<PAGE>
                                       
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549

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

                                   FORM 10-Q

                                AMENDMENT NO. 1

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

For the quarterly period ended March 31, 1998

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

                                       OR

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

For the transition period from                    to  
                               -----------------      ------------------

                        Commission file number 0-27204

                             TECHFORCE CORPORATION
-------------------------------------------------------------------------------
               (Exact Name of Registrant as Specified in Its Charter


                 GEORGIA                                58-2082077
-------------------------------------------------------------------------------
         (State of Incorporation)         (I.R.S. Employer Identification No.)


5741 Rio Vista Drive, Clearwater, Florida                                 33760
-------------------------------------------------------------------------------
(Address of Principal Executive Offices)                 (Zip Code)


Registrant's Telephone Number, Including Area Code  (813) 532-3600 
                                                    ---------------------------

-------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report


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

Yes /X/    No / /
    ---       ---

       As of May 11, 1998, there were 8,164,072 shares of the issuer's 
                          common stock outstanding.


<PAGE>

                            TECHFORCE CORPORATION

                                  FORM 10-Q

                       QUARTER ENDED MARCH 31, 1998

                                    INDEX



PART I.          FINANCIAL INFORMATION                        PAGE NO.
-------          ---------------------                        --------
                                                              
Item 1      Financial Statements...........................       1
                                                              
            Consolidated Balance Sheet.....................       1
                                                              
            Consolidated Statements of Operations..........       2
                                                              
            Consolidated Statements of Cash Flows..........       3
                                                              
            Notes to Consolidated Financial                   
            Statements.....................................       4
                                                              
Item 2.     Management's Discussion and Analysis of           
            Financial Condition and Results of                
            Operations.....................................       7

Item 3.     Quantitative and Qualitative 
            Disclosures About Market Risks.................      10


PART II.    OTHER INFORMATION

Item 1      Legal Proceedings..............................      11
                                                                
Item 2       Changes in Securities.........................      11
                                                                
Item 3       Defaults Upon Senior Securities...............      11
                                                                
Item 4       Submission of Matters to a Vote of                 
             Shareholders..................................      11
                                                                
Item 5       Other Information.............................      11
                                                                
Item 6       Exhibits and Reports on Form 8-K..............      11


SIGNATURES
----------
Signatures.................................................      12


EXHIBIT INDEX
-------------
<PAGE>

                   TECHFORCE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEET
                               March 31, 1998
                               (In thousands)


<TABLE>
<CAPTION>

              ASSETS                                                 March 31, 1998      December 31, 1997
                                                                     --------------      -----------------
                                                                      (Unaudited)
<S>                                                                  <C>                 <C>
CURRENT ASSETS
  Cash and cash equivalents                                            $  1,062              $   735
  Investments                                                               100                3,175
  Accounts receivable, net of Allowance for Doubtful Accounts            16,123               12,829
  of $356,149 and $345,000 at Mar 31, 1998 and Dec 31, 1997 
  respectively                                                               
  Inventories                                                             3,880                3,461
  Net Investment in Sales Type Leases (current portion)                   3,969                4,100
  Prepaid expenses/Other Assets                                           1,321                1,031
                                                                       --------              --------
     Total current assets                                                26,455               25,331
                                                                       --------              --------
PROPERTY, PLANT AND EQUIPMENT
  Leasehold Improvements                                                    928                  764
  Office furniture and fixtures                                           8,213                7,499
  Replacement parts                                                      17,713               17,077
  Equipment held for rental                                                 734                  592
                                                                       --------              --------
                                                                         27,588               25,932
  Less accumulated depreciation                                         (12,322)             (10,968)
                                                                       --------              --------
     Total property, plant and equipment net                             15,266               14,964
                                                                       --------              --------
NET INVESTMENTS IN SALES TYPE LEASES                                      9,629               10,105
  Less current portion                                                 --------              --------

