SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    ---------

                                    FORM 10-Q
(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, 1999

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

                                       OR

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

For the transition period from ______________________ to _______________________

                         Commission file number 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 (727) 533-3600

--------------------------------------------------------------------------------
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 6, 1999, there were 8,279,298 shares of
                     the issuer's common stock outstanding.

<PAGE>

                              TECHFORCE CORPORATION

                                    FORM 10-Q

                          QUARTER ENDED MARCH 31, 1999

                                      INDEX

PART I.   FINANCIAL INFORMATION                                         PAGE NO.
-------   ---------------------                                         --------

Item 1    Financial Statements............................................ 1

          Consolidated Balance Sheets..................................... 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..... 11

PART II.  OTHER INFORMATION

Item 1    Legal Proceedings............................................... 12

Item 2    Changes in Securities........................................... 12

Item 3    Defaults Upon Senior Securities................................. 12

Item 4    Submission of Matters to a Vote of Shareholders................. 12

Item 5    Other Information............................................... 12

Item 6    Exhibits and Reports on Form 8-K................................ 12

SIGNATURES

Signatures................................................................ 12

EXHIBIT INDEX

Exhibit Index............................................................. 13

<PAGE>

<TABLE>
<CAPTION>
                     TECHFORCE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 March 31, 1999
                                 (In thousands)

              ASSETS                                             MARCH 31, 1999   DECEMBER 31, 1998
                                                                 --------------   -----------------
                                                                   (UNAUDITED)         (AUDITED)
<S>                                                              <C>              <C>
CURRENT ASSETS
      Cash and cash equivalents                                     $  2,559           $  3,159
      Investments                                                        105                104
      Accounts receivable, net of allowance for
         doubtful accounts of approximately
         $1,010,000 and $912,000 at Mar. 31,
         1999, and Dec. 31, 1998                                      18,802             20,415
      Inventories                                                      2,281              1,796
      Prepaid expenses/other assets                                    2,679              1,222
      Net investment in sales type leases
        (current portion)                                              3,023              2,502
      Deferred taxes                                                   2,163              1,807
                                                                    --------           --------
         Total current assets                                         31,612             31,005
                                                                    --------           --------
PROPERTY, PLANT AND EQUIPMENT
      Leasehold improvements                                           1,337              1,165
      Furniture, fixtures and equipment                               10,637              9,916
      Equipment held for rental                                          799                703
      Replacement parts                                               17,550             17,107
                                                                    --------           --------
                                                                      30,323             28,891
      Less accumulated depreciation                                  (16,393)           (15,412)
                                                                    --------           --------
         Total property, plant and equipment, net                     13,930             13,479
                                                                    --------           --------

NET INVESTMENT IN SALES TYPE LEASES,                                   4,328              4,468
      Less current portion

OTHER ASSETS                                                              65                133
                                                                    --------           --------

         Total assets                                               $ 49,935           $ 49,085
                                                                    ========           ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
      Accounts payable                                              $  6,749           $  5,458
      Accrued expenses                                                 2,813              5,150
      Accrued contract labor                                           1,455              1,139
      Current maturities of obligations under
         capital leases, long-term debt and
         non-recourse notes payable                                    1,134                980
      Deferred revenue                                                 3,242              2,750
                                                                    --------           --------
                                                                      15,393             15,477
                                                                    --------           --------

OBLIGATIONS UNDER CAPITAL LEASES,                                        
      net of current maturities                                          344                371

DEFERRED REVENUE, net of current portion                                  10                 17

DEFERRED TAXES                                                         1,483              1,498

NON-RECOURSE NOTES PAYABLE, net of
      current maturities                                                 815                659
                                                                    --------           --------
STOCKHOLDERS' EQUITY
      Common stock                                                        83                 83
      Additional paid in capital                                      28,596             28,577
      Retained earnings                                                3,211              2,403
                                                                    --------           --------
                                                                      31,890             31,063
                                                                    --------           --------
         Total liabilities and
            stockholders' equity                                    $ 49,935           $ 49,085
                                                                    ========           ========
</TABLE>

