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<SEC-DOCUMENT>0001362310-09-002324.txt : 20090217
<SEC-HEADER>0001362310-09-002324.hdr.sgml : 20090216
<ACCEPTANCE-DATETIME>20090217171016
ACCESSION NUMBER:		0001362310-09-002324
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20081231
FILED AS OF DATE:		20090217
DATE AS OF CHANGE:		20090217

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TEAMSTAFF INC
		CENTRAL INDEX KEY:			0000785557
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-HELP SUPPLY SERVICES [7363]
		IRS NUMBER:				221899798
		STATE OF INCORPORATION:			NJ
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-18492
		FILM NUMBER:		09615455

	BUSINESS ADDRESS:	
		STREET 1:		300 ATRIUM DRIVE
		CITY:			SOUTH PLAINFIELD
		STATE:			NJ
		ZIP:			08873
		BUSINESS PHONE:		7327481700

	MAIL ADDRESS:	
		STREET 1:		300 ATRIUM DRIVE
		CITY:			SOUTH PLAINFIELD
		STATE:			NJ
		ZIP:			08873

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	DIGITAL SOLUTIONS INC
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>c81237e10vq.htm
<DESCRIPTION>FORM 10-Q
<TEXT>
<HTML>
<HEAD>
<TITLE>Filed by Bowne Pure Compliance</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 10pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 10pt"><B>FORM 10-Q</B>
</DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 10pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 12%"><B><B>For the quarterly period ended December&nbsp;31, 2008</B>
</B>
</DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 10pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 12%"><B><B>For the transition period from <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> to </B><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Commission File No.&nbsp;0-18492</B></DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 10pt"><B><FONT style="border-bottom: 1px solid #000000">TEAMSTAFF, INC.</FONT></B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact name of registrant as specified in its charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>New Jersey</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>22-1899798</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or other jurisdiction of incorporation or organization)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(I.R.S. Employer Identification No.)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><B>1 Executive Drive, Suite&nbsp;130</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><B>Somerset, New Jersey</B><BR>
(Address of principal executive offices)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>08873</B><BR>
(Zip Code)</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>(877)&nbsp;523-9897</B><BR>
(Registrant&#146;s telephone number, including area code)</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Indicate by check mark whether the Registrant (1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or 15 (d)&nbsp;of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or for
such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days. YES <FONT face="Wingdings">&#254;</FONT> NO <FONT face="Wingdings">&#111;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of &#147;large accelerated
filer,&#148; &#147;accelerated filer&#148; and &#147;smaller reporting company&#148; in Rule&nbsp;12b-2 of the Exchange Act.
(Check one):
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD nowrap align="center" valign="top">Large accelerated filer <FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" valign="top">Accelerated filer <FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" valign="top">Non-accelerated filer <FONT face="Wingdings">&#111;</FONT><br>
(Do not check if a smaller reporting company)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" valign="top">Smaller Reporting Company <FONT face="Wingdings">&#254;</FONT></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Indicate by check mark whether the registrant is a shell company (as defined in Rule&nbsp;12b-2 of the
Exchange Act). YES <FONT face="Wingdings">&#111;</FONT> NO <FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Indicate the number of shares outstanding of each of the issuer&#146;s classes of common stock, as of
the latest practicable date:
4,883,389 shares of Common Stock, par value $.001 per share, were outstanding as of February&nbsp;13,
2009.
</DIV>

<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">








<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>TEAMSTAFF, INC.<BR>
FORM 10-Q<BR>
For the Quarter Ended December&nbsp;31, 2008</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Table of Contents</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page No.</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101"><B>Part I &#151; Financial Information</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102">Item&nbsp;1. Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">

<TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#103">Consolidated
Balance Sheets as of <br>
December&nbsp;31, 2008 (Unaudited) and September&nbsp;30, 2008</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#104">Consolidated Statements of Operations and
Comprehensive Income for the <br>three months
ended December&nbsp;31, 2008 and 2007 (Unaudited)</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#105">Consolidated Statements of Cash Flows for the <br>
three months ended December&nbsp;31, 2008 and 2007 (Unaudited)</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#106">Notes to Consolidated Financial Statements
(Unaudited)</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#107">Item&nbsp;2. Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#108">Item&nbsp;3. Quantitative and Qualitative Disclosures about Market Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#109">Item&nbsp;4. Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#110"><B>Part II &#151; Other Information</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#111">Item&nbsp;1. Legal Proceedings</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#112">Item&nbsp;1A. Risk Factors</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#113">Item&nbsp;2. Unregistered Sales of Equity Securities and Use of Proceeds</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#114">Item&nbsp;3. Defaults Upon Senior Securities</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#115">Item&nbsp;4. Submission of Matters to a Vote of Security Holders</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#116">Item&nbsp;5. Other Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#117">Item&nbsp;6. Exhibits</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#118">Signatures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c81237exv31w1.htm">Exhibit 31.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c81237exv31w2.htm">Exhibit 31.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c81237exv32w1.htm">Exhibit 32.1</A></FONT></TD></TR>
<!-- End Table Body --></TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Part I &#151; FINANCIAL INFORMATION</B>
</DIV>

