Company  purchased  a  membership  interest  in  On-Site
Ventures, LLC, ("On-Site") equal to 1% of the aggregate membership interests. In
addition, RSI held a subordinated note convertible into a 58.69% equity interest
in On-Site,  a company that  provides  advanced  telecommunications  systems and
services within commercial buildings and/or building complexes.  The Company had
advanced On-Site $6.5 million through December 31, 1998 to fund operations costs
under the  terms of the  note.  The loan  beared  interest  at a rate of 12% per
annum.  For the three months ended June 30, 1999, the Company  recognized a loss
of $47,903 on its equity interest.

     On February 10, 1999,  the  Company,  along with another  member of On-Site
(the "Members"), executed a senior secured promissory note with On-Site for $4.0
million.   The  Members   initially  funded  $2  million  in  which  RSI  funded
approximately  $1.35  million.  On April 9, 1999, the Company made an additional
advance of $677,583.  Interest was compounded monthly at a variable rate subject
to the terms in the loan agreement.

     On April 16, 1999, the Company  contributed  approximately  $3.2 million to
On-Site  as part of a $60  million  private  equity  financing  agreement  which
included  RSI and  several  third party  private  equity  investors.  The equity
agreement requires the Company to fund up to $15 million of which RSI has funded
approximately  $5.2 million which included  approximately  $2 million funded by
RSI under the $4 million senior secured promissory note.

     Upon receipt of required  regulatory  approvals,  on June 30, 1999, On-Site
merged  into  OnSite  Access,  Inc.,  a Delaware  corporation.  On July 1, 1999,
closings were completed for approximately  $20.5 million of additional equity in
connection  with  the $60  million  private  equity  financing  (the  "Financing
Transaction").  The investors,  including RSI, in the Financing  Transaction are
committed to invest the remaining $39.5 million, subject only to satisfaction of
the  conditions  of the Financing  Transaction  and the  corporation's  call for
funds.  In addition,  in connection  with the merger,  the principal and accrued
interest  outstanding under the $6.5 million subordinated RSI loan was converted
into 5,869,000  shares of Preferred  Stock issued to RSI. Upon fully funding its
capital  commitment,  RSI will own an approximate 33% diluted interest in OnSite
Access, Inc.

4.   Shareholders' Equity

     In June 1999, the shareholders  approved the 1999 Stock Option Plan for the
purpose of attracting and retaining executive officers,  directors and other key
employees.  Pursuant to the plan,  1,750,000 of the Company's  authorized common
shares have been  reserved for  issuance,  of which  550,000  shares were issued
subsequent to June 30,1999.

     As  a  part  of  the  Company's   ongoing   investment  in   organizational
infrastructure  and the  retention of high quality  senior  management,  certain
incentive  stock and stock option awards were granted on March 24, 1999 when the
closing stock price was $4.625. These incentive compensation awards were subject
to stockholder approval of the 1999 Stock Option Plan which occurred on June 24,
1999,  when  the  closing  stock  price  was  $14.9375.  Pursuant  to  financial
accounting  guidelines the date for measuring  compensation  costs would be June
24,  1999.  These awards vest over  various  periods  ranging from six months to
three years and include  tax loans which will be forgiven  one year  thereafter.
During the second  quarter and six month  periods  ended June 30, 1999,  results
include $5.6 million or $0.23 per basic  diluted  share,  associated  with these
awards, the majority of which is non-cash in nature.





                        RECKSON SERVICE INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
                                   (UNAUDITED)

5.   Transactions With Related Parties

     On June 15, 1998,  the Company  established  a RSI Facility with Reckson in
the amount of $100 million ("RSI Facility") for their service sector  operations
and  other  general  corporate  purposes.   Reckson  has  advanced  the  Company
approximately  $46.4 million at June 30, 1999.  These  advances bear interest at
12% per annum.  Additionally,  RSI established a $100 million RSVP Facility with
Reckson  for funding the Reckson  Strategic  investments.  The amount  available
under  RSVP  Facility  is reduced  by any  amount  invested  by Reckson in joint
ventures with Reckson  Strategic.  As of June 30, 1999, Reckson has advanced RSI
approximately   $20.6   million   under  the  RSVP  Facility  and  has  invested
approximately $16.2 million in joint ventures with Reckson Strategic.  The total
outstanding  at June 30,  1999,  owed by RSI under both  credit  facilities  was
approximately  $67.0 million.  Interest  accrued on these facilities at June 30,
1999 was approximately $2.7 million.

