<PAGE>

                       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 September 30, 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 (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 November 6, 1998, there were 8,261,077 shares of the issuer's
                            common stock outstanding.


<PAGE>


                              TECHFORCE CORPORATION

                                    FORM 10-Q

                        QUARTER ENDED SEPTEMBER 30, 1998

                                      INDEX
                                      -----
<TABLE>
<CAPTION>

PART I.  FINANCIAL INFORMATION                                                PAGE NO.
-------  ---------------------                                                --------
<S>      <C>                                                                  <C>
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...........      13


PART II. OTHER INFORMATION
-------- -----------------
Item 1   Legal Proceedings......................................................     14

Item 2   Changes in Securities..................................................     14

Item 3   Defaults Upon Senior Securities........................................     14

Item 4   Submission of Matters to a Vote of Shareholders........................     14

Item 5   Other Information......................................................     14

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

SIGNATURES
----------

Signatures......................................................................     15

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


</TABLE>

<PAGE>

                     TECHFORCE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                               September 30, 1998
                                 (In thousands)

<TABLE>
<CAPTION>

                             ASSETS                                     September 30, 1998    December 31, 1997
                                                                        ------------------    -----------------
                                                                            (Unaudited)
<S>                                                                     <C>                   <C>
CURRENT ASSETS
         Cash and cash equivalents                                                $    462    $    735
         Investments                                                                   103       3,175
         Accounts receivable, net of Allowance for Doubtful Accounts of
           approximately $547,000 and $343,000 at Sep 30, 1998 and 
           Dec 31, 1997, respectively                                               17,787      12,829
         Inventories                                                                   792       3,461
         Net Investment in Sales Type Leases (current portion)                       4,856       4,100
         Prepaid expenses/Other Assets                                               1,587       1,031
                                                                                  --------    --------
                  Total current assets                                              25,587      25,331
                                                                                  --------    --------
PROPERTY, PLANT AND EQUIPMENT
         Leasehold improvements                                                      1,164         764
         Office furniture and fixtures                                               9,343       7,499
         Replacement parts                                                          17,586      17,077
         Equipment held for rental                                                     721         592
                                                                                  --------    --------
                                                                                    28,814      25,932
         Less accumulated depreciation                                             (14,735)    (10,968)
                                                                                  --------    --------
                  Total property, plant and equipment, net                          14,079      14,964
                                                                                  --------    --------
NET INVESTMENT IN SALES TYPE LEASES,
         Less current portion                                                        7,605      10,105
                                                                                  --------    --------
ORGANIZATION COSTS AND OTHER ASSETS                                                    181         273
                                                                                  --------    --------
                  Total assets                                                    $ 47,452    $ 50,673
                                                                                  --------    --------
                                                                                  --------    --------
                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

         Accounts payable                                                         $  3,138    $  3,906
         Accrued expenses                                                              622       1,936
         Accrued contract labor                                                      1,038         551
         Current maturities of obligations under capital leases,
                  long-term debt and non-recourse notes payable                      2,656       2,770
         Line of credit                                                                837        --
         Deferred revenue                                                            3,065       2,069
         Deferred Taxes                                                                --           81
                                                                                  --------    --------
                                                                                    11,356      11,313
                                                                                  --------    --------

OTHER LIABILITIES                                                                    1,642       1,835
                                                                                  --------    --------
NON-RECOURSE NOTES PAYABLE, net of current maturities                                4,755       6,032
                                                                                  --------    --------

STOCKHOLDERS' EQUITY
         Common stock                                                                   82          81
         Additional paid in capital                                                 28,459      28,031
         Retained earnings                                                           1,158       3,381
                                                                                  --------    --------
                                                                                    29,699      31,493
                                                                                  --------    --------

                  Total liabilities and stockholders' equity                      $ 47,452    $ 50,673
                                                                                  --------    --------
                                                                                  --------    --------
</TABLE>