<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>ITEM 1: </B><U><B>FINANCIAL STATEMENTS</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>TEAMSTAFF, INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="103"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>CONSOLIDATED BALANCE SHEETS</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>(AMOUNTS IN THOUSANDS)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CURRENT ASSETS:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,213</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable, net of allowance for doubtful
accounts of $13 and $2 as of December&nbsp;31, 2008 and
September&nbsp;30, 2008, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,892</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid workers&#146; compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">567</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">562</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">607</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><B>Total current assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>18,433</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>19,274</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>EQUIPMENT AND IMPROVEMENTS:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Furniture and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,299</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Computer equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">619</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Computer software</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,166</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,166</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Leasehold improvements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,104</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Less accumulated depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,471</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,409</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><B>Equipment and improvements, net</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>633</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>695</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>TRADENAME</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,569</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,569</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>GOODWILL</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>10,305</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>10,305</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>OTHER ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>136</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>151</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>TOTAL ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>34,076</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>34,994</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">The accompanying notes are an integral part of these consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>TEAMSTAFF, INC. AND SUBSIDIARIES<BR>
CONSOLIDATED BALANCE SHEETS<BR>
(AMOUNTS IN THOUSANDS EXCEPT PAR VALUE OF SHARES)</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 30</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CURRENT LIABILITIES:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Bank line of credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Notes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current portion of capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued payroll</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,585</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued pension liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,578</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued expenses and other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,192</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,008</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Liabilities from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><B>Total current liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15,857</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,876</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CAPITAL LEASE OBLIGATIONS, net of current portion</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>OTHER LONG TERM LIABILITY, net of current portion</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><B>Total Liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,062</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>17,108</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>COMMITMENTS AND CONTINGENCIES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>SHAREHOLDERS&#146; EQUITY:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Preferred stock, $.10 par value; authorized 5,000 shares;
none issued and outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common Stock, $.001 par value; authorized 40,000 shares;
issued 4,874 at December&nbsp;31, 2008 and
September&nbsp;30, 2008; outstanding 4,843 at
December&nbsp;31, 2008 and September&nbsp;30, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,924</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,844</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accumulated deficit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(50,886</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(50,934</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accumulated comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Treasury stock, 2 shares at cost at December&nbsp;31, 2008 and
September&nbsp;30, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,886</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>TOTAL LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>34,076</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>34,994</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">The accompanying notes are an integral part of these consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>TEAMSTAFF, INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="104"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>(Unaudited)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>For the Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>REVENUES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14,682</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,459</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>DIRECT EXPENSES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,955</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,684</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Gross profit</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,727</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,775</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>SELLING, GENERAL AND ADMINISTRATIVE EXPENSES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,557</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>DEPRECIATION AND AMORTIZATION</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Income from operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>50</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>129</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>OTHER INCOME (EXPENSE)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(27</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(36</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Legal expense related to pre-acquisition activity of
acquired company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(101</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(93</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Income from continuing operations before taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>52</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>36</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>INCOME TAX EXPENSE</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Income from continuing operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>48</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>36</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LOSS FROM DISCONTINUED OPERATIONS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss from operations, net of tax benefit of $0
for the quarter ended December&nbsp;31, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Loss from discontinued operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Net income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>48</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>35</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>OTHER COMPREHENSIVE INCOME</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Minimum pension liability adjustment, net of tax of $0</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>COMPREHENSIVE INCOME</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>48</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>50</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>EARNINGS PER SHARE &#151; BASIC &#038; DILUTED</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net earnings per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>WEIGHTED AVERAGE BASIC SHARES OUTSTANDING</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,860</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,920</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,881</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">The accompanying notes are an integral part of these consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>TEAMSTAFF, INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="105"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>(AMOUNTS IN THOUSANDS)</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>(Unaudited)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>For the Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CASH FLOWS FROM OPERATING ACTIVITIES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Adjustments to reconcile net income to net cash (used in)
provided by operating activities, net of divested businesses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Compensation expense related to employee restricted stock grants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Provision for doubtful accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Changes in operating assets and liabilities, net of divested businesses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(267</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,208</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Accounts payable, accrued payroll,
accrued expenses and other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,692</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,214</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Other long term liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Pension liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(138</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Cash flow from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net cash (used in) provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,793</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CASH FLOWS FROM INVESTING ACTIVITIES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Purchase of equipment, leasehold improvements and software</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(78</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net cash (used in) investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(78</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CASH FLOWS FROM FINANCING ACTIVITIES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net borrowing on revolving line of credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Repayments on capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net comprehensive income on pension</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash flows from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net cash provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net (decrease)&nbsp;in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,065</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(57</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,213</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">592</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CASH AND CASH EQUIVALENTS AT END OF PERIOD</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">535</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash paid during the period for interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash paid during the period for income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">The accompanying notes are an integral part of these consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>TEAMSTAFF, INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="106"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>December&nbsp;31, 2008 (Unaudited)</B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt">(<B>1) </B><U><B>ORGANIZATION AND BUSINESS:</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">TeamStaff, Inc., a New Jersey corporation (&#147;TeamStaff&#148; or the &#147;Company&#148;), was founded in 1969 as a
payroll service company and evolved into a national provider of temporary and permanent medical and
administrative staffing services. Effective October&nbsp;23, 2007, TeamStaff&#146;s corporate headquarters
is in Somerset, New Jersey. Previously, the Company&#146;s corporate headquarters was located in
Atlanta, Georgia and a since discontinued unit was based in Memphis, Tennessee. TeamStaff has
offices located in Clearwater, Florida; Loganville, Georgia; and Somerset, New Jersey.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">When we use the term &#147;TeamStaff,&#148; the &#147;Company,&#148; &#147;we,&#148; &#147;us&#148; and &#147;our&#148; we mean TeamStaff, Inc. and
its wholly owned subsidiaries. Currently, we operate only through the parent corporation,
TeamStaff, Inc., and TeamStaff Rx, Inc. (&#147;TeamStaff Rx&#148;) and TeamStaff Government Solutions, Inc.
(&#147;TeamStaff GS&#148;), two wholly-owned subsidiaries of TeamStaff, Inc. On February&nbsp;12, 2008, the
Company announced the name change of RS Staffing Services, Inc., a Loganville, Georgia-based
provider of medical and office administration/technical professionals acquired in June&nbsp;2005, to
TeamStaff Government Solutions, Inc. The name change reflects the subsidiary&#146;s expanding service
offerings in providing staffing for government logistical support positions through its United
States General Services Administration (&#147;GSA&#148;) Schedule, as well as providing medical and office
administration/technical professionals through nationwide Federal Supply Schedule (&#147;FSS&#148;)
contracts. TeamStaff&#146;s other wholly-owned subsidiaries include DSI Staff ConnXions Northeast, Inc.,
DSI Staff ConnXions Southwest, Inc., TeamStaff Solutions, Inc., TeamStaff I, Inc., TeamStaff II,
Inc., TeamStaff III, Inc., TeamStaff IV, Inc., TeamStaff VIII, Inc., TeamStaff IX, Inc., Digital
Insurance Services, Inc., HR2, Inc. and BrightLane.com, Inc. As a result of the sale of our
Professional Employer Organization (&#147;PEO&#148;) business in fiscal year 2004 and other Company business
changes, these &#147;other&#148; subsidiaries are not actively operating.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">TeamStaff provides specialized medical, nursing, logistics and administrative staffing services by
supplying allied healthcare and nursing professionals, logistics and administrative personnel
through two staffing subsidiaries. The Company&#146;s TeamStaff Rx subsidiary, a Joint Commission on
Accreditation of Healthcare Organizations (&#147;JCAHO&#148;) certified healthcare staffing firm, operates
throughout the United States and specializes in providing travel allied medical employees and
nurses on a short term assignment basis, as well as permanent placement services. Allied medical
staff includes MRI technicians, mammographers, physical therapists, occupational therapists,
dosimetrists, ultrasound staff and physicists. During the last six months, TeamStaff Rx placed
temporary employees for approximately 120 client facilities. The Company&#146;s TeamStaff GS subsidiary
specializes in providing medical, office administration, logistics and technical professionals
through FSS contracts with both the United States General Services Administration (&#147;GSA&#148;) and
United States Department of Veterans Affairs (&#147;DVA&#148;). During the last six months, TeamStaff GS
placed temporary employees at approximately 30 client facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">TeamStaff was organized under the laws of the State of New Jersey on November&nbsp;25, 1969 and
maintains its principal executive office at 1 Executive Drive, Suite&nbsp;130, Somerset, New Jersey
08873 where its telephone number is (877)&nbsp;523-9897.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Basis of Presentation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The consolidated interim financial statements included herein have been prepared by TeamStaff,
without audit, pursuant to the applicable rules and regulations of the Securities and Exchange
Commission (&#147;SEC&#148;). Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations. TeamStaff believes that the disclosures are
adequate to make the information presented not misleading. These consolidated financial statements
should be read in conjunction with the consolidated financial statements and the notes thereto
included in TeamStaff&#146;s fiscal 2008 Annual Report on Form 10-K. This interim financial information
reflects, in the opinion of management, all adjustments necessary (consisting only of normal
recurring adjustments and changes in estimates, where appropriate) to present fairly the results
for the interim period. The results of operations and cash flows for such interim period is not
necessarily indicative of the results for the full year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The accompanying consolidated financial statements include the accounts of TeamStaff and its
subsidiaries, all of which are wholly owned. All intercompany balances and transactions have been
eliminated.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Certain prior period amounts have been reclassified to conform to the current period presentation.
All references to common stock, options, share based arrangements, exercise price, fair values and
related data within this Form 10-Q for the three months ended December&nbsp;31, 2007 have been
retroactively amended so as to incorporate the effect of the one-to four reverse stock split
effective April&nbsp;21, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">All references to common stock, options, share based arrangements, exercise price, fair values and
related data within this Form 10-Q have been retroactively amended so as to incorporate the effect
of the one-to four reverse stock split effective April&nbsp;21, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>(2) </B><U><B>SIGNIFICANT ACCOUNTING POLICIES:</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Recently Issued Accounting Pronouncements Affecting the Company</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In June&nbsp;2006, the Financial Accounting Standards Board issued Interpretation No.&nbsp;48, <I>Accounting for
Uncertainty in Income Taxes </I>(&#147;FIN 48&#148;). This Interpretation clarifies the accounting for
uncertainty in income taxes recognized in an entity&#146;s financial statements and prescribes a
recognition threshold of more-likely-than-not to be sustained upon examination. Measurement of the
tax uncertainty occurs if the recognition threshold has been met. This Interpretation also
provides guidance on de-recognition, classification, interest and penalties, accounting in interim
periods, disclosure, and transition. TeamStaff conducts business solely in the U.S. and, as a
result, files income tax returns for U.S., New Jersey and various other states and jurisdictions.
In the normal course of business the Company is subject to examination by taxing authorities. At
present, there are no ongoing income tax audits or unresolved disputes with the various tax
authorities that the Company currently files or has filed with. Given the Company&#146;s substantial net
operating loss carryforwards, which are subject to a full valuation allowance, as well as the
historical operating losses in prior periods, the adoption of FIN 48 on October&nbsp;1, 2007 did not
have any effect on our financial position, results of operations or cash flows as of the adoption
date and for the three months ended December&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In September&nbsp;2006, the FASB issued SFAS No.&nbsp;157, <I>Fair Value Measurements </I>(&#147;SFAS 157&#148;). SFAS 157
defines fair value, establishes a framework for measuring fair value in accordance with accounting
principles generally accepted in the United States, and expands disclosures about fair value
measurements. SFAS No.&nbsp;157 was effective for financial statements issued for fiscal years beginning
after November&nbsp;15, 2007, with earlier application encouraged. Any amounts recognized upon adoption
as a cumulative effect adjustment will be recorded to the opening balance of retained earnings in
the year of adoption. In February&nbsp;2008, the FASB issued Staff Position 157-2, &#147;Effective Date of
FASB Statement No.&nbsp;157&#148;, which delays the effective date of SFAS 157 for all nonfinancial assets
and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually), until fiscal years beginning after
November&nbsp;15, 2008, and interim periods within those fiscal years. The Company adopted SFAS No.&nbsp;157
on October&nbsp;1, 2008 with no effect on its financial position, results of operations and cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In February&nbsp;2007, the FASB issued SFAS No.&nbsp;159, <I>The Fair Value Option for Financial Assets and
Financial Liabilities </I>(SFAS No.&nbsp;159)<I>. </I>SFAS No.&nbsp;159 permits entities to choose to measure, on an
item-by-item basis, specified financial instruments and certain other items at fair value.
Unrealized gains and losses on items for which the fair value option has been elected are required
to be reported in earnings at each reporting date. SFAS No.&nbsp;159 is effective for fiscal years
beginning after November&nbsp;15, 2007, the provisions of which are required to be applied
prospectively. The Company adopted SFAS No.&nbsp;159 on October&nbsp;1, 2008 with no effect on its financial
position, results of operations and cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In March&nbsp;2008, the FASB issued SFAS No.&nbsp;161, &#147;Disclosures about Derivative Instruments and Hedging
Activities&#148;. The new standard is intended to improve financial reporting about derivative
instruments and hedging activities by requiring enhanced disclosures to enable users of the
financial statements to better understand the effects on an entity&#146;s financial position, financial
performance, and cash flows. It is effective for financial statements issued for interim periods
beginning after November&nbsp;15, 2008, with early application encouraged. The Company currently does
not believe that the adoption of this standard will have a material effect on our consolidated
financial statements.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Revenue Recognition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">TeamStaff accounts for its revenues in accordance with EITF 99-19, <I>Reporting Revenues Gross as a
Principal Versus Net as an Agent, </I>and SAB 104<I>, Revenue Recognition</I>. TeamStaff recognizes all
amounts billed to its temporary staffing customers as gross revenue because, among other things,
TeamStaff is the primary obligor in the
temporary staffing arrangement; TeamStaff has pricing latitude; TeamStaff selects temporary
employees for a given assignment from a broad pool of individuals; TeamStaff is at risk for the
payment of its direct costs; and TeamStaff assumes a significant amount of other risks and
liabilities as an employer of its temporary employees, and therefore, is deemed to be a principal
in regard to these services. TeamStaff also recognizes as gross revenue and as unbilled
receivables, on an accrual basis, any such amounts that relate to services performed by temporary
employees which have not yet been billed to the customer as of the end of the accounting period.
</DIV>

<P align="left" style="font-size: 10pt">Revenues related to retroactive billings in 2008 (see Note 4) from an agency of the Federal government are recognized
when: (1)&nbsp;the Company develops and calculates an amount for such prior period services and has a contractual right to
bill for such amounts under its arrangements and (2)&nbsp;there are no remaining unfulfilled conditions for approval of such
billings. The related direct costs, principally comprised of salaries and benefits, are recognized to match the
recognized reimbursements from the Federal agency; upon approval, wages are processed for payment to the employees.


<P align="left" style="font-size: 10pt">During the year ended September&nbsp;30, 2008, TeamStaff recognized revenues of $10.8&nbsp;million and direct costs of $10.2
million related to these non-recurring arrangements. At December&nbsp;31, 2008, the amount of the remaining accounts
receivable with the DVA approximates $9.3&nbsp;million and accrued liabilities for salaries to employees and related
benefits totaled $8.7&nbsp;million. Accounts receivable includes $7.6&nbsp;million that was unbilled to the DVA at December&nbsp;31,
2008.