     The Company is entitled to a cumulative annual management fee of $2 million
with respect to Reckson Strategic, of which $1.5 million is subordinate to Paine
Webber  receiving  an annual  minimum  rate of return of 16% and a return of its
capital.  The unsubordinated  amount for the three and six months ended June 30,
1999 was $125,000 and $250,000, respectively.

     The Company  reimburses  Reckson with respect to general and administrative
expenses (including payroll expenses) incurred by Reckson for the benefit of the
Company.  For the  three  and six  months  ended  June  30,  1999,  the  Company
reimbursed Reckson $138,651 and $300,890, respectively, for such activities.

6.       Segment Disclosure

     Each of the  segments has a managing  director who reports  directly to the
Board of  Directors/Executive  Committees who have been  identified as the Chief
Operating  Decision  Makers  ("CODM")  because  of their  final  authority  over
resource allocation decisions and performance assessment.

The CODM evaluate the operating performance of these segments based on sectors.

     RSI's governance and control rights are generally  exercised  through Board
of Directors seats and through representation on the executive committees of the
various segment entities.




                        RECKSON SERVICE INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
                                   (UNAUDITED)

     The following table sets for the Company's  segments and their revenues and
expenses and other related disclosures as required by SFAS No. 131,  "Disclosure
about Segments of an Enterprise and Related Information",  ("SFAS 131"), for the
three months ended June 30, 1999 and 1998.
<TABLE>

<S>                                  <C>                     <C>                   <C>                <C>

                                                             June 30, 1999


                            Executive office        Telecommunications        RSVP Holdings           Total
                                 suites

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

Investment                   $       35,982,096       $      12,278,500       $    28,112,162      $ 76,372,758
                          ----------------------    --------------------    ------------------    --------------

Revenues and loss
on  equity                           52,588,062                 721,020           (1,810,898)
investments
                          ----------------------    --------------------    ------------------

Expenses                             52,037,627               5,188,804             1,510,807
                          ----------------------    --------------------    ------------------

Net Income (loss)                       550,435             (4,467,784)           (3,321,705)
                          ----------------------    --------------------    ------------------

RSI/Equity
in (loss) income              $         228,570        $       (47,903)      $    (1,344,538)     $ (1,163,871)
                          ----------------------    --------------------    ------------------    --------------

                                                             June 30, 1998

                            Executive office        Telecommunications         RSVP Holdings           Total
                                 suites
                          ----------------------    -------------------     ------------------    ---------------

Revenues                      $       1,478,426         $       72,075          $     189,712
                          ----------------------    -------------------     ------------------

Expenses                              1,503,788                545,411              1,501,725
                          ----------------------    -------------------     ------------------


Net income (loss)                      (25,362)              (473,336)            (1,312,013)
                          ----------------------    -------------------     ------------------


RSI/equity in
income (loss)                 $         (2,511)        $       (4,733)         $     (75,062)       $   (82,306)
                          ----------------------    -------------------     ------------------    ---------------

</TABLE>






                        RECKSON SERVICE INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
                                   (UNAUDITED)

     The following table sets for the Company's  segments and their revenues and
expenses  and other  related  disclosures  as  required  by SFAS 131 for the six
months ended June 30, 1999 and 1998.

<TABLE>
<S>                                 <C>                         <C>                 <C>                 <C>

                                                             June 30, 1999


                             Executive office        Telecommunications        RSVP Holdings             Total
                                  suites
                           ---------------------    ---------------------    ------------------    ------------------

Revenues and loss on
equity investments            $      99,363,068         $      1,282,992      $    (2,399,647)
                           ---------------------    ---------------------    ------------------

Expenses                             98,086,770                7,628,726             2,599,412
                           ---------------------    ---------------------    ------------------

Net Income (loss)                     1,276,298              (6,345,734)           (4,999,059)
                           ---------------------    ---------------------    ------------------


RSI/Equity
in (loss) income               $        488,310         $       (69,907)      $    (1,953,705)      $    (1,535,302)
                           ---------------------    ---------------------    ------------------    ------------------

                                                             June 30, 1998

                          Executive office       Telecommunications      Student housing       RSVP Holdings             Total
                               suites
                        ---------------------    -------------------    ----------------     -----------------     ----------------


Revenues                    $      1,478,426         $       72,075      $    4,057,583         $     190,145
                        ---------------------    -------------------    ----------------     -----------------