<PAGE>


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

                                                          Three months ended                          Nine months ended
                                                             September 30                                September 30
                                             -----------------------------------------    ------------------------------------------
                                                    1998                  1997                    1998                  1997
                                             -------------------    ------------------    ---------------------   ------------------
<S>                                          <C>                    <C>                    <C>                    <C>
Revenues:
      Services                                         $ 12,916               $ 9,187                 $ 35,304             $ 28,008
      Hardware                                            6,036                 5,232                   15,315               19,216
                                             -------------------    ------------------    ---------------------   ------------------
           Total revenues                                18,952                14,419                   50,619               47,224
                                             -------------------    ------------------    ---------------------   ------------------
Direct costs:
      Services                                            9,879                 7,013                   28,662               20,256
      Hardware                                            4,519                 3,331                   13,791               12,745
                                             -------------------    ------------------    ---------------------   ------------------
           Total direct costs                            14,398                10,344                   42,453               33,001
                                             -------------------    ------------------    ---------------------   ------------------
Gross Margin:
      Services                                            3,037                 2,174                    6,642                7,752
      Hardware                                            1,517                 1,901                    1,524                6,471
                                             -------------------    ------------------    ---------------------   ------------------
           Total gross margin                             4,554                 4,075                    8,166               14,223
                                             -------------------    ------------------    ---------------------   ------------------
Operating costs
      Selling and marketing                               2,148                 2,230                    6,834                6,952
      General and administrative                          1,443                 1,341                    4,427                3,736
      Non recurring expense from 
      restructuring                                         --                    --                       338                  --
                                             -------------------    ------------------    ---------------------   ------------------
                                                          3,591                 3,571                   11,599               10,688
                                             -------------------    ------------------    ---------------------   ------------------
Operating (loss) income                                     963                   504                   (3,433)               3,535
Interest (income) expense, net                               33                    (8)                     104                   49
                                             -------------------    ------------------    ---------------------   ------------------
(Loss) Income before taxes                                  930                   512                   (3,537)               3,486
Benefit (Provision) for income taxes                       (367)                 (180)                   1,314               (1,261)
                                             -------------------    ------------------    ---------------------   ------------------
Net (loss) income                                         $ 563                $  332                 $ (2,223)             $ 2,225
                                             -------------------    ------------------    ---------------------   ------------------
Basic earnings (loss) per common share                    $0.07                $ 0.04                 $  (0.27)             $  0.28
                                             -------------------    ------------------    ---------------------   ------------------
Diluted earnings (loss) per common share                  $0.07                $ 0.04                 $  (0.27)             $  0.27
                                             -------------------    ------------------    ---------------------   ------------------
Weighted average number of common
      shares outstanding                              8,203,028             8,042,115                8,159,462            8,016,704
                                             -------------------    ------------------    ---------------------   ------------------
Weighted average number of common
      and common equivalent shares                    8,386,560             8,472,620                8,159,462            8,375,173
                                             -------------------    ------------------    ---------------------   ------------------

</TABLE>


<PAGE>


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

<TABLE>
<CAPTION>

                                                                                Nine Months Ended
                                                                                  September 30
                                                                              --------------------
                                                                                1998        1997
                                                                              --------    --------
                                                                              Unaudited) (Unaudited)
<S>                                                                           <C>         <C>
Cash flows from operating activities
                Net (loss) income                                             ($ 2,223)   $  2,225
                Adjustments to reconcile net (loss) income to net cash
                  (used in) provided by operating activities:
                              Depreciation and amortization                      3,859       2,893
                              Changes in operating assets and liabilities       (3,100)      3,159
                                                                              --------    --------
Net cash (used in) provided by operating activities                             (1,464)      8,277

Cash Flows from investing activities
                Purchase of property and equipment                              (3,729)     (6,316)
                Investment in sales-type leases                                  1,744      (2,863)
                (Purchase) Sale of Investments                                   3,072      (1,835)
                Purchase of Other Assets                                           --         (120)
                                                                              --------    --------
Net cash provided by (used in) investing activities                              1,087     (11,134)
                                                                              --------    --------

Cash flows from financing activities
                Net borrowings under revolving credit facilities                   837         --
                Repayment of long term debt                                     (1,162)      1,418
                Issuances of Common Stock, net                                     429         115
                                                                              --------    --------
Net cash provided by financing activities                                          104       1,533
                                                                              --------    --------


Net decrease in cash and cash equivalents                                         (273)     (1,324)

Cash and cash equivalents, beginning of period                                     735       3,943
                                                                              --------    --------
Cash and cash equivalents, end of period                                      $    462    $  2,619
                                                                              --------    --------
                                                                              --------    --------