<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Staffing (whether medical or administrative) revenue is recognized as service is rendered.
TeamStaff bills its clients based on an hourly rate. The hourly rate is intended to cover
TeamStaff&#146;s direct labor costs of the temporary employees, plus an estimate for overhead expenses
and a profit margin. Additionally, commissions from permanent placements are included in revenue
as placements are made. Commissions from permanent placements result from the successful placement
of a medical staffing employee to a customer&#146;s workforce as a permanent employee. The Company also
reviews the status of such placements to assess the Company&#146;s future performance obligations under
such contracts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Direct costs of services are reflected in TeamStaff&#146;s Consolidated Statements of Operations as
&#147;direct expenses&#148; and are reflective of the type of revenue being generated. Direct costs of the
temporary staffing business include wages, employment related taxes and reimbursable expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Stock-Based Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company follows the guidance of Statement of Financial Accounting Standards (&#147;FAS&#148;) No.&nbsp;123
(revised 2004), Share-Based Payment (&#147;FAS 123(R)&#148;). Compensation costs for the portion of awards
(for which the requisite service has not been rendered) that are outstanding are recognized as the
requisite service is rendered. The compensation cost for that portion of awards shall be based on
the grant-date fair value of those awards as calculated for recognition purposes under FAS 123(R).
There was no share-based compensation expense for options for the three months ending December&nbsp;31,
2007 and 2008. As of December&nbsp;31, 2008, there was no remaining unrecognized compensation expense
related to non-vested stock option awards to be recognized during the current fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">During the three months ended December&nbsp;31, 2008, TeamStaff did not grant any options, no options
expired or were cancelled unexercised and no options were exercised. There were 32,625 options
outstanding as of December&nbsp;31, 2008. During the three months ended December&nbsp;31, 2007, TeamStaff
did not grant any options, 2,250 options expired or were cancelled unexercised and no options were
exercised. There were 56,750 options outstanding as of December&nbsp;31, 2007.
</DIV>



<P align="left" style="font-size: 10pt">During the three months ended December&nbsp;31, 2008, TeamStaff granted an aggregate of 67,353 shares of restricted stock
under its 2006 Plan. 30,000 shares were granted to Dale West, President of TeamStaff Rx, in connection with her
employment agreement, at the closing price on the award date of $2.00 and are subject to certain performance based
vesting requirements. An additional 7,353 shares were granted to Ms.&nbsp;West in connection with her employment
agreement, at the closing price on the award date of $1.70. These shares vested on January&nbsp;2, 2009. In addition
30,000 shares were granted to Kevin Wilson, President of TeamStaff GS, in connection with his employment agreement, at
the closing price on the award date of $2.49. 10,000 shares vested
immediately and were expensed as of September&nbsp;30, 2008. The
remaining 20,000 shares are subject to certain performance based vesting requirements. In accordance with FAS 123(R) the
Company will not recognize expense on the performance based shares until it is probable that these conditions will be
achieved. Such charges could be material in future periods.