ORGANIZATION COSTS AND OTHER ASSETS                                         189                  273
                                                                       --------              --------
     Total assets                                                      $ 51,539             $ 50,673
                                                                       --------              --------
                                                                       --------              -------
                                 LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES

  Accounts payable                                                     $  4,756              $ 3,906
  Accrued expenses                                                          905                1,936
  Accrued contract labor                                                    782                  551
  Current maturities of obligations under capital leases,
   long-term debt and non-recourse notes payable                          2,635                2,770
  Line of credit                                                             -                    -
  Deferred revenue                                                        3,445                2,069
  Deferred Taxes                                                             81                   81
                                                                       --------              --------
                                                                         12,604               11,313
                                                                       --------              --------
LONG-TERM DEBT AND OTHER LIABILITIES                                      1,928                1,835
                                                                       --------              -------
NON-RECOURSE NOTES PAYABLE, net of current maturities                     5,588                6,032
                                                                       --------              --------

STOCKHOLDERS' EQUITY
  Common stock                                                               81                   81
  Additional paid in capital                                             28,072               28,031
  Retained earnings                                                       3,266                3,381
                                                                       --------              --------
                                                                         31,419               31,493
                                                                       --------              --------
   Total liabilities and stockholders' equity                          $ 51,539             $ 50,673
                                                                       --------              --------
                                                                       --------              --------
</TABLE>
<PAGE>

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


<TABLE>
<CAPTION>

                                                      Three months ended
                                                           March 31
                                                    ------------------------
                                                        <C>          <C>
                                                        1998         1997
                                                    -----------   ----------
<S>
Revenues:
  Services                                          $    11,700   $   10,220
  Hardware                                                4,917        7,441
                                                    -----------   ----------
    Total revenues                                       16,617       17,661
                                                    -----------   ----------

Direct costs:
  Services                                                8,895        7,194
  Hardware                                                4,102        5,488
                                                    -----------   ----------
    Total direct costs                                   12,997       12,682
                                                    -----------   ----------

Gross Margin:
  Services                                                2,805        3,026
  Hardware                                                  815        1,953
                                                    -----------   ----------
    Total gross margin                                    3,620        4,979
                                                    -----------   ----------

Operating costs
  Selling and marketing                                   2,336        2,282
  General and administrative                              1,440        1,147
                                                    -----------   ----------
                                                          3,776        3,429
                                                    -----------   ----------

Operating (loss) Income                                    (156)       1,550

Interest expense, net                                        20           41
                                                    -----------   ----------
(Loss) Income before taxes                                 (176)       1,509

Benefit (Provision) for income taxes                         61         (549)
                                                    -----------   ----------
Net (loss) income                                   $      (115)  $      960
                                                    -----------   ----------
Basic earnings per common share                     $     (0.01)  $     0.12
                                                    -----------   ----------
Diluted earnings per common share                   $     (0.01)  $     0.12

Weighted average number of common
  shares outstanding                                  8,123,103    7,979,909
                                                    -----------   ----------

Weighted average number of common
  and common equivalent shares                        8,123,103    8,265,472
                                                    -----------   ----------

</TABLE>


                                    Page 1
<PAGE>


                   TECHFORCE CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In Thousands)



<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                                         March 31
                                                                ----------------------------
                                                                    1998           1997
                                                                -------------  -------------
                                                                 (Unaudited)    (Unaudited)
<S>                                                             <C>             <C>
Cash flows from operating activities
  Net (loss) Income                                                  ($115)          $960
  Adjustments to reconcile net (loss) income to net cash
    (used in) provided by operating activities:
      Depreciation and amortization                                  1,437            746
      Changes in operating assets and liabilities                   (2,474)           435
                                                                -------------  -------------
Net cash (used in) provided by operating activities                 (1,152)         2,141

Cash Flows from investing activities
  Purchase of property and equipment                                (1,656)        (1,376)
  Investment in sales-type leases                                      607           (510)
  Sale of Investments                                                3,075              0
                                                                -------------  -------------
Net cash provided by (used in) investing activities                  2,026         (1,886)
                                                                -------------  -------------