Expenses                           1,503,788                545,411           3,529,668             2,045,570
                        ---------------------    -------------------    ----------------     -----------------

Net income (loss)                   (25,362)              (473,336)             527,915           (1,855,425)
                        ---------------------    -------------------    ----------------     -----------------

RSI/equity in
income (loss)               $        (2,511)         $      (4,733)       $     119,059        $    (618,474)       $    (506,659)
                        ---------------------    -------------------    ----------------     -----------------     ----------------
</TABLE>


7.       Subsequent Events

     On August  11,  1999,  the  Company  made a $15  million  acquisition  of a
non-controlling  interest  in  eSourceOne,  a  fully  integrated  Internet-based
employee  benefits and human  resource  administration  outsourcing  company for
small and medium-size businesses. RSI has committed to invest an additional $7.5
million in connection with a future equity funding.


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

     The  following   discussion   should  be  read  in  conjunction   with  the
accompanying  consolidated  Financial  Statements of Reckson Service Industries,
Inc. (the "Company" or "RSI") and related notes thereto.

     The Company  considers certain  statements set forth to be  forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, with respect to
the  Company's   expectations  for  future  periods.   Certain   forward-looking
statements, including, without limitation, statements relating to the ability to
identify and acquire interest in commercial services companies, the financing of
the Company's  operations,  the timing and success of such  acquisitions and the
ability to integrate and manage  effectively its various  acquisitions,  involve
certain  risks  and  uncertainties.  Although  the  Company  believes  that  the
expectation reflected in such forward-looking statements are based on reasonable
assumptions,  the actual results may differ  materially  from those set forth in
the  forward-looking  statements  and the Company can give no assurance that its
expectations  will be achieved.  Certain factors that might cause the results of
the Company to differ  materially from those  indicated by such  forward-looking
statements include, among other factors,  general economic conditions, a lack of
attractive  business  opportunities  or  suitable  acquisitions,  the  Company's
dependence upon financing from Reckson Operating Partnership,  L.P., ("Reckson")
conflicts of interest of management,  competition for targeted  acquisitions and
the ability to otherwise  finance  business  opportunities.  Consequently,  such
forward-looking  statements  should be  regarded  solely as  reflections  of the
Company's current operating and development plans and estimates. These plans and
estimates are subject to revision  from time to time as  additional  information
becomes  available,  and actual  results may differ from those  indicated in the
referenced statements.

Overview and Background

     Reckson Service Industries,  Inc., was formed on July 15, 1997, to create a
service company that focuses on providing  outsourced business services to small
to medium sized  companies.  RSI seeks to  accomplish  this by  identifying  and
acquiring interests in operating companies that engage in such outsource service
businesses or by forming and growing such businesses internally.

     The  Company's  primary  business  is to  create  and  manage a  system  of
interrelated  outsource  business services to be offered to small to medium-size
companies in the marketplace  through an e-commerce based  infrastructure.  Over
time,  RSI's  strategic  goal is to develop  and  package a bundle of  outsource
business  service  products  that it will  market as a "one  stop"  solution  to
satisfy the outsourcing needs of small to medium-size  businesses.  RSI's growth
strategy is to acquire  businesses  or  significant  interests in  businesses in
targeted  business  service  sectors,  and,  where  appropriate,  to retain  the
existing  management of such businesses.  Specifically,  RSI seeks opportunities
for which  there is broad  demand  in the  marketplace,  strong  entrepreneurial
management,  a reputation for high quality  services and growth  potential.  The
Company seeks to add value by supporting  management,  offering strategic advice
and assisting in other aspects of developing the businesses  where  appropriate.
RSI pursues  growth  opportunities  in each business by (i)  accessing  small to
medium-size  companies included in Reckson Associates Realty Corp. customer base
and in the general marketplace  nationwide,  (ii) integrating each business into
its  centralized  e-commerce  based  infrastructure  and (iii)  acquiring  other
businesses with complimentary outsource service products.