<DIV align="left" style="font-size: 10pt; margin-top: 10pt">During the three months ended December&nbsp;31, 2007, TeamStaff granted 30,000 shares of restricted
stock to non-employee directors under its 2006 Long Term Incentive Plan as described above. The
shares of restricted stock were awarded and valued at the closing price on the award date of $3.36.
In accordance with FAS 123(R) the Company will not recognize expense until it is probable that
these conditions will be achieved. Such charges could be material in future periods. Stock
compensation expense associated with these grants and all other grants totaled $0.02&nbsp;million and
$0.01&nbsp;million for the three months ended December&nbsp;31, 2008 and 2007, respectively.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Weighted</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Weighted</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Remaining</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Exercise</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Contractual</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Aggregate</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Number Of Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Price</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Term</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Intrinsic Value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options outstanding, September&nbsp;30, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options outstanding and exercisable,
December&nbsp;31, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Weighted</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Average</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Grant-Date</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Number Of Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Fair Value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restricted stock outstanding,
September&nbsp;30, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3.09</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,353</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restricted stock outstanding,
December&nbsp;31, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">210,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.83</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">As of December&nbsp;31, 2008, approximately $13,000 of unrecognized compensation costs related to
non-vested restricted stock awards is expected to be recognized over the next four months. This
amount does not include compensation costs, if any, related to conditional, performance based
restricted stock awards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">At December&nbsp;31, 2008, the Company had reserved 4,728,481 shares of common stock for issuance under
various option, shares and warrant plans and arrangements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Earnings Per Share</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Basic earnings per share is calculated by dividing income available to common shareholders by the
weighted average number of common shares outstanding and restricted stock grants that vested or are
likely to vest during the period. Diluted earnings per share is calculated by dividing income
available to common shareholders by the weighted average number of common shares outstanding and
restricted stock grants that vested for the period adjusted to reflect potentially dilutive
securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In accordance with SFAS 128, the following table reconciles basic shares outstanding to fully
diluted shares outstanding:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Three Months Ended</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">December 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">(Amounts in thousands)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2007</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average number of common
shares outstanding &#151; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,860</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Incremental shares for assumed
conversion of restricted stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average number of common
shares outstanding &#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,920</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,881</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Stock options, warrants and restricted stock outstanding at December&nbsp;31, 2008 to purchase 32,625
shares of common stock and at December&nbsp;31, 2007 to purchase 56,875 shares of common stock were not
included in the computation of diluted earnings per share as the exercise price exceeded the fair
market value of the common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Income Taxes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Deferred tax assets and liabilities are determined based on temporary differences between income
and expenses reported for financial reporting and tax reporting. The Company is required to record
a valuation allowance to reduce its net deferred tax assets to the amount that it believes is more
likely than not to be realized. In assessing the need for a valuation allowance, the Company
historically had considered all positive and negative factors, including scheduled reversals of
deferred tax liabilities, prudent and feasible tax planning strategies and recent financial
performance. The Company determined that the negative factors, including historic and current
taxable losses, as well as uncertainties and limitations related to the ability to utilize certain
Federal and state net loss carry forwards and current tax losses, outweighed any objectively
verifiable positive factors, and as such, continues to conclude that a full valuation allowance
against the deferred tax asset is necessary. For all periods presented, the Company did not record
a Federal tax provision or tax benefit. In prospective periods, there may be reductions to the
valuation allowance to the extent that the Company concludes that it is more likely that not that
all or a portion of the deferred tax assets can be utilized (subject to annual limitations and
prior to the expiration of net operating loss carryforwards). The net carrying value of the
deferred tax asset was $0 (net of a valuation allowance of approximately $11.4&nbsp;million) at December
31, 2008.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">At December&nbsp;31, 2008 the Company had net operating losses of approximately $28.3&nbsp;million for U.S.
tax return purposes, and unutilized tax credits approximate $1.1&nbsp;million. As a result of previous
business combinations and changes in its ownership, there is a substantial amount of U.S. NOLs that
are subject to annual limitations on utilization. The U.S. NOLs begin to expire in 2021 and
continue to expire through 2028.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>(3) </B><U><B>DISCONTINUED OPERATIONS:</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Effective January&nbsp;27, 2008, TeamStaff, Inc. completed the sale of its per diem nurse staffing
business located in Memphis, Tennessee and operating under the name of Nursing Innovations, to
Temps, Inc. Under the terms of the definitive Asset Purchase Agreement, dated as of January&nbsp;29,
2008 (&#147;Asset Purchase Agreement&#148;), the Company received a cash purchase price of $447,000 for the
acquired business and related assets. Of the purchase price, $90,000 was escrowed for a period of
six months from the closing date. Payment to TeamStaff was subject to the downward adjustment for
the amount of pre-closing accounts receivables uncollected by the purchaser during such six-month
period. Temps, Inc. released approximately $89,000 escrow to Teamstaff in the fourth quarter of
2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Net revenues for the Nursing Innovations per diem operations for the three months ended December
31, 2007 were $0.5&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The following chart details activity in liabilities from the discontinued operation through
December&nbsp;31, 2008:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">September 30,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Expensed</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Paid This</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">December 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2008 Balance</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">This Period</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Period</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2008 Balance</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued expenses and other
current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(11</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">55</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(11</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">55</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>(4) </B><U><B>COMMITMENTS AND CONTINGENCIES: </B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Payroll Taxes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">TeamStaff has received notices from the Internal Revenue Service (&#147;IRS&#148;) claiming taxes, interest
and penalties due related to payroll taxes predominantly from its former PEO operations which were
sold in fiscal 2003. TeamStaff has also received notices from the IRS reporting overpayments of
taxes. Management believes that these notices are predominantly the result of misapplication of
payroll tax payments between its legal entities. If not resolved favorably, the Company may incur
interest and penalties. Until the sale of certain assets related to the former PEO operations,
TeamStaff operated through 17 subsidiaries, and management believes that the IRS has not correctly
identified payments made through certain of the different entities, therefore leading to the
notices. To date, TeamStaff has been working with the IRS to resolve these discrepancies and has
had certain interest and penalty claims abated. TeamStaff has also received notices from the Social
Security Administration claiming variances in
wage reporting compared to IRS transcripts. TeamStaff believes the notices from the Social
Security Administration are directly related to the IRS notices received. TeamStaff has retained
the services of Ernst &#038; Young LLP as a consultant to assist in resolving certain of these matters
with the IRS and Social Security Administration. TeamStaff believes that after the IRS applies all
the funds correctly, any significant interest and penalties will be abated; however, there can be
no assurance that each of these matters will be resolved favorably. In settling various years for
specific subsidiaries with the IRS, the Company has received refunds for those specific periods;
however, as the process of settling and concluding on other periods and subsidiaries is not yet
completed and the potential exists for related penalties and interest, the remaining liability
($1.4&nbsp;million at December&nbsp;31, 2008) has been recorded in accounts payable. In the quarter ended
December&nbsp;31, 2008 the Company paid $0.6&nbsp;million of this liability.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Legal Proceedings</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">On April&nbsp;17, 2007, a Federal Grand Jury subpoena was issued by the Northern District of Illinois to
the Company&#146;s wholly-owned subsidiary, TeamStaff GS, formerly known as RS Staffing Services,
requesting production of certain documents dating back to 1997, prior to the time the Company
acquired RS Staffing Services. The subpoena stated that it was issued in connection with an
investigation of possible violations of Federal criminal laws and related crimes concerning
procurement at the DVA. According to the cover letter accompanying the subpoena, the U.S.
Department of Justice, Antitrust Division (&#147;DOJ&#148;), along with the DVA, Office of the Inspector
General, are responsible for the current criminal investigation. RS Staffing Services provides
temporary staffing at certain DVA hospitals that may be part of the investigation. The return date
for documents called for by the subpoena was May&nbsp;17, 2007. In connection with the same
investigation, agents with the DVA, Office of Inspector General, executed a search warrant at the
Monroe, Georgia offices of RS Staffing Services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The government has advised TeamStaff that the DOJ has no intent to charge TeamStaff or any of its
subsidiaries or employees in connection with the Federal investigation of contract practices at
various government owned/contractor operated facilities. TeamStaff remains committed to cooperate
with the DOJ&#146;s continued investigation of other parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company originally acquired RS Staffing Services in June&nbsp;2005. As part of the purchase price
of the acquisition, the Company issued to the former owners of RS Staffing Services a $3.0&nbsp;million
promissory note, of which $1.5&nbsp;million was paid in June&nbsp;2006. On May&nbsp;31, 2007, the Company sent a
notice of indemnification claim to the former owners for costs that have been incurred in
connection with the investigation. Effective June&nbsp;1, 2007, the Company and former owners of RS
Staffing Services reached an agreement to extend the due date from June&nbsp;8, 2007 to December&nbsp;31,
2008 with respect to the remaining $1.5&nbsp;million note payable and accrued interest payable. Such
agreement has been extended to March&nbsp;31, 2009. As of December&nbsp;31, 2008, the amount has not been
settled. The Company recognized expenses related to legal representation and costs incurred in
connection with the investigation in the amount of $7,000 and $101,000 during the three months
ended December&nbsp;31, 2008 and 2007, respectively, as a component of other income (expense).
Cumulative costs related to this matter approximate $1.7&nbsp;million. Pursuant to the acquisition
agreement with RS Staffing Services, the Company has notified the former owners of RS Staffing
Services that it is the Company&#146;s intention to exercise its right to setoff the payment of such
expenses against the remaining principal and accrued interest due to the former owners of RS
Staffing Services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company will pursue the recovery as a right of offset in future periods. Management has a good
faith belief that the Company will recover such amounts; however, generally accepted accounting
principles preclude the Company from recording an offset to the note payable to the former owners
of RS Staffing Services until the final amount of the claim is settled and determinable. At
present, no assurances can be given that the former owners of RS Staffing Services would not pursue
action against us or that the Company will be successful in the offset of such amounts against the
outstanding debt. Accordingly, the Company has expensed costs incurred related to the
investigation through December&nbsp;31, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Other Matters</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">On October&nbsp;2, 2008, the United States Equal Employment Opportunity Commission (&#147;EEOC&#148;) issued a
subpoena to TeamStaff GS regarding the alleged wrongful termination of certain employees who were
employed at a federal facility staffed by TeamStaff GS temporary contract employees. The wrongful
termination is alleged to have occurred when the former employees were terminated because they
could not satisfy English proficiency requirements imposed by the Federal government. TeamStaff GS
has produced all documents that it believes were required by the subpoena and has submitted its
position statement to the EEOC. It is unclear, at present, if or when the EEOC will respond.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">As a commercial enterprise and employer, we are subject to various claims and legal actions in the
ordinary course of business. These matters can include professional liability, employment-relations
issues, workers&#146; compensation, tax, payroll and employee-related matters and inquiries and
investigations by governmental agencies regarding our employment practices. We are not aware of
any pending or threatened litigation that we believe is reasonably likely to have a material
adverse effect on our results of operations, financial position or cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Potential Contractual Billing Adjustments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">At December&nbsp;31, 2008, TeamStaff GS is seeking approval from the Federal government for gross profit
on retroactive billing rate increases associated with certain government contracts at which it has
employees staffed on contract assignments. These adjustments are due to changes in the contracted
wage determination rates for these contract employees. A wage determination is the listing of wage
rates and fringe benefit rates for each classification of laborers whom the Administrator of the
Wage and Hour Division of the U.S. Department of Labor (&#147;DOL&#148;) has determined to be prevailing in a
given locality. Contractors performing services for the Federal government under certain contracts
are required to pay service employees in various classes no less than the wage rates and fringe
benefits found prevailing in these localities. An audit by the DOL at one of the facilities
revealed that notification, as
required by contract, was not provided to TeamStaff GS in order to effectuate the wage increases in
a timely manner. Wages for contract employees currently on assignment have been adjusted
prospectively to the prevailing rate and hourly billing rates to the DVA have been increased
accordingly. During the fiscal year ended September&nbsp;30, 2008, TeamStaff recognized nonrecurring
revenues of $10.8&nbsp;million and direct costs of $10.1&nbsp;million, based on amounts that are
contractually due under its arrangements with the Federal agencies. At December&nbsp;31, 2008, the
amount of the remaining accounts receivable with the DVA approximates $9.3&nbsp;million. TeamStaff is
currently in the process of negotiating a final amount related to gross profit on these
adjustments. As such, there may be additional revenues recognized in future periods once the
approval for such additional amounts is obtained. The ranges of revenue and gross profit are
estimated to be between $0.4&nbsp;million and $0.7&nbsp;million. At present, the Company expects to collect
such amounts in the fiscal quarter ending March&nbsp;31, 2009. Because these amounts are subject to
government review, no assurances can be given that we will receive any additional billings from our
government contracts or that if additional amounts are received, that the amount will be within the
range specified above.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>(5)&nbsp;PREPAID WORKERS&#146; COMPENSATION:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">TeamStaff&#146;s current workers&#146; compensation insurance program is provided by Zurich American
Insurance Company (&#147;Zurich&#148;). This program covers TeamStaff&#146;s temporary employees and its
corporate employees. The program is managed by Cedar Hill and GAB Robins provides claims handling
services. This program is a fully insured, guaranteed cost program that contains no deductible or
retention feature. The premium for the program is paid monthly based upon actual payroll and is
subject to a policy year-end audit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">As part of the Company&#146;s discontinued PEO operations, TeamStaff had a workers&#146; compensation program
with Zurich, which covered the period from March&nbsp;22, 2002 through November&nbsp;17, 2003, inclusive.
Payments for the policy were made to the trust monthly based on projected claims for the policy
period. Interest on all assets held in the trust is credited to TeamStaff. Payments for claims and
claims expenses are made from the trust. From time-to-time, trust assets have been refunded to the
Company based on Zurich&#146;s and managers&#146; overall assessment of claims experience and historical and
projected settlements. In March&nbsp;2008, Zurich reduced the collateral requirements on outstanding
workers&#146; compensation claims and released $350,000 in trust account funds back to the Company. In
fiscal years ended September&nbsp;30, 2007 and 2006, Zurich reduced the collateral requirements on
outstanding workers&#146; compensation claims and released $1.19&nbsp;million and $2.25&nbsp;million,
respectively, in trust account funds back to the Company. The final amount of trust funds that
could be refunded to the Company is subject to a number of uncertainties (e.g. claim settlements
and experience, health care costs, the extended statutory filing periods for such claims); however,
based on a third party&#146;s study of claims experience, TeamStaff estimates that at December&nbsp;31, 2008,
the remaining prepaid asset of $0.4&nbsp;million will be received within the next six months. This is
reflected on TeamStaff&#146;s balance sheet as of December&nbsp;31, 2008 as a current asset, in addition to
approximately $0.2&nbsp;million related to current policy deposits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">As of December&nbsp;31, 2008 the adequacy of the workers&#146; compensation reserves (which are offset
against the trust fund balances in prepaid assets) was determined, in management&#146;s opinion, to be
reasonable. In determining our reserves we rely in part upon information regarding loss data
received from our workers&#146; compensation insurance carriers that may include loss data for claims
incurred during prior policy periods. In addition, these reserves are for claims that have not
been sufficiently developed and such variables as timing of payments and investment returns thereon
are uncertain or unknown, therefore actual results may vary from current estimates. TeamStaff will
continue to monitor the development of these reserves, the actual payments made against the claims
incurred, the timing of these payments, the interest accumulated in TeamStaff&#146;s prepayments and
adjust the related reserves as deemed appropriate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>(6) </B><U><B>DEBT:</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">On March&nbsp;28, 2008, TeamStaff and its wholly-owned subsidiaries, TeamStaff Rx and TeamStaff GS
entered into an Amended and Restated Loan and Security Agreement dated as of March&nbsp;28, 2008 (the
&#147;Loan Agreement&#148;) with Business Alliance Capital Company (&#147;BACC&#148;), a division of Sovereign Bank
(the &#147;Lender&#148;). Pursuant to the Loan Agreement, the Lender (i)&nbsp;acquired by assignment from the
Company&#146;s prior lender, PNC Bank, National Association (&#147;PNC&#148;), all right, title and interest of
PNC under the $8.0&nbsp;million PNC Credit Facility, the PNC note and related loan documentation, and
(ii)&nbsp;restructured the PNC Credit Facility into a $3.0&nbsp;million three (3)&nbsp;year revolving credit
facility. Effective April&nbsp;1, 2008, BACC changed its name to Sovereign Business Capital
(&#147;Sovereign&#148;). The outstanding principal and interest balance under the PNC Credit Facility,
related fees and certain expenses related to the execution and closing of the Loan Agreement were
paid in full with $0.6&nbsp;million in proceeds drawn from the Loan Agreement on April&nbsp;2, 2008. Fees
associated with this facility approximate $150,000, which will be amortized over the life of the
Loan Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Under the Loan Agreement, the Lender agreed to provide a revolving credit facility to the Company
in an aggregate amount of up to $3.0&nbsp;million subject to the further terms and conditions of the
Loan Agreement. The loan is secured by a first priority lien on all of the Company&#146;s assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company&#146;s ability to request loan advances under the Loan Agreement is subject to computation
of the Company&#146;s advance limit and compliance with the covenants and conditions of the loan. The
loan is for a term of 36&nbsp;months and matures on March&nbsp;31, 2011. Interest on advances accrues on
the daily unpaid balance of the loan advances at a per annum rate of one-quarter (.25%)
percentage points above the Prime Rate in effect from time to time, but not less than five and
one-half percent (5.5%) per annum. The Loan Agreement requires compliance with certain customary
covenants including a debt service coverage ratio and restrictions on the Company&#146;s ability to,
among other things, dispose of certain assets, engage in certain transactions, incur indebtedness
and pay dividends. As of December&nbsp;31, 2008, TeamStaff was in compliance with all loan covenants.
The Loan Agreement also provides for customary events of default following which, the Lender may,
at its option, accelerate the amounts outstanding under the Loan Agreement. As of December&nbsp;31,
2008, there was $0.7&nbsp;million outstanding under the Loan Agreement and defined unused availability
totaled $1.4&nbsp;million, net of required collateral reserves per the Loan Agreement for certain
payroll and tax liabilities. The interest rate on the facility at December&nbsp;31, 2008 was 5.5%.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Promissory Note (see Note (4)&nbsp;Commitments and Contingencies: &#147;Legal Proceedings&#148; above)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In connection with the acquisition of RS Staffing Services, TeamStaff issued two promissory notes
to the former owners of RS Staffing Services as part of the acquisition price, in the aggregate
principal amount of $3.0&nbsp;million. The notes bear interest at 5% per annum, and are subordinate to
the financing provided by Sovereign described above. One half of the principal ($1.5&nbsp;million) and
interest ($150,000) was due on June&nbsp;8, 2006 and payment was made in the amount of $1.65&nbsp;million.
The remaining principal and interest was due in June&nbsp;2007. As described in Note (4)&nbsp;above,
effective June&nbsp;1, 2007, the Company and former owners of RS Staffing Services reached an agreement
to extend the due date of the $1.5&nbsp;million note payable and accrued interest to March&nbsp;31, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Based on contractual terms of the initial agreement and the status of the parties&#146; discussions,
long-term debt at December&nbsp;31, 2008 and September&nbsp;30, 2008 is classified as a current liability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>(7) </B><U><B>STOCK WARRANTS:</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company had no outstanding warrants during the three months ended December&nbsp;31, 2008. During
the three months ended December&nbsp;31, 2007, no warrants were issued, warrants to purchase 598,000
shares of common stock expired unexercised and no warrants were exercised.
</DIV>
<DIV align="left">
<A name="107"></A>
</DIV>