Cash flows from financing activities
  Borrowings under revolving credit facilities                           0              0
  Repayment of long term debt                                         (589)          (459)
  Issuances of Common Stock, net                                        41              0
                                                                -------------  -------------
Net cash used in financing activities                                 (548)          (459)
                                                                -------------  -------------

Net increase (decrease) in cash and cash equivalents                   326           (204)

Cash and cash equivalents, beginning of period                         736          6,242
                                                                -------------  -------------
Cash and cash equivalents, end of period                            $1,062         $6,038
                                                                -------------  -------------
                                                                -------------  -------------
</TABLE>
<PAGE>

                           TECHFORCE CORPORATION AND SUBSIDIARIES
                         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                      March 31, 1998
                                        (Unaudited)


1.  NATURE OF BUSINESS

    TechForce Corporation and subsidiaries (collectively, the "Company" and 
    formerly TechForce, a Georgia general partnership) are engaged in the sale, 
    design, on-site installation and maintenance, and support of computer and 
    data communications networking equipment.

2.  BASIS OF FINANCIAL REPORTING

    The condensed consolidated financial statements at March 31, 1998 and for 
    the three month period then ended are unaudited and reflect all adjustments 
    (consisting only of normal recurring adjustments) which are, in the opinion 
    of management necessary for fair presentation of the financial position and 
    operating results for the interim period. The condensed consolidated 
    financial statements should be read in conjunction with the consolidated 
    financial statements and notes thereto, together with management's 
    discussion and analysis of financial condition and results of operations, 
    contained in the Company's Annual Report to Shareholders incorporated by 
    reference in the Company's Annual Report on Form 10-K for the fiscal year 
    ended December 31, 1997.

3.  MAJOR CUSTOMERS

    During the quarters ended March 31, 1998, and March 31, 1997, the 
    following customers individually accounted for more than 10% of the 
    Company's revenue:

<TABLE>
<CAPTION>

                                       Quarter Ended March 31, 1998        Quarter Ended March 31, 1997
                                       ----------------------------        ----------------------------
                                       Amount (1000)     Percentage        Amount (1000)     Percentage
                                       -------------     ----------        -------------     ----------
<S>                                     <C>              <C>               <C>               <C>
    Packard Bell Electronics, Inc.            $1,075             6%               $3,599              20%
    General Electric Corporation              $3,023            18%               $   --               0%

</TABLE>

    The loss of revenues from General Electric Corporation could have a material
    impact on the results of the operations of the Company in the near term. 
    Management believes that the loss of revenues from Packard Bell would not 
    have a material impact on the results.

4.  EARNINGS PER SHARE

    In 1997, the Company adopted Statement of Financial Accounting Standards 
    (SFAS) No. 128, "Earnings per Share" (SFAS 128). Basic earnings per share 
    is based upon the weighted average number of common shares and the 
    diluted earnings per share is based upon the weighted average number of 
    common shares plus the dilutive common equivalent shares outstanding 
    during the period. The following is a reconciliation of the denominators 
    of the basic and diluted earnings per share computations shown on the 
    face of the accompanying consolidated statements of operations:

<PAGE>


<TABLE>
<CAPTION>
        <S>                                                       <C>             <C>
                                                                  Three months ended March 31,
                                                                  ----------------------------
                                                                     1998            1997
                                                                  -----------     ------------

         Basic weighted average number of common
           shares.......................................            8,123,103       7,979,909
         Dilutive effect of options outstanding.........               --             285,563
         Dilutive weighted average number of common
           and common equivalent shares outstanding.....            8,123,103       8,265,472
</TABLE>

The following options were outstanding at March 31, 1998, but were not 
included in the computation of diluted earnings per share because the company 
incurred a net loss:

<TABLE>
<CAPTION>
         <S>                                                                     <C>
         Number of options.............................                             1.389.561
         Range of exercised prices.....................                           $.38 - 9.63
         Range of expiration dates.....................                           2004 - 2008
</TABLE>

The following options were outstanding at March 31, 1997, but were not 
included in the computation of diluted earnings per share because the 
options' exercise price was greater than the average market price of the 
common shares for March 31, 1997.