</TABLE>


<PAGE>


                     TECHFORCE CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1998
                                   (Unaudited)


1.     NATURE OF BUSINESS

       TechForce Corporation and subsidiaries (collectively, the "Company")
       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 September 30, 1998
       and for the three and the nine month periods 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 September 30, 1998, and September 30, 1997,
       the following customers individually accounted for more than 10% of
       the Company's revenue:
<TABLE>
<CAPTION>

                                                   Quarter Ended September 30, 1998       Quarter Ended September 30, 1997
                                                   -------------------------------      --------------------------------------
                                                     Amount ($000)   Percentage             Amount ($000)       Percentage
                                                   -------------------------------      --------------------------------------

<S>                                                 <C>              <C>                <C>                    <C>
       Packard Bell Electronics, Inc.                    $   243            1%           $ 2,886                           20%
       General Electric Corporation                      $ 1,939           10%           $     -
       Best Buy Company, Inc                             $ 2,211           12%           $     -
       Sears Roebuck and Company                         $ 1,971           10%           $     4                  Less than 1%

</TABLE>

       The loss of revenues from General Electric Corporation, Best Buy
       Company, Inc., or Sears Roebuck and Company could have a material
       impact on the results of operations and financial conditions of the
       Company. Management believes that the loss of revenue from Packard Bell
       would not have a material impact on such 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

<PAGE>


       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 September 30,      Nine months ended September 30,
                                                               1998                  1997             1998               1997
                                                            ------------         -------------    -------------      --------------
<S>                                                           <C>                 <C>              <C>                 <C>
         Basic weighted average number of common
              shares ......................................   8,203,028           8,042,115        8,159,462           8,016,704
         Dilutive effect of options outstanding ...........     183,532             430,505                -             358,469
         Dilutive weighted average number of common
             and common equivalent shares outstanding .....   8,386,560           8,472,620        8,159,462           8,375,173

</TABLE>


       The following options were outstanding at September 30, 1998 and 1997, 
       but, were not included in the computation of diluted earnings per share 
       for the three month periods ended September 30, 1998 and 1997 and the 
       nine month period ended September 30, 1997 because the options' 
       exercise price were greater than the average market price of the 
       common shares for those periods:

<TABLE>

                                                            Three months ended September 30,      Nine months ended 
                                                                                                      September 30, 
                                                               1998                  1997                 1997
                                                            ------------         -------------    ------------------
<S>                                                           <C>                 <C>               <C>
         Number of options ................................     898,087              149,200             229,533
         Range of exercise prices .........................  $6.13-9.63                $9.63          $8.75-9.83
         Range of expiration dates ........................   2005-2008            2005-2006           2005-2007

</TABLE>


       The following options were outstanding at September 30, 1998 but were
       not included in the computation of diluted earnings per share for the
       nine months ended September 30, 1998 because the Company incurred a net 
       loss for that period:

<TABLE>

                                                                           Nine months ended September 30,
                                                                                        1998
                                                                                  ----------------
<S>                                                                               <C>
         Number of options .........................................                     1,174,826
         Range of exercise prices ..................................                  $0.38 - 9.63
         Range of expiration dates .................................                   2004 - 2008

</TABLE>

       As a result of adopting SFAS 128, the Company's earnings per share 
       have been restated for the three months and nine months ended 
       September 30, 1997. The effects of this accounting change on previously
       reported primary earnings per share data are as follows:

<TABLE>
<CAPTION>

                                                             Three months ended September 30,      Nine months ended September 30,
                                                                        1997                                 1997
                                                                        ----                                 ----
<S>                                                         <C>                                 <C>
         Primary earnings per share as previously 
               reported ..................................              $0.04                                $0.27

         Effects of SFAS 128 .............................              $0.00                                $0.01
                                                                      ---------                            ---------
         Basic earnings per share restated ...............              $0.04                                $0.28
                                                                      ---------                            ---------
                                                                      ---------                            ---------
</TABLE>

       The previously reported fully diluted earnings per share for the three 
       months and nine months ended September 30, 1997 did not differ from the
       diluted earnings per share calculated under SFAS 128.

<PAGE>


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
       September 30, 1998 or results of operations for the three and nine
       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
       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.

       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.