<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 2:</B>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><U><B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B></U></TD>
</TR>
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U><B>Forward Looking and Cautionary Statements</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">This Quarterly Report on Form 10-Q contains &#147;forward-looking statements&#148; within the meaning of the
Private Securities Litigation Reform Act of 1995 (the &#147;1995 Reform Act&#148;), Section&nbsp;27A of the
Securities Act of 1933, as amended and Section&nbsp;21E of the Securities Exchange Act of 1934, as
amended (the &#147;Exchange Act&#148;). TeamStaff desires to avail itself of certain &#147;safe harbor&#148;
provisions of the 1995 Reform Act and is therefore including this special note to enable TeamStaff
to do so. Forward-looking statements are identified by words such as &#147;believe,&#148; &#147;anticipate,&#148;
&#147;expect,&#148; &#147;intend,&#148; &#147;plan,&#148; &#147;will,&#148; &#147;may&#148; and other similar expressions. In addition, any
statements that refer to expectations, projections or other characterizations of future events or
circumstances are forward-looking statements. Forward-looking statements included in this Quarterly
Report involve known and unknown risks, uncertainties and other factors which could cause
TeamStaff&#146;s actual results, performance (financial or operating) or achievements to differ from the
future results, performance (financial or operating) or achievements expressed or implied by such
forward-looking statements. We based these forward-looking statements on our current expectations
and best estimates and projections about future events. Our actual results could differ materially
from those discussed in, or implied by, these forward-looking statements. The following factors
(among others) could cause our actual results to differ materially from those implied by the
forward-looking statements in this Quarterly Report: our ability to continue to recruit and retain
qualified temporary and permanent healthcare professionals and administrative staff at reasonable
costs; our ability to attract and retain sales and operational personnel; our ability to enter into
contracts with hospitals, healthcare facility clients, affiliated healthcare networks, physician
practice groups and the United States government on terms attractive to us and to secure orders
related to those contracts; changes in the timing of hospital, healthcare facility clients&#146;,
physician practice groups&#146; and U.S. Government orders
for and our placement of temporary and permanent healthcare professionals and administrative staff;
the general level of patient occupancy at our hospital, healthcare facility clients&#146; and physician
practice groups&#146; facilities; the overall level of demand for services offered by temporary and
permanent healthcare staffing providers; the ability of our hospital, healthcare facility and
physician practice group clients to retain and increase the productivity of their permanent staff;
the variation in pricing of the healthcare facility contracts under which we place temporary and
permanent healthcare professionals; our ability to successfully implement our strategic growth,
acquisition and integration strategies; our ability to successfully integrate completed
acquisitions into our current operations; our ability to manage growth effectively; the performance
of our information and communication systems; the effect of existing or future government
legislation and regulation; the impact of medical malpractice and other claims asserted against us;
the disruption or adverse impact to our business as a result of a terrorist attack; our ability to
carry out our business strategy; the loss of key officers, and management personnel that could
adversely affect our ability to remain competitive; the effect of recognition by us of an
impairment to goodwill; other tax and regulatory issues and developments; and the effect of
adjustments by us to accruals for self-insured retentions.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Other factors that could cause actual results to differ from those implied by the forward-looking
statements in this Quarterly Report on Form 10-Q are set forth in our Annual Report on Form 10-K
for the year ended September&nbsp;30, 2008 and our other reports filed with the SEC. We undertake no
obligation to update any forward-looking statement or statements in this filing to reflect events
or circumstances that occur after the date on which the statement is made or to reflect the
occurrence of unanticipated events.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">All references to common stock, options, share based arrangements, exercise price, fair values and
related data within this Form 10-Q for the three months ended December&nbsp;31, 2007 have been
retroactively amended so as to incorporate the effect of the one-to four reverse stock split
effective April&nbsp;21, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U><B>Critical Accounting Policies and Estimates</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">TeamStaff believes the accounting policies below represent its critical accounting policies due to
the significance or estimation process involved in each. See Note 2 of TeamStaff&#146;s 2008 Annual
Report on Form 10-K as well as &#147;Critical Accounting Policies&#148; contained therein for a detailed
discussion on the application of these and other accounting policies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Recently Issued Accounting Pronouncements Affecting the Company</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In June&nbsp;2006, the Financial Accounting Standards Board issued Interpretation No.&nbsp;48, <I>Accounting for
Uncertainty in Income Taxes </I>(&#147;FIN 48&#148;). This Interpretation clarifies the accounting for
uncertainty in income taxes recognized in an entity&#146;s financial statements and prescribes a
recognition threshold of more-likely-than-not to be sustained upon examination. Measurement of the
tax uncertainty occurs if the recognition threshold has been met. This Interpretation also
provides guidance on de-recognition, classification, interest and penalties, accounting in interim
periods, disclosure, and transition. TeamStaff conducts business solely in the U.S. and, as a
result, files income tax returns for U.S., New Jersey and various other states and jurisdictions.
In the normal course of business the Company is subject to examination by taxing authorities. At
present, there are no ongoing income tax audits or unresolved disputes with the various tax
authorities that the Company currently files or has filed with. Given the Company&#146;s substantial net
operating loss carryforwards, which are subject to a full valuation allowance, as well as the
historical operating losses in prior periods, the adoption of FIN 48 on October&nbsp;1, 2007 did not
have any effect on our financial position, results of operations or cash flows as of the adoption
date and for the three months ended December&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In September&nbsp;2006, the FASB issued SFAS No.&nbsp;157, <I>Fair Value Measurements </I>(&#147;SFAS 157&#148;). SFAS 157
defines fair value, establishes a framework for measuring fair value in accordance with accounting
principles generally accepted in the United States, and expands disclosures about fair value
measurements. SFAS No.&nbsp;157 was effective for financial statements issued for fiscal years beginning
after November&nbsp;15, 2007, with earlier application encouraged. Any amounts recognized upon adoption
as a cumulative effect adjustment will be recorded to the opening balance of retained earnings in
the year of adoption. In February&nbsp;2008, the FASB issued Staff Position 157-2, &#147;Effective Date of
FASB Statement No.&nbsp;157&#148;, which delays the effective date of SFAS 157 for all nonfinancial assets
and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually), until fiscal years beginning after
November&nbsp;15, 2008, and interim periods within those fiscal years. The Company adopted SFAS No.&nbsp;157
on October&nbsp;1, 2008 with no effect on its financial position, results of operations and cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In February&nbsp;2007, the FASB issued SFAS No.&nbsp;159, <I>The Fair Value Option for Financial Assets and
Financial Liabilities </I>(SFAS No.&nbsp;159)<I>. </I>SFAS No.&nbsp;159 permits entities to choose to measure, on an
item-by-item basis, specified
financial instruments and certain other items at fair value. Unrealized gains and losses on items
for which the fair value option has been elected are required to be reported in earnings at each
reporting date. SFAS No.&nbsp;159 is effective for fiscal years beginning after November&nbsp;15, 2007, the
provisions of which are required to be applied prospectively. The Company adopted SFAS No.&nbsp;159 on
October&nbsp;1, 2008 with no effect on its financial position, results of operations and cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In March&nbsp;2008, the FASB issued SFAS No.&nbsp;161, &#147;Disclosures about Derivative Instruments and Hedging
Activities&#148;. The new standard is intended to improve financial reporting about derivative
instruments and hedging activities by requiring enhanced disclosures to enable users of the
financial statements to better understand the effects on an entity&#146;s financial position, financial
performance, and cash flows. It is effective for financial statements issued for interim periods
beginning after November&nbsp;15, 2008, with early application encouraged. The Company currently does
not believe that the adoption of this standard will have a material effect on our consolidated
financial statements.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Revenue Recognition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">TeamStaff accounts for its revenues in accordance with EITF 99-19, <I>Reporting Revenues Gross as a
Principal Versus Net as an Agent, </I>and SAB 104<I>, Revenue Recognition</I>. TeamStaff recognizes all
amounts billed to its temporary staffing customers as gross revenue because, among other things,
TeamStaff is the primary obligor in the temporary staffing arrangement; TeamStaff has pricing
latitude; TeamStaff selects temporary employees for a given assignment from a broad pool of
individuals; TeamStaff is at risk for the payment of its direct costs; and, TeamStaff assumes a
significant amount of other risks and liabilities as an employer of its temporary employees, and
therefore, is deemed to be a principal in regard to these services. TeamStaff also recognizes as
gross revenue and as unbilled receivables, on an accrual basis, any such amounts that relate to
services performed by temporary employees which have not yet been billed to the customer as of the
end of the accounting period.
</DIV>


<P align="left" style="font-size: 10pt">Revenues related to retroactive billings in 2008 (see Note 4) from an agency of the Federal government are recognized
when: (1)&nbsp;the Company develops and calculates an amount for such prior period services and has a contractual right to
bill for such amounts under its arrangements and (2)&nbsp;there are no remaining unfulfilled conditions for approval of such
billings. The related direct costs, principally comprised of salaries and benefits, are recognized to match the
recognized reimbursements from the Federal agency; upon approval, wages are processed for payment to the employees.