                                     Page 1

<PAGE>

                     TECHFORCE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                  For the quarter ended March 31, 1999 & 1998
                     (In thousands, except per share data)

                                                       QUARTER ENDED
                                                          MARCH 31
                                              ----------------------------------
                                                 1999                  1998
                                              (UNAUDITED)           (UNAUDITED)
                                              -----------           -----------
Revenues:
    Services                                       14,574                11,700
    Hardware                                        6,729                 4,917
                                               ----------            ----------
       Total revenues                              21,303                16,617

Direct Cost:
    Services                                       11,734                 9,276
    Hardware                                        4,958                 4,102
                                               ----------            ----------
       Total direct cost                           16,692                13,378

Gross Margin:
    Services                                        2,840                 2,424
    Hardware                                        1,771                   815
                                               ----------            ----------
       Total gross margin                           4,611                 3,239

Operating Costs:
    Selling and marketing                           1,724                 1,955
    General and administrative                      1,579                 1,440
                                               ----------            ----------
                                                    3,303                 3,395

Operating Income (loss)                             1,308                  (156)

Interest (income) expense, net                         (3)                   20
                                               ----------            ----------

Income (Loss) before taxes                          1,311                  (176)

Provision (Benefit) for
   income taxes                                       503                   (61)
                                               ----------            ----------

Net Income (loss)                                     808                  (115)
                                               ==========            ==========
Basic earnings (loss) per
  common share                                       0.10                 (0.01)
                                               ==========            ==========
Diluted earnings (loss) per
  common share                                       0.10                 (0.01)
                                               ==========            ==========
Weighted average number of
    common shares outstanding - basic           8,263,860             8,123,103
                                               ==========            ==========
Weighted average number of
    common and common
    equivalent shares outstanding - diluted     8,422,601             8,123,103
                                               ==========            ==========

                                     Page 2

<PAGE>

<TABLE>
<CAPTION>
                     TECHFORCE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

                                                                              THREE MONTHS ENDED
                                                                                   MARCH 31
                                                                         ---------------------------
                                                                            1999            1998
                                                                         -----------     -----------
                                                                         (UNAUDITED)     (UNAUDITED)
<S>                                                                      <C>              <C>
Cash flows from operating activities
          Net income (loss)                                                $   808         ($  115)
          Adjustments to reconcile net income (loss) to net cash
             provided by (used in) operating activities:
                  Depreciation and amortization                              1.049           1,437
                  Deferred income tax (benefit) provision                     (371)            132
                  Changes in assets and liabilities:
                          Accounts receivable                                1,613          (3,294)
                          Inventories                                         (485)           (419)
                          Prepaid expenses and other current assets         (1,457)           (197)
                          Accounts payable                                   1,291             850
                          Accrued expenses                                  (2,339)         (1,021)
                          Accrued contract labor                               316             231
                          Deferred revenue                                     485           1,376
                                                                           -------         -------
                                  Net cash provided by (used in)
                                    operating activities                       910          (1,020)
                                                                           -------         -------
Cash Flows from investing activities
          Purchase of property and equipment                                (1,432)         (1,656)
          (Purchase) sale of investments                                        (1)          3,075
          Investment in sales-type leases                                     (381)            607
                                                                           -------         -------
Net cash (used in) provided by investing activities                         (1,814)          2,026
                                                                           -------         -------
Cash flows from financing activities
          Proceeds from stock options exercised                                 21              41
          Repayments of capital lease obligations                              (27)            (10)
          Borrowings/(Payments) of non-recourse notes payable,
            secured by sales-type leases                                       310            (710)
                                                                           -------         -------
Net cash provided by (used in) financing activities                            304            (679)
                                                                           -------         -------

Net (decrease) increase in cash and cash equivalents                          (600)            327

Cash and cash equivalents, beginning of period                               3,159             735
                                                                           -------         -------