<TABLE>
<CAPTION>
         <S>                                                                      <C>
         Number of options.............................                               549,866
         Range of exercise prices......................                          $7.00 - 9.63
         Range of expiration dates.....................                           2005 - 2007
</TABLE>

    As a result of adopting SFAS 128, the Company's quarterly earnings per share
    for March 31, 1997, has been restated.   However, for the three months ended
    March 31, 1997, the previously reported primary and fully diluted earnings
    per share did not differ from the basic and diluted earnings per share
    calculated under SFAS 128.

5.  LEGAL MATTERS

    From time to time, the Company is involved in certain litigation and 
    claims arising in the ordinary course of business.  In the opinion of 
    management, the ultimate resolution of any such matters will not have a 
    material adverse effect on the Company's financial position at March 31, 
    1998 or results of operations for the three months then ended.

6.  RECLASSIFICATIONS

    Certain amounts included in the 1997 financial statements have been 
    reclassified to conform with the 1998 financial statements.


7.  NEW ACCOUNTING PRONOUNCEMENTS

    In June 1997, the Financial Accounting Standards Board issued Statement 
    of Financial Accounting Standards No. 131, "Disclosures about Segments of 
    an Enterprise and Related Information" (SFAS 131).  SFAS 131 requires 
    that a public business enterprise report financial and descriptive 
    information about its reportable operating segments and related 
    information.  SFAS 131 is effective for financial statement relating to 
    annual periods beginning after December 15, 1997.  Management has determined
    that the adoption of SFAS 131 will not have a material effect on the 
    accompanying consolidated financial statements.
   
<PAGE>

    In February 1998, the Financial Accounting Standards Board issued 
    Financial Accounting Standards No. 132 "Employers disclosures about 
    Pensions and Other Postretirement Benefits" (SFAS 132) which standardizes 
    the disclosure requirements for defined contribution plans and defined 
    benefit plans. The statement is effective for financial statements 
    relating to annual periods beginning after December 31, 1997. Management 
    has determined that the adoption of SFAS 132 will not have a material 
    effect on the accompanying consolidated financial statements.

    Other issued but not yet required FASB standards are not currently 
    applicable or material to the Company's operations.

8.  On May 8, 1998, the Company announced that it will restructure its 
    business operations away from the hardware business segment by reducing 
    the infrastructure and resources allocated to it. As a result of the 
    planned cost reductions, the Company expects to incur a non-recurring 
    charge in the second quarter of approximately $2.5 million related to 
    staff reductions, closing and relocating certain functions and inventory 
    valuation adjustments in response to the Company's strategy shift related 
    to the sale of hardware.

<PAGE>

PART I.          FINANCIAL INFORMATION (continued)
-------          ---------------------

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

Overview

      The Company provides network support services focusing on mission 
critical technologies such as LAN/WAN internetworking, data networking, 
mainframe channel networking and workstation support.  The Company's support 
solutions include network monitoring services, 7X24 diagnostic and technical 
support from the Technology Support Center in Clearwater, Florida, on-site 
maintenance, remote and on-site equipment software installation and network 
design on complex multi-vendor enterprise networks.  The Company's 
maintenance contracts with customers range from one to five years.  The 
Company also sells and leases various data network hardware supplied by other 
manufacturers, as well as its own channel extension hardware.  Field service 
operations are conducted through a combination of the Company's field support 
personnel and a network of authorized service providers that are certified by 
the Company to provide local on-site repair or parts replacement services 
under the direction of the Company's Technical Support Center.