8.     RESTRUCTURING OF HARDWARE SALES BUSINESS

       During the second quarter, in response to the declining performance
       from its hardware sales business, the Company restructured its
       business operations away from this business segment by reducing the
       infrastructure and resources allocated to it. As a result of these
       second quarter actions and the Company's strategy shift related to the
       sale of hardware, the Company incurred one-time charges of $0.3
       million related to staff reductions and $1.6 million related to
       finished goods inventory valuation adjustments. Such charges for the
       second quarter also included valuation adjustments of $0.9 million
       related to replacement parts due to the Company's planned move to a
       fee-based spares access program rather than owning a portion of its
       low volume, high cost replacement parts. The valuation adjustments to
       finished goods inventory and replacement parts were included in the 
       cost of hardware and the cost of service, respectively, for the nine 
       month period ended September 30, 1998, and contributed to the 
       unfavorable cost and margin variances.


<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

         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. The Company's Custom PC Services
provide repairs to extended warranty retailers and manufacturers of personal
computers and peripherals. 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 September 30, 1998 and 
September 30, 1997, respectively were $0.5 million and $0.7 million. 
Amortized interest on sales-type leases totaled $0.17 million and $0.1 
million for the three month periods ended September 30, 1998 and September 
30, 1997, respectively.

         During the second quarter of 1998, in response to the declining 
performance from its hardware sales business, the Company restructured its 
business operations away from this business segment by reducing the 
infrastructure and resources allocated to it. As a result of these second 
quarter actions and the Company's strategy shift related to the sale of 
hardware, the Company incurred one-time charges of $0.3 million related to 
staff reductions and $1.6 million related to finished goods valuation 
adjustments. Such charges for the second quarter also included valuation 
adjustments of $0.9 million related to replacement parts inventories due to 
the Company's planned move to a fee-based spares access program rather than 
owning a portion of its low volume, high cost replacement parts.

         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 Packard Bell represented 1% of total Company revenues 
for the three months ended September 30, 1998 as compared to 20% for the 
three months ended September 30, 1997. The decrease in call volume level 
resulted from changes made by Packard Bell in its end user product warranty. 
During the third quarter of 1998, the Company provided services to two 
significant customers which it did not have in the prior year period, General 
Electric and Best Buy. Revenues from General Electric represented 10% of 
total Company revenues for the quarter and Best Buy represented 12% of total 
Company revenues for the quarter.

<PAGE>


Sears Roebuck and Company, an existing customer, also increased its demand 
for the Company's service. As a result, revenues from Sears Roebuck and 
Company increased to 10% of total Company revenues for the quarter, compared 
with less than 1% of total Company revenues for the three months ended 
September 30, 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.

         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 SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED 
SEPTEMBER 30, 1997

         TOTAL REVENUES. Total revenues increased 31.4% from the three months 
ended September 30, 1997 to the three months ended September 30, 1998 largely 
due to increased hardware sales, enterprise network support and workstation 
support revenues. This increase was partially offset by decreased revenues 
from leasing activity and FedEx repair revenues.

         SERVICE REVENUES. Revenues from services increased 40.6% from $9.2 
million (63.7% of total revenues) for the three months ended September 30, 
1997 to $12.9 million (68.2% of total revenues) for the three months ended 
September 30, 1998. This increase was attributable to increased enterprise 
network and workstation support revenues partially offset by the reduced 
FedEx repair revenues. The Company discontinued its repair business for FedEx 
during the three months ended September 30, 1997. Revenues from enterprise 
network support services increased by 26.7% while revenues from workstation 
support increased by 71.5% for the three months ended September 30, 1998 as 
compared to revenues from these services for the three months ended September 
30, 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 sales increased 15.4% from 
$5.2 million (36.3% of total revenue) for the three months ended September 
30, 1997 to $6.0 million (31.8% of total revenues) for the three months ended 
September 30, 1998. Hardware revenues included revenues from leasing 
activities of $0.7 million and $0.5 million for the three months ended 
September 30, 1997 and 1998, respectively. During the three months ended June 
30, 1998, the Company reduced its strategic focus on hardware sales and 
decreased infrastructure supporting its hardware sales efforts resulting in 
one time charges related to inventory valuation and staff reductions. 
Accordingly, historical levels of revenue from the sale and lease of hardware 
may not be indicative of future hardware revenue.