     Reckson Strategic Venture Partners, LLC ("Reckson Strategic") was formed on
March  5,  1998 to  invest  in real  estate  and real  estate-related  operating
companies with  experienced  management teams in market sectors which are in the
early stages of their growth cycle or offer unique  circumstances for attractive
investments,  as well as platforms for future growth. Through RSVP Holdings, LLC
("Holdings"),  the  Company  is a  managing  member and 100% owner of the common
equity of Reckson  Strategic.  New World  Realty,  LLC,  an entity  owned by two
individuals  retained by Holdings,  (the "RSVP Managing  Directors"),  acts as a
managing member of Holdings,  and have a carried interest which provides for the
RSVP Managing  Directors to receive a share in the profits of Reckson  Strategic
after the  Company  and Paine  Webber  Real  Estate  Securities,  Inc.,  ("Paine
Webber") have received  certain minimum  returns and a return of capital.  Paine
Webber is a  non-managing  member and  preferred  equity owner who has committed
$200 million in capital (the "Preferred  Equity Facility") and shares in profits
and losses of Reckson Strategic with the Company,  subject to a maximum internal
rare of return of 16% of  invested  capital.  On April 24,  1998,  Paine  Webber
assigned 25% of its preferred equity interest in Reckson Strategic, representing
an  unfunded  capital  commitment  of $50  million to Stratum  Realty  Fund,  LP
("Stratum"). The assignment provided Stratum with similar rights and priorities.
On March  17,  1999,  Paine  Webber  transferred  all of its  rights,  title and
interest in its initial invested capital to Stratum.  This transfer included the
right to distributions based upon the amount of funded capital contributions. As
a result of this transfer, Stratum has funded its entire $50 million committment
as of June 30,1999.

     On January 8, 1999, Interoffice Superholdings  Corporation  ("Interoffice")
(36  executive  office  suite  centers)  and  Reckson  Executive  Centers,  Inc.
("Reckson  Executive") (8 executive  office suite centers)  merged with Alliance
National Incorporated,  a holding company which owned and operated approximately
90 nationally located executive office suite centers (the "Merger").  The merged
entity changed its name to VANTAS.  The  stockholders of Interoffice and Reckson
Executive received Series C Preferred Stock of VANTAS representing approximately
40% of the equity  interest in VANTAS of which  approximately  23% of VANTAS was
owned by the  Company as of the  merger.  The  holders of the Series C Preferred
Stock  have  the  right  to  appoint  four of the ten  members  of the  board of
directors of VANTAS,  including  Chairman of the Board and specified  preemptive
rights and other specified rights. RSI and the other stockholders of Interoffice
hold the Series C Preferred  Stock  received in respect of the Merger  through a
limited liability company of which RSI is the sole manager.

     VANTAS and RSI have also entered into an intercompany agreement pursuant to
which RSI has the opportunity to be the exclusive  provider of certain  business
services  to VANTAS,  provided  certain  third party and  "most-favored  nation"
conditions are satisfied.

     RSI acquired  certain  ownership  rights  related to the Series C Preferred
Stock of VANTAS from a stockholder  of  Interoffice  which  provided the Company
with enhanced governance rights for approximately $6.5 million. In addition, the
Company paid $3.5 million to another stockholder of Interoffice for an option to
purchase that  stockholder's  effective interest in the Series C Preferred Stock
for a  purchase  price of $6.75  million.  If the option is not  exercised,  the
stockholder  has the right to sell such  interests to the Company at fair value,
as determined in accordance with the applicable agreement.  A significant number
of items presented to the Board of Directors will require the separate  approval
of a majority  of the  representatives  of the Series C  Preferred  Stock on the
Board of  Directors,  including  significant  acquisitions,  sale or  leasing of
assets,  approval of VANTAS annual  operating  budget,  certain  borrowings and
capital  expenditures by VANTAS,  the hiring or termination of senior executives
and other matters.  The holders of Series C Preferred  Stock also have the right
to appoint  half of the members of the  executive  and audit  committees  of the
Board of Directors.  The preferred stockholders of VANTAS (including the holders
of  VANTAS'  Class A  Preferred  Stock,  Class B  Preferred  Stock  and  Class C
Preferred  Stock) were  granted  super-majority  voting  rights with  respect to
certain corporate actions, including the issuance of equity securities,  changes
to the charter documents of VANTAS and other matters.

     Subsequent to June 30, 1999, the Company  increased its ownership in VANTAS
to 28.7%,  on a fully diluted basis with a $23 million equity  investment.  With
this investment, RSI increases its percentage of "as if converted" voting shares
it  controls  to  52.4%.  This  investment  was made as a part of a $30  million
financing,  a further  portion of which the  Company  intends to purchase in the
third quarter.