<P align="left" style="font-size: 10pt">During the year ended September&nbsp;30, 2008, TeamStaff recognized revenues of $10.8&nbsp;million and direct costs of $10.2
million related to these non-recurring arrangements. At December&nbsp;31, 2008, the amount of the remaining accounts
receivable with the DVA approximates $9.3&nbsp;million and accrued liabilities for salaries to employees and related
benefits totaled $8.7&nbsp;million. Accounts receivable includes $7.6&nbsp;million that was unbilled to the DVA at December&nbsp;31,
2008.

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Staffing (whether medical or administrative) revenue is recognized as service is rendered.
TeamStaff bills its clients based on an hourly rate. The hourly rate is intended to cover
TeamStaff&#146;s direct labor costs of the temporary employees, plus an estimate to cover overhead
expenses and a profit margin. Additionally, commissions from permanent placements are included in
revenue as placements are made. Commissions from permanent placements result from the successful
placement of a medical staffing employee to a customer&#146;s workforce as a permanent employee. The
Company also reviews the status of such placements to assess the Company&#146;s future performance
obligations under such contracts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Direct costs of services are reflected in TeamStaff&#146;s Consolidated Statements of Operations as
&#147;direct expenses&#148; and are reflective of the type of revenue being generated. Direct costs of the
temporary staffing business include wages, employment related taxes and reimbursable expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Prepaid Workers&#146; Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">TeamStaff&#146;s current workers&#146; compensation insurance program is provided by Zurich American
Insurance Company (&#147;Zurich&#148;). This program covers TeamStaff&#146;s temporary employees and its
corporate employees. The program is managed by Cedar Hill and GAB Robins provides claims handling
services. This program is a fully insured, guaranteed cost program that contains no deductible or
retention feature. The premium for the program is paid monthly based upon actual payroll and is
subject to a policy year-end audit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">As part of the Company&#146;s discontinued PEO operations, TeamStaff had a workers&#146; compensation program
with Zurich, which covered the period from March&nbsp;22, 2002 through November&nbsp;17, 2003, inclusive.
Payments for the policy were made to the trust monthly based on projected claims for the policy
period. Interest on all assets held in the trust is credited to TeamStaff. Payments for claims and
claims expenses are made from the trust. From time-to-time, trust assets have been refunded to the
Company based on Zurich&#146;s and managers&#146; overall assessment of claims experience and historical and
projected settlements. In March&nbsp;2008, Zurich reduced the collateral requirements on outstanding
workers&#146; compensation claims and released $350,000 in trust account funds back to the Company. In
fiscal years ended September&nbsp;30, 2007 and 2006, Zurich reduced the collateral requirements on
outstanding workers&#146; compensation claims and released $1.19&nbsp;million and $2.25&nbsp;million,
respectively, in trust account funds back to the Company. The final amount of trust funds that
could be refunded to the Company is subject to a number of uncertainties (e.g. claim settlements
and experience, health care costs, the extended statutory filing periods for such claims); however,
based on a third party&#146;s study of claims experience, TeamStaff estimates that at December&nbsp;31, 2008,
the remaining prepaid asset of $0.3&nbsp;million will be received within the next six months. This is
reflected on TeamStaff&#146;s balance sheet as of December&nbsp;31, 2008 as a current asset, in addition to
approximately $0.2&nbsp;million related to current policy deposits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">As of December&nbsp;31, 2008 the adequacy of the workers&#146; compensation reserves (which are offset
against the trust fund balances in prepaid assets) was determined, in management&#146;s opinion, to be
reasonable. In determining our reserves we rely in part upon information regarding loss data
received from our workers&#146; compensation insurance carriers that may include loss data for claims
incurred during prior policy periods. In addition, these reserves are for claims that have not
been sufficiently developed, and such variables as timing of payments and investment returns
thereon are uncertain or unknown, therefore actual results may vary from current estimates.
TeamStaff will continue to monitor the development of these reserves, the actual payments made
against the claims incurred, the timing of these payments, the interest accumulated in TeamStaff&#146;s
prepayments and adjust the related reserves as deemed appropriate.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Income Taxes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">TeamStaff accounts for income taxes in accordance with Statements of Financial Accounting Standards
No.&nbsp;109, &#147;Accounting for Income Taxes.&#148; Under SFAS No.&nbsp;109, deferred tax assets and liabilities
are determined based on the difference between the financial statement and tax bases of assets and
liabilities, using enacted tax rates in effect for the year in which the differences are expected
to reverse. Deferred tax assets are reflected on the balance sheet when it is determined that it
is more likely than not that the asset will be realized. SFAS No.&nbsp;109 also requires that deferred
tax assets be reduced by a valuation allowance if it is more likely than not that some or all of
the deferred tax asset will not be realized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">At December&nbsp;31, 2008, the Company provided a 100% deferred tax valuation allowance of approximately
$11.8&nbsp;million. In assessing the need for a valuation allowance, the Company historically has
considered all positive and negative factors, including scheduled reversals of deferred tax
liabilities, prudent and feasible tax planning strategies and recent financial performance. The
Company determined that negative factors, including historic and current taxable losses, as well as
uncertainties related to the ability to utilize certain Federal and state net loss carry forwards,
outweighed any objectively verifiable positive factors, and as such, continues to conclude that a
valuation allowance is necessary. The Company is providing a 100% valuation allowance that it is
more likely than not that it will not be able to realize the full benefit of the deferred tax
asset. The establishment of the deferred tax asset allowance does not preclude the Company from
reversing any or all of the allowance in future periods if the Company believes the positive
factors are sufficient enough to utilize the deferred tax asset, nor does it limit the ability to
utilize losses for tax purposes, subject to loss carry forward limitations and periods permitted by
law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U><B>Overview</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Business Description</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">TeamStaff provides specialized medical, nursing, logistics and administrative staffing services by
supplying allied healthcare and nursing professionals, logistics and administrative personnel
through two staffing subsidiaries. The Company&#146;s TeamStaff Rx subsidiary operates throughout the
United States and specializes in providing travel allied medical employees and nurses on a short
term assignment basis, as well as permanent placement services. Allied medical staff includes MRI
technicians, mammographers, physical therapists, occupational therapists, dosimetrists, ultrasound
staff and physicists. During the last six months, TeamStaff Rx placed temporary employees at
approximately 120 client facilities. The Company&#146;s TeamStaff GS subsidiary specializes in providing
medical and office administration/technical professionals through FSS contracts with both the GSA
and DVA. During the last six months, TeamStaff GS placed temporary employees at approximately 30
client facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company has implemented several initiatives to position the staffing services subsidiaries for
growth. Sales initiatives include assessing, restructuring and adding to its sales force and
recruiting efforts and continued management of a pricing and gross margin improvement plans. In
September&nbsp;2008, the Company hired Dale West as President of its TeamStaff Rx subsidiary. Ms.&nbsp;West
was former President of RNNetwork as well as an owner and original founder. Ms.&nbsp;West grew RN
Network from a start-up to approximately $100&nbsp;million in annual revenue over a five year period.
In February&nbsp;2008, TeamStaff Rx received Joint Commission on Accreditation of Healthcare
Organizations (&#147;JCAHO&#148;) certification which serves to validate the Company&#146;s hiring practices and
our commitment to providing quality healthcare services. The Company believes this Gold Seal is
critical in maximizing additional recruiting and sales opportunities. During the past year,
efforts to build marketing presence included the launching of new TeamStaff Rx, TeamStaff GS and
corporate websites, implementing a print advertisement campaign, and revising our strategic
marketing communications plan in an effort to attract allied medical and nurse travelers.
Recently, we also added several marketing events to our tradeshow calendar in order to increase our
brand recognition. This added exposure allows us to introduce our suite of offerings to an
expanded market. We continue to focus on our sales and marketing efforts throughout our operating
divisions in order to
increase our contact with current and prospective clients. During the past year, we initiated a
corporate branding campaign which promotes consistency and brand recognition as well as increases
TeamStaff&#146;s visibility in the marketplace. TeamStaff GS, formerly known as RS Staffing Services,
gives us a strong presence in the government sector and provides us with an opportunity to bid on
awards for large multi-year contracts with favorable operating margins. In February&nbsp;2008 we
announced the renaming of RS Staffing Services to TeamStaff Government Solutions. The name change
reflects the subsidiary&#146;s expanding service offerings in providing staffing for government
logistical support positions.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Recent Business Trends</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>TeamStaff Rx</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Demand for travelers has continued to be soft due to hospital budget constraints and continued low
patient census. On the supply side, during a period of economic instability, travelers prefer the
security of a permanent position. Additionally, a poor economic climate has had an adverse impact
on hospital staff wanting to leave their position and take a travel assignment with us. In an
effort to attract travelers, the Company recently enhanced its benefits package and traveler
loyalty program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Longer term, we continue to believe the demand for temporary medical personnel will rebound as a
result of key drivers in our business segment such as the declining health of an aging population,
advances in medical technology, hospital employee turnover and growth in hospital admissions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>TeamStaff Government Solutions</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">TeamStaff GS has achieved positive results in expanding its penetration of DVA facilities through
vertical expansion of previously awarded contracts. The Company is expanding its reach within the
government sector beyond VA opportunities by bidding on Department of Defense (&#147;DOD&#148;) staffing
contracts afforded to large businesses and GSA&#146;s <I>e-Buy </I>portal, an electronic Request for Quote
(RFQ) / Request for Proposal (RFP)&nbsp;system designed to allow Federal buyers to request information,
find sources, and prepare RFQs/RFPs, online, for various services offered through GSA&#146;s Multiple
Award Schedule. Additionally, TeamStaff GS is evaluating opportunities to satisfy the staffing
needs of other government agencies in addition to the DVA and DOD as a means of horizontal
expansion of its client base.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We believe demand will remain strong as the government looks to maintain or improve social services
provided to our returning veterans. In addition, we believe the government staffing business is
more stable in an economic downturn due to the longer term duration of its contracts. Management
believes that, under the current administration, there will not be a reduction in government
spending supporting social programs that benefit military personnel and veterans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U><B>Results of Operations</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The following table summarizes, for the periods indicated, selected consolidated statements of
operations data expressed as a percentage of revenue:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Three Months</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Three Months</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Condensed Consolidated Statement of Operations:</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Direct Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">81.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">82.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gross Profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">18.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">18.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling, general and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">17.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">16.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation and amortization expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-0.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income from continuing operations before taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax (expense)&nbsp;benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">TeamStaff&#146;s revenues for the three months ended December&nbsp;31, 2008 and 2007 were $14.7&nbsp;million and
$15.5&nbsp;million, respectively, which represents a decrease of $0.8&nbsp;million, or 5.0% over the prior
fiscal year period. Revenues for the three months ended December&nbsp;31, 2008 and 2007 include $12.0
million and $11.0&nbsp;million, respectively, related to TeamStaff GS. This subsidiary&#146;s revenues
helped offset the decrease in revenues in the TeamStaff Rx travel allied and travel nursing
subsidiary from the first fiscal quarter of 2008 to the first fiscal quarter of 2009. The
decrease in Rx revenues is in part due to the poor economic conditions whereby hospitals have
reduced spending and travelers are preferring the stability of a permanent assignment. It is the
Company&#146;s hope that the management changes coupled with our continued sales and marketing efforts
will position Rx for growth, once demand picks up.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->18<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Direct expenses for the three months ended December&nbsp;31, 2008 and 2007 were $12.0&nbsp;million and $12.7
million, respectively, which represents a decrease of $0.7&nbsp;million, or 5.7% over the prior fiscal
year period. This decrease is a result of lower revenues. As a percentage of revenue, direct
expenses for the three months ended December&nbsp;31, 2008 and 2007 were 81.4% and 82.0%, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Gross profit for the three months ended December&nbsp;31, 2008 and 2007 were $2.7&nbsp;million and $2.8
million, respectively, which represents a decrease of $0.1&nbsp;million, or 1.7%. This decrease is a
result of lower revenues. Gross profit, as a percentage of revenue, was 18.6% and 18.0% for the
three months ended December&nbsp;31, 2008 and 2007, respectively. The improvement in gross profit
margin (as a percentage of revenue) is related primarily to increased pricing on contracts and
direct cost control initiatives as well as reduced use of TeamStaff GS teaming partners
(subcontractors)&nbsp;that are included as a direct expense.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Selling, general and administrative (&#147;SG&#038;A&#148;) expenses for the three months ended December&nbsp;31, 2008
and 2007 were $2.62&nbsp;million and $2.56&nbsp;million, respectively, which represents an increase of $0.06
million, or 2.3%. This is primarily a result of increased new business spending, which increased
by 15.5% from the first quarter of fiscal 2008 to the first quarter of fiscal 2009. The Company
seeks continued elimination of overhead costs deemed to be non-essential to growth or
infrastructure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Depreciation and amortization expense was $0.1&nbsp;million for each of the three months ended December
31, 2008 and 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Income from operations for the three months ended December&nbsp;31, 2008 and 2007 was $50,000 and
$129,000, respectively, which represents a decrease of $79,000, or 61.2%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Other income for the three months ended December&nbsp;31, 2008 and 2007, which is normally comprised
primarily of late fee income in the TeamStaff Rx subsidiary and interest income, was $36,000 and