Cash and cash equivalents, end of period                                   $ 2,559         $ 1,062
                                                                           =======         =======
</TABLE>

                                     Page 3

<PAGE>

                     TECHFORCE CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 1999
                                   (Unaudited)

1.   NATURE OF BUSINESS

     Established in 1991, TechForce (the "Company") operates two primary
     business units providing support for corporate enterprise networks and
     personal computers. Our Enterprise Network Services business unit provides
     multivendor network support services for local and wide area networks
     (LAN/WAN) to corporate customers, manufacturers, carriers, and network
     integrators. The Enterprise network services, branded under the name
     "TechCare(SM)," include offerings for network consulting, management and
     monitoring, integration, and maintenance. The Company also sells and leases
     networking equipment which serves as a base for additional long-term
     support agreements. Our Custom PC Services business unit provides on-site,
     depot and logistics services for personal computers and peripheral devices
     for PC manufacturers, retailers and other extended-warranty providers.

2.   BASIS OF FINANCIAL REPORTING

     The condensed consolidated financial statements at March 31, 1999 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, 1998.

3.   MAJOR CUSTOMERS

     During the quarters ended March 31, 1999, and March 31, 1998, the following
     customers individually accounted for 10% or more of the Company's revenue:

<TABLE>
<CAPTION>
                                    QUARTER ENDED MARCH 31, 1999    QUARTER ENDED MARCH 31, 1998
                                    ----------------------------    ----------------------------
                                    AMOUNT ($000)    PERCENTAGE     AMOUNT ($000)   PERCENTAGE
                                    -------------   ------------    ------------- --------------
<S>                                 <C>             <C>             <C>           <C>
     Best Buy Corporation              $ 3,394          16%             $     6    less than 1%
     General Electric Corporation      $ 2,141          10%             $ 3,023        18%
     Sears Roebuck and Company         $ 2,141          10%             $ 1,022        6%
</TABLE>

     The loss of revenues from Best Buy Corporation, General Electric
     Corporation or Sears Roebuck and Company could have a material impact on
     the results of the operations of the Company in the near term.

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:

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED MARCH 31,
                                                           ----------------------------
                                                               1999             1998
                                                           -----------       ----------
<S>                                                        <C>               <C>
     Basic weighted average number of common
          shares ............................               8,263,860         8,123,103
     Dilutive effect of options outstanding ............      158,741                 -
     Diluted weighted average number of common
         and common equivalent shares outstanding.......    8,422,601         8,123,103
</TABLE>

                                     Page 4

<PAGE>

     The following options were outstanding at March 31, 1999, 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, 1999:

             Number of options ...............................        755,794
             Range of exercise prices ........................    $6.50 - 10.59
             Range of expiration dates .......................     2005 - 2009

     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:

             Number of options ...............................      1,389,561
             Range of exercise prices ........................     $.38 - 9.63
             Range of expiration dates .......................     2004 - 2008

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, 1999 or
     results of operations for the three months then ended.

6.   RECLASSIFICATIONS

     Certain amounts included in the 1998 financial statements have been
     reclassified to conform with the 1999 financial statements.

7.   BUSINESS SEGMENTS

     The Company operates in three primary business segments, one related to the
     sale of networking hardware and two related to the sale of services. The
     hardware segment provides networking and channel extension hardware
     primarily in the United States, Canada and the United Kingdom. The service
     operation segment is comprised of two segments, one operating in the
     network services industry and the other in the personal computer warranty
     repair industry.

     Due to the nature of the Company's business, the segments share operating
     costs, assets and related liabilities. Where the ability to allocate
     specific amounts exists, they have been reflected in their respective
     segments.

     There were no significant intercompany sales between the three segments
     for the three month periods ended March 31, 1999 and 1998.

     The following information summarizes the Company's segment information for
     the three month periods ended March 31, 1999 and 1998.