<PAGE>


         COST OF SERVICE. Cost of service increased 40.9% from $7.0 million 
(76.3% of service revenues) for the three months ended September 30, 1997 to 
$9.9 million (76.5% of service revenues) for the three months ended September 
30, 1998. The cost of service increase was attributable to the growth in 
business volumes from Custom PC Services and the increased cost structure to 
support multiple extended warranty provider customers. 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 increased 35.7% from $3.3 million 
(63.7% of hardware revenues) for the three months ended September 30, 1997 to 
$4.5 million (74.9% of hardware revenue) for the three months ended September 
30, 1998. Hardware cost as a percent of revenue in excess of historical 
levels continues to reflect competitive pressure on hardware pricing.

         GROSS MARGIN. Overall gross margin increased 11.8% from $4.1 
million, (28.3% of total revenues), for the three months ended September 30, 
1997 to $4.6 million, (24.0% of total revenues), for the three months ended 
September 30, 1998. Gross margin on services increased 39.7% from $2.2 
million for the three months ended September 30, 1997 to $3.0 million for the 
three months ended September 30, 1998 while decreasing as a percent of 
service revenues from 23.7% to 23.5% respectively. Gross margin on hardware 
revenues decreased 20.2% from $1.9 million for the three months ended 
September 30, 1997 to $1.5 million for the three months ended September 30, 
1998. This decrease was caused primarily by declining margins from sales of 
hardware during the three months ended September 30, 1998. Hardware margins 
as a percentage of hardware revenues decreased from 36.3% for the three 
months ended September 30, 1997 to 25.1% for the three months ended September 
30, 1998.

         SELLING AND MARKETING EXPENSES. Selling and marketing expenses 
decreased 3.7% from $2.2 million for the three months ended September 30, 
1997 to $2.1 million for the three months ended September 30, 1998. The 
decrease resulted primarily from the reduction of the sales infrastructure 
and reduced selling expense from lower margins on hardware revenues.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative 
expenses increased 7.6% from $1.3 million for the three months ended 
September 30, 1997 to $1.4 million for the three months ended September 30, 
1998. Rent, information systems, supplies, and depreciation expenses 
comprised a significant portion of the general and administrative expense 
increase over the same period for 1997.

         OPERATING INCOME. Operating income increased 91.1% from $.5 million, 
(3.5% of total revenues), for the three months ended September 30, 1997 to 
$.96 million, (5.1% of total revenues), for the three months ended September 
30, 1998.

         INTEREST EXPENSE, NET. Net interest income totaled $8,000 for the 
three months ended September 30, 1997, resulting from investments partially 
offset by interest on the Company's line of credit. Net interest expense 
totaled $33,000 for the three months ended September 30, 1998, resulting from 
increased reliance on the Company's line of credit.

         INCOME TAXES. The Company's effective income tax rate was 39.5% for 
the three months ended September 30, 1998, compared to a 35.2% effective 
income tax rate for the three months ended September 30, 1997.

NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED 
SEPTEMBER 30, 1997

         Total revenues. Total revenues increased 7.2% from $47.2 million for 
the nine months ended September 30, 1997 to $50.6 million for the nine months 
ended September 30, 1998 due to increased enterprise network support and 
workstation support revenues. This increase was partially offset by decreased 
revenues from hardware sales, leasing activity and FedEx repair.

         Service revenues. Revenues from services increased 26.0% from $28.0 
million (59.3% of total revenues) for the nine months ended September 30, 
1997 to $35.3 million (69.7% of total revenues) for the nine months ended 
September 30, 1998. This increase was attributable to increased enterprise 
network and workstation support revenues and was partially offset by the 
reduced FedEx repair revenue. The Company discontinued its repair business 
for FedEx

<PAGE>


during the nine months ended September 30, 1997. Revenues from enterprise 
network support services increased by 17.5% while revenues from workstation 
support increased by 55.9% for the nine months ended September 30, 1998 as 
compared to revenues from these services for the nine months ended September 
30, 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 sales decreased 20.3% from 
$19.2 million (40.7% of total revenue) for the nine months ended September 
30, 1997 to $15.3 million (30.3% of total revenues) for the nine months ended 
September 30, 1998. Hardware revenues included revenues from leasing 
activities of $5.1 million and $1.3 million for the nine months ended 
September 30, 1997 and 1998, respectively. During the nine months ended 
September 30, 1998, the Company reduced its strategic focus on hardware sales 
and decreased infrastructure supporting its hardware sales efforts. 
Accordingly historical levels of revenue from the sale and lease of hardware 
may not be indicative of future hardware revenue.