$44,000, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Interest expense for the three months ended December&nbsp;31, 2008 and 2007 was $27,000 and $36,000,
respectively, representing a decrease of $9,000 due primarily to reduced interest rates related to
borrowings on the line of credit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company recorded other expense of $7,000 and $101,000 for the three months ended December&nbsp;31,
2008, and 2007, respectively. This expense is related to legal representation and investigation
costs incurred in connection with the Federal Grand Jury subpoena issued to our subsidiary formerly
known as RS Staffing Services on April&nbsp;17, 2007. The subpoena requested production of certain
documents dating back to 1997. The Company acquired RS Staffing effective as of June&nbsp;2005. These
expenses are classified as non-operating expense because the subpoena relates to activity prior to
the acquisition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">For the period ended December&nbsp;31, 2008, the Company recorded a tax provision of $4,000 as a result
of state tax provisions. For the period ended December&nbsp;31, 2007, the Company did not record a tax
provision or tax benefit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Income from continuing operations for the three months ended December&nbsp;31, 2008 and 2007 was
$48,000, or $0.01 per basic and diluted share, and $36,000, or $0.01 per basic and diluted share,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">There was no activity in discontinued operations for the three months ended December&nbsp;31, 2008.
Loss from operations of the discontinued business unit for the three months ended December&nbsp;31, 2007
was minimal, with no impact on basic and diluted earnings per share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Net
income for the three months ended December&nbsp;31, 2008 and 2007 was $48,000, or $0.01 per basic and
diluted share, and $35,000, or $0.01 per basic and diluted share, respectively. This represents an
increase of $13,000 in net income from the first fiscal quarter of 2008 to the first fiscal quarter
of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Potential Contractual Billing Adjustments</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">As described in greater detail in note 4 to the consolidated financial statements included in this
Quarterly Report on Form 10-Q, TeamStaff GS is seeking approval from the Federal government for
additional gross profit on retroactive billing rate increases associated with certain of its
government contracts. These adjustments are due to changes in the contracted wage determination
rates for covered contract employees. At December&nbsp;31, 2008, the amount of the remaining accounts
receivable with the DVA approximates $9.3&nbsp;million. TeamStaff is currently negotiating a final
amount related to gross profit on these adjustments. Accordingly, the Company may be able to
recognize additional revenues in future periods if the approval for the additional amounts is
obtained. The ranges of revenue and gross profit are estimated to be between $0.4&nbsp;million and $0.7
million. At present, the Company expects to collect such amounts in the fiscal quarter ending
March&nbsp;31, 2009. However, because these amounts are subject to government review, no assurances can
be given that we will receive any additional billings from these contracts or that if additional
amounts are received, that the amount will be within the range specified above.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->19<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U><B>Liquidity and Capital Resources; Commitments</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Our principal sources of cash to fund our working capital needs are cash generated from operating
activities and borrowings under our revolving credit facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Cash from operating activities</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Net cash used in operating activities for the three months ended December&nbsp;31, 2008 was $1.8
million. This decrease in cash was primarily driven by a decrease in accounts payable due to $0.6
million of payments made to the IRS for previously recorded prior period tax liabilities, an
increase in accounts receivable due to the slowdown in cash collections that historically occurs
during the end of December and payment of bonuses to Company employees in the quarter. Net cash
provided by operating activities for the three months ended December&nbsp;31, 2007 was $16,000. Sources
of cash for the first fiscal quarter of 2008 was primarily from accounts receivable collections
offset by a use of cash related to payment of legal fees and other accrued expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Cash from investing activities</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We continue to have relatively low capital investment requirements. The Company did not have any
investing activity during the three months ended December&nbsp;31, 2008 and used $78,000 for the three
months ended December&nbsp;31, 2007, primarily for expenses related to the implementation of a new front
office computer system and the redesign of our traveler website.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Cash from financing activities</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Net cash provided by financing activities for the three months ended December&nbsp;31, 2008 was $0.7
million, primarily as a result of borrowing on the line of credit to fund operations during the
last week of December&nbsp;2008. This is due to a
slow down in cash collections that historically occurs during the end of the calendar year. Cash
provided by financing activities for the three months ended December&nbsp;31, 2007 was negligible.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Loan Facility</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">On March&nbsp;28, 2008, TeamStaff and its wholly-owned subsidiaries, TeamStaff Rx and TeamStaff GS
entered into an Amended and Restated Loan and Security Agreement dated as of March&nbsp;28, 2008 (the
&#147;Loan Agreement&#148;) with Business Alliance Capital Company (&#147;BACC&#148;), a division of Sovereign Bank
(the &#147;Lender&#148;). Pursuant to the Loan Agreement, the Lender (i)&nbsp;acquired by assignment from the
Company&#146;s prior lender, PNC Bank, National Association (&#147;PNC&#148;), all right, title and interest of
PNC under the $8.0&nbsp;million PNC Credit Facility, the PNC note and related loan documentation, and
(ii)&nbsp;restructured the PNC Credit Facility into a $3.0&nbsp;million three (3)&nbsp;year revolving credit
facility. Effective April&nbsp;1, 2008, BACC changed its name to Sovereign Business Capital
(&#147;Sovereign&#148;). The outstanding principal and interest balance under the PNC Credit Facility,
related fees and certain expenses related to the execution and closing of the Loan Agreement were
paid in full with $0.6&nbsp;million in proceeds drawn from the Loan Agreement on April&nbsp;2, 2008. Fees
associated with this facility approximate $150,000, which will be amortized over the life of the
Loan Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Under the Loan Agreement, the Lender agreed to provide a revolving credit facility to the Company
in an aggregate amount of up to $3.0&nbsp;million subject to the further terms and conditions of the
Loan Agreement. The loan is secured by a first priority lien on all of the Company&#146;s assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company&#146;s ability to request loan advances under the Loan Agreement is subject to computation
of the Company&#146;s advance limit and compliance with the covenants and conditions of the loan. The
loan is for a term of 36&nbsp;months and matures on March&nbsp;31, 2011. Interest on advances accrues on
the daily unpaid balance of the loan advances at a per annum rate of one-quarter (.25%)
percentage points above the Prime Rate in effect from time to time, but not less than five and
one-half percent (5.5%) per annum. The Loan Agreement requires compliance with certain customary
covenants including a debt service coverage ratio and restrictions on the Company&#146;s ability to,
among other things, dispose of certain assets, engage in certain transactions, incur indebtedness
and pay dividends. As of December&nbsp;31, 2008, TeamStaff was in compliance with all loan covenants.
The Loan Agreement also provides for customary events of default following which, the Lender may,
at its option, accelerate the amounts outstanding under the Loan Agreement. As of December&nbsp;31,
2008, there was $0.7&nbsp;million outstanding under the Loan Agreement and defined unused availability
totaled $1.4&nbsp;million, net of required collateral reserves per the Loan Agreement for certain
payroll and tax liabilities. The interest rate on the facility at December&nbsp;31, 2008 was 5.5%.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->20<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Availability under the Loan Agreement is directly related to the successful assignment of certain
accounts receivable. Certain government accounts of TeamStaff GS are required to execute
&#147;Acknowledgements of Assignment.&#148; There can be no assurance that every TeamStaff GS government
account will execute the documentation to effectuate the assignment and secure availability. The
failure of government third parties to sign the required documentation could result in a decrease
in availability under the Loan Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">As of December&nbsp;31, 2008, TeamStaff had cash and cash equivalents of $4.1&nbsp;million and net accounts
receivable of $13.1&nbsp;million. At December&nbsp;31, 2008, the amount of the accounts receivable associated
with the DVA retroactive billings approximates $9.3&nbsp;million. This includes $7.6&nbsp;million that was
unbilled at December&nbsp;31, 2008. As of December&nbsp;31, 2008, there was $0.7&nbsp;million in debt
outstanding under the Loan Agreement and unused availability totaled $1.4&nbsp;million, net of required
collateral reserves per the Loan Agreement for certain payroll and tax liabilities. As of
December&nbsp;31, 2008, TeamStaff had working capital of $2.6&nbsp;million. The Company believes that, along
with cash on hand, the availability under the existing revolving line of credit will provide
sufficient liquidity over the next twelve months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Contractual Obligations</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Payments Due By Period</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left">Obligations</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Less than</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>1-3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>4-5</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">(Amounts in thousands)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>1 Year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Years</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long Term Debt (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,312</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating Leases (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,485</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">485</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">331</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pension Liability (3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Severence Liability (4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total Obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">337</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Represents bank line of credit, the maximum amount of notes payable related to acquisition of
TeamStaff GS, and capital lease obligations.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Represents lease payments net of sublease income.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Represents pension liabilities for the former Chief Executive Officer and former Chief Financial Officer.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Represents severance payments related to former employees.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Employment Agreements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">As previously reported, during fiscal 2008, we entered into employment agreements with our Chief
Executive Officer and Chief Financial Officer. During the quarter ended December&nbsp;31, 2008, we
entered into employment agreements with our President of TeamStaff GS and with our President of
TeamStaff Rx. The material terms and conditions of each of these employment agreements were
summarized in greater detail in our Annual Report on Form 10-K for the fiscal year ended September
30, 2008 under the caption &#147;Executive Compensation and Related Information &#151; Employment Agreements
with Other Executive Officers&#148;. The summaries of each of the foregoing agreements are incorporated
herein by reference.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U><B>Off-Balance Sheet Arrangements</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company does not have any off-balance sheet arrangements that have or are, in the opinion of
management, likely to have a current or future material effect on the Company&#146;s financial
condition, results of operations or cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U><B>Effects of Inflation</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Inflation and changing prices have not had a material effect on TeamStaff&#146;s net revenues and
results of operations, as TeamStaff has been able to modify its prices and cost structure to
respond to inflation and changing prices.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->21<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">TeamStaff does not undertake trading practices in securities or other financial instruments and
therefore does not have any material exposure to interest rate risk, foreign currency exchange rate
risk, commodity price risk or other similar risks, which might otherwise result from such
practices. TeamStaff is not materially subject to fluctuations in foreign exchange rates, commodity
prices or other market rates or prices from market sensitive instruments. TeamStaff has a material
interest rate risk with respect to our prior workers&#146; compensation programs. In connection with
TeamStaff&#146;s prior workers&#146; compensation programs, prepayments of future claims were deposited into
trust funds for possible future payments of these claims in accordance with the policies. The
interest income resulting from these prepayments is for the benefit of TeamStaff, and is used to
offset workers&#146; compensation expense. If interest rates in these periods decrease, TeamStaff&#146;s
workers&#146; compensation expense would increase because TeamStaff would be entitled to less interest
income on the deposited funds. Further, and as discussed elsewhere in this filing, as of March&nbsp;28,
2008, TeamStaff has a new $3.0&nbsp;million revolving credit facility with Sovereign Business Capital
under which revolving credit advances bear interest at the Prime Rate in effect from time to time
plus 25 basis points. The Loan Agreement has a three-year life and contains term and line of credit
borrowing options. The Loan Agreement is subject to certain restrictive covenants, including a debt
service coverage ratio. The Loan Agreement is subject to acceleration upon non-payment or various
other standard default clauses. Material increases in the Prime Rate could have a material adverse
effect on our results of operations, cash flows, the status of the Loan Agreement as well as
interest costs.
</DIV>
<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>ITEM 4: CONTROLS AND PROCEDURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Evaluation of Disclosure Controls and Procedures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed in the Company&#146;s Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the SEC&#146;s rules and forms, and that
such information is accumulated and communicated to the Company&#146;s management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure based closely on the definition of &#147;disclosure controls and procedures&#148; in Rule
13a-15(e). In designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving the desired control objectives, and management necessarily
was required to apply its judgment in designing and evaluating the controls and procedures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Based on their evaluation, as of December&nbsp;31, 2008, the Company&#146;s Chief Executive Officer and the
Company&#146;s Chief Financial Officer concluded that the Company&#146;s disclosure controls and procedures
were effective at the reasonable assurance level to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the SEC&#146;s rules and forms
and that such information is accumulated and communicated to our management, including our
President and Chief Financial Officer, to allow timely decisions regarding required disclosure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Changes in Internal Controls</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">There have been no changes in the Company&#146;s internal control over financial reporting (as defined
in Rule&nbsp;13a-15(f) under the Exchange Act) that occurred during the Company&#146;s first quarter ended
December&nbsp;31, 2008, that have materially affected, or are reasonably likely to materially affect,
the Company&#146;s internal control over financial reporting.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->22<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Part II &#151; OTHER INFORMATION</B>
</DIV>