<TABLE>
<CAPTION>
                                            FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1999
                                        -------------------------------------------------------
                                                     TECHCARE(TM)    CUSTOM PC
                                          HARDWARE     SERVICES       SERVICES    CONSOLIDATED
                                        -----------  ------------   -----------   -------------
<S>                                     <C>          <C>            <C>           <C>
              Revenues                  $ 6,729,204  $ 6,243,246    $ 8,330,659   $ 21,303,109
              Gross margin                1,771,096    1,078,214      1,761,837      4,611,147
              Operating costs                                                        3,303,026
              Operating income                                                       1,308,121
              Interest Income                                                            3,183
              Income before provision
                   for income taxes                                                  1,311,304
              Provision for income taxes                                               502,933
              Net Income                                                               808,371
</TABLE>

                                     Page 5

<PAGE>

<TABLE>
<CAPTION>
                                            FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
                                        -------------------------------------------------------
                                                     TECHCARE(TM)    CUSTOM PC
                                          HARDWARE     SERVICES       SERVICES    CONSOLIDATED
                                        -----------  ------------   -----------   -------------
<S>                                     <C>          <C>            <C>           <C>
              Revenues                  $ 4,916,525  $ 5,533,396    $ 6,166,899   $ 16,616,820
              Gross margin                  814,598    1,140,447      1,283,338      3,238,383
              Operating costs                                                        3,394,593
              Operating loss                                                          (156,210)
              Interest expense                                                          20,008
              Loss before benefit
                   for income taxes                                                   (176,218)
              Benefit for income taxes                                                 (61,081)
              Net loss                                                                (115,137)
</TABLE>

<TABLE>
<CAPTION>
             IDENTIFIABLE ASSETS AND LIABILITIES

                                                 FOR THE PERIOD ENDED MARCH 31, 1999, AND DECEMBER 31, 1998
                                                 ----------------------------------------------------------
                                                              1999                       1998
                                                           ----------                 ----------
<S>                                                        <C>                        <C>
             HARDWARE SEGMENT
                      Inventory                            $2,281,000                 $1,796,000
                      Net Investment in Leases              7,351,000                  6,970,000
                      Notes Payable                        (1,949,000)                (1,539,000)

             TECHCARE(TM) SERVICES SEGMENT
                      Replacement Parts, Net                7,055,000                  6,965,000
                      Deferred Revenue                     (3,253,000)                (2,767,000)

             CUSTOM PC SERVICES SEGMENT
                      Accounts Receivable Net               7,251,000                  7,896,000
</TABLE>

             GEOGRAPHIC INFORMATION

             The Company allocates revenues based on the selling location.
             Accordingly revenue from external customers was derived as follows:

                                            FOR THE THREE MONTHS ENDED MARCH 31,
                                            ------------------------------------
                                                  1999              1998
                                              -----------       -----------
             North America                    $20,750,970       $15,949,175
             United Kingdom                       552,139           667,645
                                               ----------        ----------
                                              $21,303,109       $16,616,820

             The Company's long-lived assets, excluding deferred assets, were as
follows:

                                            FOR THE PERIOD ENDED MARCH 31, 1999,
                                                    AND DECEMBER 31, 1998
                                            ------------------------------------
                                                  1999               1998
                                               ----------       -----------
             North America                    $18,187,310       $17,978,080
             United Kingdom                       127,541           152,212
                                              -----------       -----------
                                              $18,314,851       $18,130,292

8.   NEW ACCOUNTING PRONOUNCEMENTS

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

                                     Page 6

<PAGE>

      This Report contains certain forward-looking statements with respect to
the Company's operations, industry, financial condition and liquidity. These
statements, which are typically introduced by phrases such as "the Company
believes", "anticipates", "estimates" or "expects" certain conditions to exist,
reflect management's best current assessment of a number of risks and
uncertainties. The Company's actual result could differ materially from the
results anticipated in these forward-looking financial statements as a result of
certain factors described in this report. See "Safe Harbor Statement".