         COST OF SERVICE. Cost of service increased 41.5% from $20.3 million 
(72.3% of service revenues) for the nine months ended September 30, 1997 to 
$28.7 million (81.2% of service revenues) for the nine months ended September 
30, 1998. This overall cost of service increase was attributable, in part to 
a one time charge of $0.9 million related to a replacement parts valuation 
adjustment in the nine months ended September 30, 1998, and increased costs 
related to enterprise service delivery. The cost of service increase was also 
attributable to the growth in business volumes from Custom PC Services and 
the increased cost structure to support multiple extended warranty provider 
customers. 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 increased 8.2% from $12.7 million
(66.3% of hardware revenues) for the nine months ended September 30, 1997 to
$13.8 million (90.0% of hardware revenue) for the nine months ended September
30, 1998. This increase was primarily due to the one time charge of $1.5 million
related to finished goods inventory valuation adjustment in the nine months
ended September 30, 1998, and increased competitive pressure on hardware
pricing.

         GROSS MARGIN. Overall gross margin decreased 42.6% from $14.2 
million, (30.1% of total revenues), for the nine months ended September 30, 
1997 to $8.2 million, (16.1% of total revenues) for the nine months ended 
September 30, 1998 due to the one time charges discussed under "Cost of 
Service" and "Cost of Hardware", declining hardware margins, and 
increased costs supporting multiple extended warranty customers. Gross margin 
on services decreased 14.3% from $7.8 million for the nine months ended 
September 30, 1997 to $6.6 million after the one-time charge for the nine 
months ended September 30, 1998 while decreasing as a percent of service 
revenues from 27.7% to 18.8% respectively. Gross margin on hardware revenues 
decreased from $6.5 million for the nine months ended September 30, 1997 to $ 
1.5 million after the one time charge for the nine months ended September 30, 
1998. This decrease was caused primarily by the one time charge and by 
decreased hardware revenues combined with declining margins from sales of 
hardware during the nine months ended September 30, 1998. Hardware margins as 
a percentage of hardware revenues decreased from 33.7% for the nine months 
ended September 30, 1997 to 10.0% for the nine months ended September 30, 
1998 as a result of these factors.

         SELLING AND MARKETING EXPENSES. Selling and marketing expenses 
decreased 1.7% from 7.0 million for the nine months ended September 30, 1997 
to 6.8 million for the nine months ended September 30, 1998. The decrease 
resulted primarily from the reduction of the sales infrastructure and reduced 
selling expense from lower margins on hardware revenues.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased 18.5% from $3.7 million for the nine months ended September
30, 1997 to $4.4 million for the nine months ended September 30, 1998. Rent,
information systems, and depreciation expenses comprised a significant portion
of the general and administrative expense increase over the same period for
1997.

         NONRECURRING CHARGES. For the nine months ended September 30, 1998, 
the Company recognized non-recurring cost of $0.3 million related to staff 
reductions, primarily in response to the Company's strategy shift related to 
the sale of hardware. The Company incurred no such expenses for the nine 
months ended September 30, 1997.

<PAGE>

         OPERATING (LOSS) INCOME. Operating income decreased 197.0% from $3.5 
million, (7.5% of total revenues), for the nine months ended September 30, 
1997 to a loss of $(3.4) million, ((6.8)% of total revenues), for the nine 
months ended September 30, 1998 as a result of the factors listed above.

         INTEREST EXPENSE, NET. Net interest expense totaled $49,000 for the 
nine months ended September 30, 1997, resulting from interest on the 
Company's line of credit partially offset by investment income. Net interest 
expense totaled $104,000, for the nine months ended September 30, 1998, 
resulting from increased reliance on the Company's line of credit.

         INCOME TAXES. The Company's effective income tax rate was 37.2% for 
the nine months ended September 30, 1998, as compared to a 36.2% effective 
income tax rate for the nine months ended September 30, 1997.