      Revenues from service and maintenance contracts are either recognized 
ratably over the contract period or on a per call basis, as is the case under 
the Company's workstation support agreements.  Revenues from product sales 
are recognized at the time of shipment.  When appropriate, revenues from 
leasing are accounted for as sales-type leases where the present value of all 
payments are recorded currently as revenues and the related costs of the 
equipment less the present value of any appropriate unguaranteed residual 
value are recorded to cost of sales.  The associated interest income is 
recognized over the term of the lease. Revenues derived from sales-type 
leases for the three months ended March 31, 1998 and March 31, 1997, 
respectively were  $0.3 million and $1.0 million.  Amortized interest on 
sales-type leases totaled $0.2 million and $0.1 million for the three month 
periods ended March 31, 1998 and March 31, 1997, respectively.

      Management anticipates that revenues from its proprietary channel 
extension products and services will continue to decrease at a rate of 
approximately 10% to 20% per year primarily as a result of a trend toward 
open-systems environments. Management does not believe that this gradual 
decline in such revenues will have a material adverse effect on the Company's 
results of operations and financial condition.

      Revenues from Packard Bell represented 6% of total Company revenues for 
the three months ended March 31, 1998 as compared to 20% for the three months 
ended March 31, 1997.  The call volume level for the three months ended March 
31, 1998 may not be indicative of future call volumes due to changes made by 
Packard Bell in its end user product warranty.  Revenues from General 
Electric represented 18% of total Company revenues for the three months ended 
March 31, 1998.  The Company received no revenues from General Electric for 
the three months ended March 31, 1997.   

      Continued growth of the Company's customer base and its services can be 
expected to continue to place a significant strain on its administrative, 
operational and financial resources.  The Company's future performance and 
profitability will depend in part on its ability to continue to increase the 
number and productivity of its channels to market,  to successfully implement 
enhancements to its business management systems and to adapt those systems as 
necessary to respond to changes in its business.  Furthermore, although the 
Company has experienced rapid growth in total revenues and has previously 
been profitable, its limited operating history makes the prediction of future 
operating results difficult.  There can be no assurance that the Company's 
revenue growth will continue in the future or that profitable operating 
results can be sustained.

      In June 1997, the Financial Accounting Standards Board issued Statement 
of Financial Accounting Standards No. 131, "Disclosures about Segments of an 
Enterprise and Related Information" (SFAS 131).  SFAS 131 requires that a 
public business enterprise report financial and descriptive information about 
its reportable operating segments and related information.  SFAS 131 is 
effective for financial statements relating to annual periods beginning after 
December 15, 1997.  Management has determined that the adoption of SFAS 131 
will not have a material effect on the accompanying consolidated Financial 
Statements.

<PAGE>

      In February 1998, the Financial Accounting Standards Board issued 
Financial Accounting Standards No. 132, "Employers Disclosures about Pensions 
and Other Postretirement Benefits" (SFAS 132) which standardizes the 
disclosure requirements for defined contribution plans and defined benefit 
plans.  The statement is effective for financial statements relating to 
annual periods beginning after December 15, 1997. Management has determined 
that the adoption of SFAS 132 will not have a material effect on the 
accompanying consolidated financial statements. 

      Other issued but not yet required FASB standards are not currently 
applicable or material to the Company's operations.


THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997

      Total revenues.  Total revenues decreased  5.9% from $17.7 million for 
the three months ended March 31, 1997 to $16.6 million for the three months 
ended March 31, 1998 due to decreased hardware sales and leasing activity 
partially offset by increased enterprise network support and workstation 
support revenues.

      Service  revenues.  Revenues from services increased 14.5% from $10.2 
million (57.9% of total revenues) for the three months ended March 31, 1997 
to $11.7 million (70.4% of total revenues) for the three months ended March 
31, 1998.  This increase was attributable to increased enterprise network and 
workstation support revenues offset by the reduced revenue from FedEx.  
Revenues from enterprise network support services increased by 26.0% while 
revenues from  workstation support increased by 32.3% for the three months 
ended March 31, 1998 as compared to revenues from these services for the 
three months ended March 31, 1997. Service revenues include revenues from the 
sale of workstation repair parts procured by the Company on behalf of certain 
workstation support customers.