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

OVERVIEW

      Established in 1991, TechForce (the "Company") operates two primary
business units providing support for corporate enterprise networks and personal
computers. Our Enterprise Network Services business unit provides multivendor
network support services for local and wide area networks (LAN/WAN) to corporate
customers, manufacturers, carriers, and network integrators. The Enterprise
network services, branded under the name "TechCare(SM)," include offerings for
network consulting, management and monitoring, integration, and maintenance. The
Company also sells and leases networking equipment which serves as a base for
additional long-term support agreements. Our Custom PC Services business unit
provides on-site, depot and logistics services for personal computers and
peripheral devices for PC manufacturers, retailers and other extended-warranty
providers. For on-site repair and parts replacement services, we dispatch our
own customer support representatives, as well as TechForce certified contracted
technicians located in the United States, Canada and the United Kingdom.

      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.

      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 an industry 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 General Electric represented 10% of total Company revenues
for the three months ended March 31, 1999 as compared to 18.2% for the three
months ended March 31, 1998. Revenues from Sears and Best Buy represented 10%
and 16% of total Company revenues respectively for the three months ended March
31, 1999, as compared to less than 10% respectively for the three months ended
March 31, 1998.

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

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998

      TOTAL REVENUES. Total revenues increased 28.2% from the three months ended
March 31, 1998 to the three months ended March 31, 1999 largely due to increased
hardware sales, network services revenue, and custom PC services. Revenues from
channel networking decreased in line with management's expectations.

      SERVICE REVENUES. Revenues from services increased 24.6% from $11.7
million for the three months ended March 31, 1998 to $14.6 million for the three
months ended March 31, 1999. This increase was attributable to increased network
services, network integration services and custom PC services revenues partially
offset by the reduced channel networking revenues. Revenues from network
services and network integration services increased

<PAGE>

by 17.8% and 52.2% respectively, while revenues from custom PC services
increased by 35.1% for the three months ended March 31, 1999 as compared to
revenues from these services for the three months ended March 31, 1998.

      HARDWARE REVENUES. Revenues from hardware sales increased 36.9% from $4.9
million for the three months ended March 31, 1998 to $6.7 million for the three
months ended March 31, 1999. Hardware revenues included revenues from leasing
activities of $0.4 million and $1.4 million for the three months ended March 31,
1998 and 1999, respectively.

      COST OF SERVICE. Cost of service increased 26.5% from $9.3 million for the
three months ended March 31, 1998 to $11.7 million for the three months ended
March 31, 1999. The cost of service increase was attributable to the growth in
business volumes from Custom PC Services, and the increased cost structure to
support the growth of network integration services.

      COST OF HARDWARE. Cost of hardware increased 20.9% from $4.1 million for
the three months ended March 31, 1998 to $5.0 million for the three months ended
March 31, 1999.

      GROSS MARGIN. Overall gross margin increased 42.4% from $3.2 million
(19.5% of total revenues), for the three months ended March 31, 1998 to $4.6
million (21.6% of total revenues), for the three months ended March 31, 1999.
Gross margin on services increased 17.2% from $2.4 million for the three months
ended March 31, 1998 to $2.8 million for the three months ended March 31, 1999
while decreasing as a percent of service revenues from 20.7% to 19.5%,
respectively. Gross margin on hardware revenues increased 117.3% from $.8
million for the three months ended March 31, 1998 to $1.8 million for the three
months ended March 31, 1999. This increase was caused primarily by increased
hardware revenues with margins in excess of historical levels during the three
months ended March 31, 1999. Hardware margins as a percentage of hardware
revenues increased from 16.6% for the three months ended March 31, 1998 to 26.3%
for the three months ended March 31, 1999.

      SELLING AND MARKETING EXPENSES. Selling and marketing expenses decreased
11.8% from $2.0 million for the three months ended March 31, 1998 to $1.7
million for the three months ended March 31, 1999. The decrease resulted
primarily from a reduction of the sales infrastructure.

      GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased 9.7% from $1.4 million for the three months ended March 31, 1998 to
$1.6 million for the three months ended March 31, 1999. This increase was
primarily due to increases in business systems development and support expenses,
professional expenses and other general support expenses. General and
administrative expenses as a percentage of revenues decreased from 8.7% for the
three months ended March 31, 1998 to 7.4% for the three months ended March 31,
1999.

      OPERATING INCOME. Operating income increased from $(0.2) million (0.9% of
total revenues), for the three months ended March 31, 1998 to $1.3 million (6.1%
of total revenues), for the three months ended March 31, 1999.

      INTEREST EXPENSE, NET. Net interest expense totaled $20,000 for the three
months ended March 31, 1998, resulting from interest on the company's line of
credit and notes payable partially offset by investments. Net interest income
totaled $3,000 for the three months ended March 31, 1999, resulting from
interest income on investments offset by interest expense on the company's line
of credit and notes payable.

      INCOME TAXES. The Company's effective income tax rate was 38.4% for the
three months ended March 31, 1999, compared to a 34.7% effective income tax rate
for the three months ended March 31, 1998.

LIQUIDITY AND CAPITAL RESOURCES

       The Company's operating activities used cash of $1.0 million and provided
cash of $0.9 million for the three months ended March 31, 1998 and 1999,
respectively. Cash used in operating activities for the 1998 period was
primarily due to a net operating loss, increases in accounts receivable,
inventories and prepaid expenses, and reductions in accrued expenses, offset by
a decrease in other assets and increases in accounts payable, accrued

<PAGE>

contract labor, deferred revenue and net deferred taxes. Cash provided by
operating activities for the 1999 period was primarily due to net income before
depreciation and amortization, decreases in accounts receivable and other
assets, and increases in accounts payable, accrued contract labor and deferred
revenue, offset by increases in inventories and prepaid expenses, and decreases
in accrued expenses and net deferred taxes.

      The Company's investing activities provided cash of $2.0 million and used
cash of $1.8 million for the three months ended March 31, 1998 and 1999,
respectively. Cash used by the Company's investing activities for the 1998
period related to the purchase of property and equipment. Cash was provided by
the sale of investments and increases in investment of sales-type leases. Cash
used by the Company's investing activities for the 1999 period resulted from the
purchase of property and equipment. Cash was provided by the reduction of
investment in sales-type leases.


      Financing activities used cash of $0.7 million and provided cash of $0.3
million for the three months ended March 31, 1998 and 1999, respectively.

      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 6.43% to 7.12% during the three months ended March 31,
1999, and was 6.43% as of March 31, 1999. As of March 31, 1999, the Company had
no outstanding balance under the line of credit with approximately $11.3 million
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 primarily for working capital requirements. The credit facility expires
in September 1999. Although there can be no assurances that the Bank will do so,
the Company believes that the Bank will agree to renew the facility.

      As of March 31, 1999 the Company's investment in sales-type leases
included $2.2 million of leases which had been discounted via non-recourse notes
payable to the banks. Additionally investment in capital leases includes $5.2
million of undiscounted leases, a portion of which the Company plans to discount
in 1999. 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 does not currently have any other material commitments
for capital expenditures.


YEAR 2000

      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 year 2000 ("Year 2000
compliant software"). In 1998 the Company initiated a project to evaluate its
internal systems and critical external interfaces in order to identify areas
where the Year 2000 issue might materially impact the Company's business and has
hired an outside consultant with Year 2000 compliance experience to assist in
this evaluation. All critical systems and interfaces are being evaluated for
Year 2000 compliance and programs have been initiated to bring about remedial
action where necessary. During 1999, the Company plans to replace certain of its
systems to meet its evolving business requirements. The replacement systems are
being evaluated or developed to ensure Year 2000 compliance. Such replacements
are being made due to reasons other than Year 2000 compliance concerns and no
replacement has been accelerated because of such concerns. The expected costs
for systems work are included within the Company's capital and operating budgets
for 1999.