Liquidity and Capital Resources

          The Company's operating activities provided cash of $8.3 million 
and used cash of $1.5 million for the nine months ended September 30, 1997 
and 1998, respectively. Cash provided by operating activities for the 1997 
period was primarily the result of net income before depreciation and 
amortization, increases in accounts payable and deferred revenue, and 
reductions in accounts receivable and inventory. Cash used in operating 
activities for the 1998 period was primarily the result of net income before 
depreciation and amortization, and second quarter valuation charges, and an 
increase in deferred revenue offset by increases in accounts receivable and 
prepaid expenses, and decreases in accounts payable, and accrued expenses.

         The Company's investing activities used cash of $11.1 million and
provided cash of $1.1 million for the nine months ended September 30, 1997 and
1998, respectively. Cash used by the Company's investing activities for the 1997
period related to the purchase of investments and 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, the reduction of investment in sales-type leases partially offset
by the purchase of property and equipment.

         Financing activities provided cash of $1.5 million and $.1 million 
for the nine months ended September 30, 1997 and 1998 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 leases receivables. Borrowings
under the line of credit bear interest at the Bank's quoted variable base rate,
which has ranged from 7.09% to 7.47% during the nine months ended September 30,
1998, and was 7.09% as of September 30, 1998. As of September 30, 1998, the
Company had an outstanding balance under the line of credit of $.8 million out
of approximately $11.3 million which 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 primarily for working
capital requirements. The credit facility is available through September 1999.

         The Company decreased its investment in sales-type leases by $0.5 
million and decreased discounted leases to third parties of $0.2 million for 
the three months ended September 30, 1998. As of September 30, 1998, the 
Company's investment in capital leases included $4.6 million in 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


<PAGE>


conjunction with this move, the Company committed to a 60 month premise lease 
in Clearwater, Florida. The Company does not currently have any other 
material commitments.

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"). During 1997, the Company upgraded its 
financial and business communications systems with Year 2000 compliant 
software. Furthermore, the Company is in the process of replacing and 
upgrading certain other systems to meet its evolving business requirements. 
The replacement or upgraded systems will be evaluated or developed to ensure 
Year 2000 compliance. However, each of these upgrades and replacements is 
being made due to reasons other than Year 2000 compliance concerns and no 
upgrade or replacement has been accelerated because of such concerns. The 
expected costs for this systems work are included within the Company's 
capital and operating budgets. The Company is also testing remaining internal 
systems and critical external interfaces in order to identify areas where the 
Year 2000 issue might materially impact the Company's business and retains an 
outside consultant with Year 2000 compliance experience to assist in this 
evaluation.

         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. 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.

         The Company is conducting an audit of its replacement parts inventories
to identify its Year 2000 related upgrade requirements. Management believes that
the project will be complete by mid 1999. 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.

         Management believes that any Year 2000 compliance issue related to its
internal system can be properly managed by its internal staff with no additional
incremental costs; however, management estimates that the Company will incur
less than $100,000 in 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
1998.

         During 1998, management expects to identify any remaining concerns 
related to Year 2000 readiness and initiate required actions to ensure Year 
2000 readiness. Except as otherwise discussed herein, 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 believes that its most reasonably likely worst case Year 
2000 scenario would be the failure of the public telecommunications network, 
including the Internet, to provide service to the Company and its customers. 
The Company's business substantially depends upon its ability and the ability 
of its customers to exchange both voice and digital information. The 
sustained inability of a substantial portion of the Company's customer base to 
have telecommunications service or the sustained inability of one or more of 
the Company's business service units to have telecommunications service could 
materially impact the Company. While management does not expect that scenario 
to occur, that scenario, if it occurs could, even despite the successful 
execution of the Company's business continuity and contingency plans, result 
in the reduction or suspension of a material portion of the Company's 
operations and accordingly have a material adverse effect on the Company's 
business and financial condition.

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 


<PAGE>


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.


Item 3.           Quantitative and Qualitative Disclosures About Market Risks.

                  Not Applicable.



<PAGE>


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

Item 1.  Exhibits and Reports on Form 8-K

         (a)  Exhibit No.          Description
              -----------          -----------
             27.1                  Financial Data Schedule

             27.2                  Financial Data Schedule (RESTATED)

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


<PAGE>


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

EXHIBIT NO.
-----------
27.1     Financial Data Schedule

27.2     Financial Data Schedule (RESTATED)