To our shareholders:

“ I believe in the dignity of labor, whether with head or hand; that the world owes no man a living but that it owes every man an opportunity to make a living.”
— John D. Rockefeller

We continued to focus on two major priorities in 2007: providing value to you, our shareholders, and in supplying the quality employees needed by our clients to power their business. Since our path to profitability is people driven, we are continually aware of our obligation to their development as a vital part of fulfilling our goals.

At COMFORCE the emphasis on the dignity of work, regardless of skill level, permeates our culture. Our commitment to our employees reflects itself in the quality of our workforce and the noteworthy retention rate of high performers, both temporary and full time.
With gratitude to all we are once again proud to report a very productive year in terms of advancing our niche service lines and improving our balance sheet. Some of the highlights of 2007 were:

• Record revenues of $586.7 million

• Interest expense reduction of approximately $1.7 million over the year 2006

• An 11.4% increase in net income from continuing operations before income taxes over the year 2006

Our financial stability has steadily improved through the continuing reduction of long-term public debt which has decreased from $138.8 million in June 2000 to $11.7 million dollars in ’07. During 2007, we redeemed and repurchased $11.2 million principal amount of our 12% Senior Notes, thereby, further reducing our annualized interest expense.

While our gross margin has improved slightly, it has been offset by increased operating expenses, primarily a result of our overseas expansion. Accelerated business growth has necessitated the upgrade and enhancement of the proprietary software, “WAND”. WAND makes possible the customized service strategy of our profit leading subsidiary, PrO Unlimited. To maintain a leadership position in this valuable niche, which we feel represents the future of the staffing industry, we feel it is an investment which will help insure our future. Leading change has always been our hallmark.

Visualizing market trends and business challenges has required foresight, investment and patience. However, it has paid off particularly with PrO Unlimited. Responding to the 1099 independent contractor challenge in 1991 we pioneered a systematic identification and compliance business process to respond to the challenges of the use of contractors. Since then legislation and marketplace demand has broadened PrO’s scope of services to include: vendor neutral staffing supplier management, worker classification identification and professional payrolling services. Client recognition for market leadership in this space is well established and PrO continues to grow nationally and internationally. PrO’s sales climbed 7.7% in ‘07 to $363.7 million.

Our expanding global footprint manifests itself in our government services division which now successfully places people to work in foreign countries. We now have multimillion dollar contracts in place to provide services abroad for the Center for Disease Control and other government agencies. In 2007 we were also named as a preferred vendor for the Departments of Defense and Energy making the growth potential for this division excellent.

The expanded and growing usage of contingent staff by large companies has dramatically changed the demand for the skills and services provided by staffing vendors. Our industry has grown to $190 billion dollars and most client companies are compelled to utilize multiple staffing vendors to meet their needs. The time consuming and complex activities involved in order flow, fulfillment, billing and reporting has put vendor management services (VMS), in the forefront of changes.

Nowhere is VMS more critical than in the vital area of health care where speed of delivery is mandatory. In response to this industries dilemma, COMFORCE has created RightSourcing®, a vendor management service customized for the healthcare industry and hospitals in particular. We consider this division to be a “mini” PrO Unlimited and for the number of years which it has been in existence, it is ahead of PrO at the same stage of development.

The future as always is fraught with uncertainty; however, we feel that our broad based service offerings and business diversity will provide some economic downturn insurance. Providing staffing to a broad array of industries and skill areas such as information technology, engineering, technical, a full range of health care support, professional accounting and administrative office skills help counter the downturn equation. Adding to our growth strategy has been the addition of a permanent placement division in each COMFORCE office. Here again, this high gross margin activity was recognized as a result of client demand.

People drive our profits, people power our clients and they continue to be our most valuable asset. As a provider of services, our inventory leaves each night and comes in each morning. We want to thank our shareholders, clients, vendors and employees for their contributions and support for our success. You can be assured that the COMFORCE management team will do its part for matters within our control to seek to support your company’s future growth and profitability.

Yours truly, John Fanning Chairman of the Board and Chief Executive Officer