<PAGE>

      Management believes that any other Year 2000 compliance issue related to
its internal systems can be properly managed by its internal staff with minimal
incremental costs, including fees payable to its Year 2000 outside consultant.

      Management believes that if the Company's PC service customers experience
Year 2000 compliance problems in their customer help desk systems, the Company
could experience a downturn in customer service requests. Management intends to
seek Year 2000 compliance certification from these customers prior to the end of
1999. Management has identified concerns related to Year 2000 readiness and has
initiated actions to ensure Year 2000 readiness.

      The Company utilizes replacement parts inventories with varying levels of
software content in the maintenance of enterprise networks. These replacement
parts are distributed throughout warehouse locations owned and operated by the
Company's logistics vendor. The Company has initiated a program to identify and
upgrade non-compliant Year 2000 replacement parts and expects to complete this
activity prior to 2000. Management believes that less than 10% of its
replacement parts pool represents potential Year 2000 compliance issues.
Software upgrades for these replacement parts are generally available from the
manufacturers at little to no cost to the Company. The unavailability of Year
2000 compliant replacement parts or the failure of such parts once introduced
into the customers' networks due to Year 2000 non-compliance would reduce the
quality of service provided by the Company to its customers and increase the
Company's costs. Although it is not possible to accurately predict the extent of
the upgrade requirement, management estimates that the expenses related to the
audit and upgrade activity will not exceed $250,000.

      The Company believes that it will be Year 2000 ready with no material
impact on its business and estimates that its total costs related to all Year
2000 compliance efforts will be approximately $250,000 to $300,000. Any
corrective action will not materially affect the Company's operating results or
financial condition

KEY EMPLOYEE COMPENSATION CONTINUATION PLAN.

       In 1998, the Board of Directors adopted the Key Employee Compensation
Continuation Plan (the "Continuation Plan"). Under the Continuation Plan,
employees identified by the Board of Directors as "key" or critical to TechForce
are entitled to a severance payment equal to a percentage of their compensation
(including certain other benefits, bonus amounts and perquisites) for the
twelve-month period ending upon their termination. Each of the Company's
executive officers is entitled to receive a severance payment of 100% of their
compensation. We adopted the Continuation Plan to attract the highest quality
individuals to become key members of our leadership team and to retain the
high-quality individuals who are presently members of our leadership team.

SAFE HARBOR STATEMENT

      The Management's Discussion and Analysis and other portions of this
Report, include "forward-looking" statements within the meaning of the federal
securities laws, that are subject to future events, risks and uncertainties that
could cause actual results to differ materially from those expressed or implied.
Important factors that either individually or in the aggregate could cause
actual results to differ materially from those expressed include, without
limitation, (1) that the Company will not retain or grow its customer base, (2)
that the Company will fail to be competitive with existing and new competitors,
(3) that the Company will not be able to sustain its current growth, (4) that
the Company will not adequately respond to technological developments impacting
its industry and markets, (5) that needed financing will not be available to the
Company if and as needed, (6) that a significant change in the growth rate of
the overall U.S. economy will occur such that consumer and corporate spending
are materially impacted, (7) that the Company or its vendors and suppliers may
fail to timely achieve Year 2000 readiness such that there is a material adverse
impact on the business, operations or financial results of the Company, (8) that
a drastic negative change in market conditions occurs, or (9) that some other
unforeseen difficulties occur. This list is intended to identify only certain of
the principal factors that could cause actual results to differ materially from
those described in the forward-looking statements included herein.

<PAGE>

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             Key Employee Compensation Continuation Plan

                  27.1             Financial Data Schedule

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

<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: May 13, 1998            /s/ JERREL W. KEE
                                        -------------------------------------
                                    Jerrel W. Kee
                                    Chief Financial Officer
                                    (principal financial and accounting officer)

<PAGE>

                                  EXHIBIT INDEX

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

10.1    Key Employee Compensation Continuation Plan

27.1    Financial Data Schedule