      Hardware  revenues. Revenues from hardware decreased 33.9% from $7.4 
million (42.1% of total revenue) for the three months ended March 31, 1997 to 
$4.9 million (29.6% of total revenues) for the three months ended March 31, 
1998.  Hardware revenues included revenues from leasing activities of $1.0 
million and $.3 million for the three months ended March 31, 1997 and 1998, 
respectively.  On May  8, 1998, the Company announced that it will reduce its 
strategic focus on hardware and will decrease the infrastructure supporting 
its hardware sales efforts.  Accordingly the Company expects revenue from the 
sale and lease of hardware to decline from historical levels.

      Cost of Service. Cost of service increased 23.6% from $7.2 million 
(70.4% of service revenues) for the three months ended March 31, 1997 to $8.9 
million (76.0% of service revenues) for the three months ended March 31, 
1998.  This overall cost of service increase was unfavorably affected by the 
increased cost related to enterprise service delivery, and volume related 
increase in workstation support.  Cost of service includes the cost of 
workstation repair parts procured by the Company on behalf of certain 
workstation support customers.
 
      Cost of Hardware. Cost of hardware decreased 25.2% from $5.5 million 
(73.8% of hardware revenues) for the three months ended March 31, 1997 to 
$4.1 million (83.4% of hardware revenue) for the three months ended March 31, 
1998.  This decrease was caused by lower hardware revenues during the three 
months ended March 31, 1998. Increased cost of hardware as a percent of 
revenue reflected increased competitive pressure on hardware pricing.

      Gross Margin. Overall gross margin decreased 27.4% from  $5.0 million, 
(28.2% of total revenues), for the three months ended  March 31, 1997 to $3.6 
million, (21.8% of total revenues) for the three months ended March 31, 1998. 
 Gross margin on services decreased 7.3% from $3.0 million for the three 
months ended March 31, 1997 to $2.8 million for the three months ended March 
31, 1998, while decreasing as a percent of service revenues from 29.6% to 
24.0% respectively.   Gross margin on hardware revenues decreased 58.4% from 
$2.0 million for the three months ended March 31, 1997 to $0.8 million for 
the three months ended March 31, 1998.  This decrease was caused primarily by 
decreased hardware revenues combined with declining margins from sales of 
hardware during the three months ended March 31, 1998.  Hardware margins as a 
percentage of hardware revenues decreased from 26.2% for the three months 
ended March 31, 1997 to 16.5% for the three months ended March 31, 1998 
primarily as a result of these factors.  The Company has experienced 
competitive pressure on resale hardware margins and anticipates continued 
pressure due to price competition.



<PAGE>

      Selling and Marketing Expenses. Selling and marketing expenses 
increased 2.3% from $2.3 million (12.9% of total revenues) for the three 
months ended March 31, 1997 to $2.3 million (14.0% of total revenues) for the 
three months ended March 31, 1998. The increase resulted primarily from the 
build up of sales infrastructure which the company now plans to reduce.

      General and Administrative Expenses. General and administrative 
expenses increased 25.5% from $1.1 million for the three months ended March 
31, 1997 to $1.4 million for the three months ended March 31, 1998.  Rent, 
information systems, supplies, and depreciation expenses comprise a 
significant portion of the general and administrative  expense increase over 
the same period for 1997.

      Operating Income. Operating income decreased 110.1% from $1.6 million, 
(8.5% of total revenues), for the three months ended March 31, 1997 to $(0.2) 
million, (1.0% of total revenues), for the three months ended March 31, 1998 
as a result of the factors listed above.

      Interest (Income) Expense, Net. Net interest expense  totaled $41,000 
for the three months ended March 31, 1997, resulting from interest on the 
company's line of credit.  Net interest income totaled $20,000 for the three 
months ended March 31, 1998, due to higher a investment balance and no line 
of credit.