     In May 1998,  the  Company  purchased  a  membership  interest  in  On-Site
Ventures,  LLC, ("On-Site"),  equal to 1% of the aggregate membership interests.
In addition,  RSI held a  subordinated  note  convertible  into a 58.69%  equity
interest  in  On-Site   Ventures,   LLC,  a  company  that   provides   advanced
telecommunications  systems and  services  within  commercial  buildings  and/or
building  complexes.  The Company had  advanced  On-Site  $6.5  million  through
December 31, 1998 to fund operations costs under the terms of the note. The loan
beared interest at a rate of 12% per annum.

     On February 10, 1999,  the  Company,  along with another  member of On-Site
(the "Members"), executed a senior secured promissory note with On-Site for $4.0
million.  The  Members  initially  funded  $2.0  million,  in which  RSI  funded
approximately  $1.3  million.  On April 9, 1999, the Company made an additional
advance of $677,583.  Interest was compounded monthly at a variable rate subject
to the terms in the loan agreement.

     On April 16, 1999, the Company  contributed  approximately  $3.2 million to
On-Site  as part of a $60  million  private  equity  financing  agreement  which
included  RSI and  several  third party  private  equity  investors.  The equity
agreement requires the Company to fund up to $15 million of which RSI has funded
approximately  $5.2 million which included  approximately  $2 million funded by
RSI under the $4 million senior secured promissory note.

     Upon receipt of required  regulatory  approvals,  on June 30, 1999, On-Site
merged  into  OnSite  Access,  Inc.,  a Delaware  corporation.  On July 1, 1999,
closings were completed for approximately  $20.5 million of additional equity in
connection  with  the $60  million  private  equity  financing  (the  "Financing
Transaction").  The investors,  including RSI, in the Financing  Transaction are
committed to invest the remaining $39.5 million, subject only to satisfaction of
the  conditions  of the Financing  Transaction  and the  corporation's  call for
funds.  In addition,  in connection  with the merger,  the principal and accrued
interest  outstanding under the $6.5 million subordinated RSI loan was converted
into 5,869,000  shares of Preferred  Stock issued to RSI. Upon fully funding its
capital  commitment,  RSI will own an approximate 33% diluted interest in OnSite
Access, Inc.




Results of Operations



     The  Company  commenced  operations  on  July  15,  1997  and  had  minimal
activities  through  June 30, 1998,  therefore,  the  following  periods are not
comparable.

Three and six months ended June 30, 1998

     For the three months ended June 30, 1998,  the Company  reported a net loss
of $416,476.  Total revenues  included interest income relating to loans made to
certain  affiliates.  The Company also reported  expenses  primarily  related to
interest, payroll and office costs.

     For the six months  ended June 30, 1998 the Company  reported a net loss of
$1,125,685.  Total revenues  included  management fee income and interest income
relating to loans made to certain  affiliates.  The Company also reported  total
expenses of  $926,624  which  substantially  represented  interest,  payroll and
office costs.

Summary of  Operations  by Business  Segment for the Three Months ended June 30,
     1999

Operations

     Net loss for the  quarter  was  $9.8  million  due to  higher  general  and
administrative   expenses  associated  with  the  Company's  elevated  level  of
operating   activity  and  include  certain  second  quarter  non-cash  charges
attributable  to  incentive  stock   compensation  for  key  members  of  senior
management.

Executive Suites

     For the  three  months  ended  June 30,  1999,  VANTAS  reported  income of
$550,435. RSI's share after adjustments, was income of $228,570. VANTAS reported
$52.6 million in revenues primarily due to occupancy and service revenue.

Telecommunications

     For the  three  months  ended  June 30,  1999,  OnSite  reported  losses of
$4,467,784.  OnSite's losses were generally attributable to interest expense and
start-up costs such as staffing.  The Company's share of losses  attributable to
its 1% equity  interest was $47,903 after  adjustments.  In connection  with the
Company's  convertible notes and secured  financing with OnSite,  RSI recognized
$337,822 in interest income.

RSVP Holdings, LLC

     For the three months ended June 30, 1999,  Holdings reported total revenues
of  $84,466,  losses  on  equity  investments  of  $1,895,364  and  expenses  of
$1,510,806.  RSI's share of  Holdings'  loss for the three months ended June 30,
1999 was $1,344,538.

     These losses are  attributable  to the start-up nature of the businesses in
which Holdings has invested. Operating expenses consisted primarily of interest,
payroll and other operating costs.