      Income Taxes.  The Company's effective income tax rate was 34.6% for 
the three months ended March 31, 1998, as compared to a 36.4% effective 
income tax rate for the three months ended March 31, 1997.  

Liquidity and Capital Resources

      The Company's operating activities provided cash of $2.1 million and 
used cash of $1.2 million for the three months ended March 31, 1997 and 1998, 
respectively. Cash provided by operating activities for the 1997 period was 
primarily due to net income before depreciation and amortization and increase 
in accounts payable and deferred revenue offset by increases in accounts 
receivable.  Cash used in operating activities for the 1998 period was 
primarily due to a net operating loss, increases in accounts receivable and 
inventory, partially offset by increases in accounts payable and deferred 
revenue.

      The Company's investing activities used  cash of $1.9 million and 
provided cash of $2.0 million for the three months ended March 31, 1997 and 
1998, respectively. Cash used by the Company's investing activities for the 
1997 period related to the purchase of property and equipment as well as 
increases in investment of sales-type leases.  Cash provided by the Company's 
investing activities for the 1998 period resulted from the sale of 
investments, as well as the reduction of investment in sales-type leases, 
partially offset by the purchase of property and equipment.

       Financing activities used cash of $0.5 million  and $0.5 million for 
the three months ended March 31, 1997 and 1998 respectively, primarily due to 
the repayment of long term debt.

      The Company's cash requirements have been financed with cash flow from 
operations and borrowings under its revolving credit facility with First 
Union National Bank of Florida (the "Bank") since October 1996.  The credit 
facility with the Bank provides for borrowings of up to $15.0 million based 
on the value and aging of the Company's eligible accounts and lease 
receivables.  Borrowings under the line of credit bear interest at the Bank's 
quoted variable base rate, which has ranged from 7.12% to 7.47% during the 
three months ended March 31, 1998,  and was 7.18% as of March 31, 1998.  As 
of March 31, 1998, the Company had no outstanding balance under the line of 
credit and approximately $11.6 million was available for borrowing thereunder 
based upon the Company's qualifying accounts receivables.  The Company 
intends to use its borrowing capacity under the line of credit on a limited 
basis primarily for working capital requirements.  The credit facility 
expires in September 1998.  Although there can be no assurances that the Bank 
will do so, the Company believes that the Bank will agree to renew the 
facility.

      The Company decreased its investment in sales-type leases by $0.6 
million and increased discounted leases to third parties of $0.4 million for 
the three months ended March 31, 1998.  As of March 31, 1998, the Company's 



<PAGE>
 
investment in capital leases included $9.2 million of leases which had been 
discounted via non-recourse notes payable to banks.  An additional $5.5 
million represented undiscounted leases, a portion of  which the Company 
plans to discount in the future. This leasing activity places demands on the 
Company's working capital based on the timing and availability of discounting 
activities with financial institutions.

      Management believes that cash from operations and borrowings available 
under its revolving credit facility together with current cash balances will 
be sufficient to finance its working capital needs and capital expenditure 
requirements for at least the next 12 months.  Although no assurance can be 
given, management believes that cash from operations together with available 
sources of financing, including additional bank debt, will be sufficient to 
fund the company's capital requirements for the foreseeable future beyond 
such 12 month period.  The Company relocated its joint corporate headquarters 
and operations facility to a new location in the first quarter of 1998.  In 
conjunction with this move, the company has committed to a 60 month premises 
lease in Clearwater, Florida.  The Company does not currently have any other 
material commitments for capital expenditures.