Summary of Operations by Business Segment for the Six Months ended June 30, 1999

Operations

     Net loss for the  quarter  was  $11.8  million  due to higher  general  and
administrative   expenses  associated  with  the  Company's  elevated  level  of
operating   activity  and  include  certain  second  quarter   non-cash  charges
attributable  to  incentive  stock   compensation  for  key  members  of  senior
management.

Executive Suites

     For the six  months  ended June 30,  1999,  VANTAS  reported  net income of
$1,276,298.  RSI's  share  after  adjustments,  was income of  $488,310.  VANTAS
reported  $99.4 million in revenues  reflecting 12% growth in the second quarter
over the first  quarter.  Merger  expenses of  approximately  $1.4  million were
incurred in connection with the merger of Reckson Executive and Interoffice.

Telecommunications

     For the  six  months  ended  June  30,  1999,  OnSite  reported  losses  of
$6,345,737.  On-Sites losses were generally attributable to interest expense and
start-up costs such as staffing.  The Company's share of losses  attributable to
its 1% equity  interest was $69,907 after  adjustments.  In connection  with the
Company's  convertible notes and secured  financing with OnSite,  RSI recognized
$561,769 in interest income.



RSVP Holdings, LLC ("Holdings")

     For the six months ended June 30, 1999, Holdings reported total revenues of
$147,582, losses on equity investments of $2,547,229 and expenses of $2,599,412.
RSI's  share  of  Holdings'  loss for the six  months  ended  June 30,  1999 was
$1,953,705.  These  losses  are  attributable  to  the  start-up  nature  of the
businesses  in  which  Holdings  has  invested.   Operating  expenses  consisted
primarily of interest, payroll and other operating costs.



Liquidity and Capital Resources

Summary of Cash Flows

     Net cash provided by and used in operating activities totaled approximately
$4.2 million for the six months  ended June 30,  1999,  and $1.6 million for the
six months ended June 30, 1998,  respectively.  Cash  provided by  operations in
1999 were  attributable  to collections of affiliate  receivables.  Cash used in
operations for 1998 were primarily  attributable to the start-up losses incurred
by  the  Company  and  Holdings,   advances  to   affiliates   and  general  and
administrative operating costs.

     Net cash used in investing  activities totaled  approximately $32.1 million
for the six months  ended June 30,  1999,  and $14.1  million for the six months
ended June 30, 1998.  Cash used in  investing  activities  related  primarily to
investments in and advances to Holdings, VANTAS, and On-Site.

     Net cash  provided by  financing  activities  totaled  approximately  $26.1
million for the six months  ended June 30, 1999,  and $15.6  million for the six
months ended June 30, 1998. Cash provided by financing activities during 1999 is
primarily attributable to draws on both the RSI Facility and the RSVP Facility.

Financing Activities

     On June 15, 1998,  RSI  established  the RSI  Facility  with Reckson in the
amount of $100 million for RSI's  service  sector  operations  and other general
corporate  purposes.  On the same date, RSI  established  the RSVP Facility with
Reckson  for funding of  investments  of up to $100  million  with or in Reckson
Strategic through (i) Reckson Strategic controlled joint venture  REIT-qualified
Investments,  or (ii) advances made to RSI.  Advances under the RSVP Facility in
excess of $25 million in respect of any single  platform are subject to approval
by Reckson's board of directors, while advances under the RSI Facility in excess
of $10  million  in  respect of any  single  investment  in a  business  service
platform, as well as advances for investments in opportunities in non-commercial
services,  are  subject  to  approval  by  Reckson's  board of  directors,  or a
committee  thereof.  The RSI and RSVP Facilities (the "Credit  Facilities") each
have a term of five years and advances  thereunder  are recourse  obligations of
RSI.  Interest  accrues on advances  made under the Credit  Facilities at a rate
equal to the greater of (i)-the prime rate plus 2% and (ii)-12% per annum,  with
the rate on balances outstanding for more than one year increasing annually at a
rate of 4% of the prior  year's  rate.  Prior to  maturity,  interest is payable
quarterly but only to the extent of net cash flow and on an interest-only  basis
and is  pre-payable  without  penalty at the option of RSI. As long as there are
outstanding advances under the Credit Facilities,  RSI is prohibited from paying
dividends on any shares of its capital stock. The Credit  Facilities are subject
to certain other covenants and will prohibit  advances  thereunder to the extent
such advances could, in the determination of Reckson,  endanger Reckson's status
as a REIT. Additional indebtedness may be incurred by subsidiaries of RSI. As of
June 30,  1999,  approximately  $46.4  million  was  outstanding  under  the RSI
Facility and approximately $36.8 million was advanced under the RSVP Facility of
which approximately $16.2 million represented  investments by Reckson in Reckson
Strategic joint ventures and approximately $20.6 million represented outstanding
borrowings.

     Additionally,  Reckson Strategic has obtained the Preferred Equity Facility
which  provides  for the  investment  by Paine  Webber of up to $200  million in
Reckson  Strategic  in  the  form  of  preferred  equity,   subject  to  certain
conditions. Amounts available under the Preferred Equity Facility have been used
by Reckson Strategic to make investments consistent with its business objectives
and to fund working  capital.  Under the terms of the Preferred Equity Facility,
Reckson  Strategic  is subject to various  covenants  and events of default  and
related remedies. Such remedies include increased control rights of Paine Webber
over the operation of Reckson  Strategic under certain  circumstances.  Advances
under the Preferred  Equity Facility were partially funded by an investment fund
that is  jointly  sponsored  by  financier  George  Soros and Paine  Webber.  In
addition, Paine Webber and such investment fund are entitled to receive priority
or preferred  distributions from Reckson Strategic prior to the distributions of
cash to RSI. On March 17,  1999,  Paine  Webber  transferred  all of its rights,
title and interest on its initial invested capital of $50 million to Stratum. As
of June 30, 1999, Paine Webber and Stratum have contributed $51.1 million.

     The Company  utilizes  the  advances  under the RSI  Facility  primarily to
acquire  interests in operating  companies that provide business  services.  The
Company  may  acquire  additional  interests  in these  operating  companies  to
accommodate  their  respective  growth  plans.  The  Company's   investments  in
operating  companies  are  anticipated  to produce  net cash flow as a result of
their operating  activities over the long term, although the level and timing of
net cash flow for each investment in the short-and long-term may vary based upon
the stage of the respective  operating  company's  growth cycle and the level of
the Company's ownership  interest.  The Company targets operating companies that
will produce net cash flow in the long-term.  It is expected that certain of the
Company's investments will be made in companies which is does not fully control.
Thereby cash flow of these  companies will be used for growth  opportunities  at
such companies not for distribution to its owners.  It is also expected that the
Company will acquire  companies where it controls such companies  operations and
consolidates  such  companies  cash flows with those of the Company.  Under such
circumstances,  net cash flow  produced  will be used for debt service under the
RSI Facility and for the Company's  operating costs. The Company expects to meet
its  short  term  liquidity  requirements  generally  through  its net cash flow
produced by its  operations  along with  advances  under the RSI  Facility.  The
Company  expects that it will refinance  indebtedness  under the RSI Facility at
maturity or retire such debt through the issuance of debt  securities  or equity
securities,  although there can be no assurance that the Company will be able to
refinance  or retire such  indebtedness.  The Company  anticipates  that cash on
hand,  net cash flows from  operating  activities,  together with cash available
from borrowings under the RSI Facility, will be adequate to meet the capital and
liquidity requirements of the Company in both the short-and long-term.

Impact of Year 2000

     Some of the Company's older computer programs were written using two digits
rather than four to define the  applicable  year.  As a result,  those  computer
programs have  time-sensitive  software that recognizes a date using "00" as the
year 1900  rather  than the year  2000.  This  could  cause a system  failure or
miscalculation causing disruptions of operations, including, among other things,
a  temporary  inability  to process  transactions,  or engage in similar  normal
business activities.

     The Company has completed an  assessment  to modify or replace  portions of
its software so that its computer systems will function properly with respect to
dates in the year 2000 and thereafter.  Since the Company's  accounting software
is maintained  and supported by a third party,  the total year 2000 project cost
was minimal.

     The year 2000 project has been completed to date on its operating  systems.
Additionally,  the Company has received  assurances from its significant service
providers  that all their systems are currently  year 2000  compliant or will be
made compliant prior to any impact on those systems. However, the Company cannot
guarantee  that  all  significant  service  providers  will  comply  with  their
assurances  and  therefore,  the Company may not be able to determine  year 2000
compliance of those  significant  service  providers.  At that time, the Company
will  determine  the  extent  to  which  the  Company  will be  able to  replace
non-compliant  significant  service  providers.  The Company  believes that with
modifications  to existing  software and  conversions to new software,  the year
2000 issue  will not pose  significant  operational  problems  for its  computer
systems. However, if such modifications and conversions are not made, or are not
complete  timely costs  associated with the year 2000 issue could be significant
and have a material impact on the operations on the Company.