      Many companies use existing computer programs which identify a 
particular year using only two digits. These programs were not developed to 
consider the impact of the upcoming change in the century. Many computer 
software applications could therefore fail or create erroneous results at or 
beyond the year 2000 if not corrected or replaced by software applications 
designed to properly recognize and process dates during and beyond the year 
2000 ("Year 2000 compliant software"). During 1997, the Company upgraded its 
financial and business communications systems with Year 2000 compliant 
software. Furthermore, beginning in 1998, the Company plans to replace or 
upgrade certain other systems to meet its evolving business requirements. The 
replacement or upgraded systems will be evaluated or developed to ensure Year 
2000 compliance. The expected costs for 1998 systems work are included within 
the Company's capital budget for 1998. Furthermore, the Company has initiated 
a project to test remaining internal systems and critical external interfaces 
in 1998 in order to identify areas where the Year 2000 issue might materially 
impact the Company's business. During 1998, management expects to identify 
any remaining concerns related to Year 2000 readiness and initiate required 
actions to ensure Year 2000 readiness. The Company believes that it will be 
Year 2000 ready with no material impact on the Company's business and that 
the costs of any corrective action will not materially affect the Company's 
operating results or financial condition.

      The Company also announced that it had signed a contract with a Fortune 
100 company under which TechForce, as a subcontractor, will provide network 
services to customers nationwide.

      On May 8, 1998, the Company announced that it will restructure its 
business operations away from the hardware business segment by reducing the 
infrastructure and resouces allocated to it.  As a result of the planned cost 
reductions, the Company expects to incur a non-recurring charge in the second 
quarter of approximately $2.5 million related to staff reductions, closing 
and relocating certain functions and inventory valuation adjustments in 
response to the Company's strategy shift related to the sale of hardware.

      The above "Management's Discussion and Analysis of Financial Condition 
and Results of Operations" contains forward-looking statements that involve 
risks and uncertainties.  The Company's actual results could differ 
materially from those anticipated in these forward-looking statements as a 
result of certain factors. Among such risks and uncertainties are as those 
relating to the competitive nature of the TechForce's marketplace and its 
ability to expand its customer base and grow revenues in line with previous 
experience, dependence upon certain key personnel, the Company's ability to 
manage its growth, and the risk of economic and market factors affecting 
TechForce or its customers.


Item 3.   Quantitative and Qualitative Disclosures About Market Risks.

          Not Applicable.



<PAGE>

PART II     OTHER INFORMATION
-------     -----------------

Item 1.     Legal Proceedings
            Not Applicable.

Item 2.     Changes in Securities
            Not Applicable.

Item 3.     Defaults Upon Senior Securities
            Not Applicable.

Item 4.     Submission of Matters to a Vote of Shareholders
            Not Applicable.
 
Item 5.     Other Information
            Not Applicable.

Item 6.     Exhibits and Reports on Form 8-K

            (a)  Exhibit No.   Description
                 -----------   -----------

                    10.1*      Master sub-contract agreement, dated March 31, 
                               1998, between TechForce Corporation and XXX
                               Corporation.

                    10.2       Sub-contractor agreement, dated October 10, 1997,
                               between TechForce Corporation and General 
                               Electric Corporation.

                    27.1       Financial Data Schedule

                    27.2       Financial Data Schedule (RESTATED)

            (b)   No reports on Form 8-K were filed during the period.


            * Portions of this document have been omitted pursuant to a 
              request for confidential treatment under Rule 24b-2 of the
              Securities Exchange Act of 1934, as amended.



<PAGE>
                                       
                                   SIGNATURES


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


                                  TECHFORCE CORPORATION




Date: June 4, 1998                /s/ Jerrel W. Kee
                                  ------------------------------------
                                  Jerrel W. Kee
                                  Chief Financial Officer
                                  (principal financial and accounting officer)



<PAGE>

                                EXHIBIT INDEX
                                -------------


EXHIBIT NO.
-----------

10.1*          Master sub-contract agreement, dated March 31, 1998, between 
               TechForce Corporation and XXX Corporation.

10.2           Sub-contractor agreement, dated October 10, 1997, between 
               TechForce Corporation and General Electric Corporation.

27.1            Financial Data Schedule

27.2            Financial Data Schedule (Restated)

            * Portions of this document have been omitted pursuant to a 
              request for confidential treatment under Rule 24b-2 of the
              Securities Exchange Act of 1934, as amended.