     The Company has expended approximately $66,000 in connection with year 2000
issues.

     In a "worst case scenario" of the failure of the third party to deliver to,
on a timely  basis,  the  necessary  upgrades to the  accounting  software,  the
Company  would be  required  to process  transactions,  such as the  issuance of
disbursements, manually until an alternative system was implemented.

     If the Company is not successful in  implementing  its year 2000 compliance
plan,  the  Company  may suffer a material  adverse  impact on their  results of
operations and financial condition.  Because of the importance of addressing the
year  2000  issue,  the  Company  expects  to  develop  contingency  plans if it
determines that the compliance plans will not be implemented.


Inflation

     The Credit  Facilities  bear interest at the greater of the prime rate plus
2% or 12% (on balances outstanding more than one year increasing 4% per year, as
described  above).  The  rate  of  interest  on the  Credit  Facilities  will be
influenced  by changes in the prime rate and is sensitive to inflation and other
economic factors.  A significant  increase in interest rates may have a negative
impact on the earnings of the Company due to the variable  interest  rates under
the Credit Facilities.

     The Company believes that  inflationary  increases will be offset by higher
revenues.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

     The primary  market  risk  facing the Company is interest  rate risk on its
Credit Facilities. The Company does not hedge interest rate risk using financial
instruments.  The Credit  Facilities  bear  interest at the greater of the prime
rate plus 2% or 12% (with balances  outstanding more than one year increasing 4%
per year,  as described  above).  The rate of interest on the Credit  Facilities
will be  influenced  by changes in the prime rate and is  sensitive to inflation
and other economic factors. A significant  increase in interest rates may have a
negative  impact on the  earnings of the Company  due to the  variable  interest
rates under the Credit Facilities.

     The following table sets forth the Company's Credit Facilities obligations,
principal cash flows by scheduled maturity,  weighted average interest rates and
estimated fair market value ("FMV") at June 30, 1999.
<TABLE>
<S>                         <C>          <C>         <C>        <C>         <C>           <C>

                          1999         2000        2001        2002         2003       Thereafter       Total            FMV

 Variable rate          $   -----  $    -----    $ -----    $ -----  $67,006,239    $    -----   $67,006,239     $67,006,239


Average interest rate     -----       -----        -----      -----          12%          -----          12%            -----

</TABLE>



Part II - Other Information

Item 1.  Legal Proceedings - None
Item 2.  Changes in Securities and Use of Proceeds- None
Item 3.  Defaults Upon Senior Securities - None
Item 4.  Submission of Matters to a Vote of Securities Holders

     On June 24, 1999, the Company held its annual meeting of stockholders.  The
matters on which the  stockholders  voted,  in person or by proxy,  were (1) the
election of two  nominees  as Class I  Directors  to serve until the 2002 annual
meeting of stockholders,  or until their respective  successors are duly elected
and qualified,  (2) to ratify the selection of the  independent  auditors of the
Company  and (3) to approve  the  Company's  1999  Stock  Option  Plan.  The two
nominees were elected, the auditors were ratified and the 1999 Stock Option Plan
was approved. The results of the voting are set forth below:

      Election of Directors                   Votes Cast For
      Scott Rechler                             21,587,563
      Paul F. Amoruso                           21,587,515

                     Ratification of Auditors

      Votes Cast For                        Votes Cast Against
      21,297,755                                   12,505

                Approval of 1999 Stock Option Plan

      Votes Cast For                        Votes Cast Against
      13,825,593                                 2,691,530

Item 5.  Other information - None
Item 6.  Exhibits and Reports on Form 8-K

Form 8-K           dated        April 16, 1999
Relating to the Company's  additional  investment with On-Site  Ventures,LLC


Signatures

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

                        RECKSON SERVICE INDUSTRIES, INC.

                            By: \s\ Scott H. Rechler
             Scott H. Rechler, President and Chief Executive Officer
                          (Principal Executive Officer)

                               \s\ Michael Maturo
                    Michael Maturo, Executive Vice President
                           and Chief Financial Officer
                  (Principal Financial and Accounting Officer)


Date:  August 13, 1999