<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>ITEM 1: LEGAL PROCEEDINGS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>RS Staffing Services, Inc.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">On April&nbsp;17, 2007, a Federal Grand Jury subpoena was issued by the Northern District of Illinois to
the Company&#146;s wholly-owned subsidiary, TeamStaff GS, formerly known as RS Staffing Services,
requesting production of certain documents dating back to 1997, prior to the time the Company
acquired RS Staffing Services. The subpoena stated that it was issued in connection with an
investigation of possible violations of Federal criminal laws and related crimes concerning
procurement at the DVA. According to the cover letter accompanying the subpoena, the U.S.
Department of Justice, Antitrust Division (&#147;DOJ&#148;), along with the DVA, Office of the Inspector
General, are responsible for the current criminal investigation. RS Staffing Services provides
temporary staffing at certain DVA hospitals that may be part of the investigation. The return date
for documents called for by the subpoena was May&nbsp;17, 2007. In connection with the same
investigation, agents with the DVA, Office of Inspector General, executed a search warrant at the
Monroe, Georgia offices of RS Staffing Services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The government has advised TeamStaff that the DOJ has no intent to charge TeamStaff or any of its
subsidiaries or employees in connection with the Federal investigation of contract practices at
various government owned/contractor operated facilities. TeamStaff remains committed to cooperate
with the DOJ&#146;s continued investigation of other parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company originally acquired RS Staffing Services in June&nbsp;2005. As part of the purchase price
of the acquisition, the Company issued to the former owners of RS Staffing Services a $3.0&nbsp;million
promissory note, of which $1.5&nbsp;million was paid in June&nbsp;2006. On May&nbsp;31, 2007, the Company sent a
notice of indemnification claim to the former owners for costs that have been incurred in
connection with the investigation. Effective June&nbsp;1, 2007, the Company and former owners of RS
Staffing Services reached an agreement to extend the due date from June&nbsp;8, 2007 to December&nbsp;31,
2008 with respect to the remaining $1.5&nbsp;million note payable and accrued interest payable. Such
agreement has been extended to March&nbsp;31, 2009. As of December&nbsp;31, 2008, the amount has not been
settled. The Company recognized expenses related to legal representation and costs incurred in
connection with the investigation in the amount of $7,000 and $101,000 during the three months
ended December&nbsp;31, 2008 and 2007, respectively, as a component of other income (expense).
Cumulative costs related to this matter approximate $1.7&nbsp;million. Pursuant to the acquisition
agreement with RS Staffing Services, the Company has notified the former owners of RS Staffing
Services that it is the Company&#146;s intention to exercise its right to setoff the payment of such
expenses against the remaining principal and accrued interest due to the former owners of RS
Staffing Services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company will pursue the recovery as a right of offset in future periods. Management has a good
faith belief that the Company will recover such amounts; however, generally accepted accounting
principles preclude the Company from recording an offset to the note payable to the former owners
of RS Staffing Services until the final amount of the claim is settled and determinable. At
present, no assurances can be given that the former owners of RS Staffing Services would not pursue
action against us or that the Company will be successful in the offset of such amounts against the
outstanding debt. Accordingly, the Company has expensed costs incurred related to the
investigation through December&nbsp;31, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Other Matters</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">On October&nbsp;2, 2008, the United States Equal Employment Opportunity Commission (&#147;EEOC&#148;) issued a
subpoena to TeamStaff GS regarding the alleged wrongful termination of certain employees who were
employed at a federal facility staffed by TeamStaff GS temporary contract employees. The wrongful
termination is alleged to have occurred when the former employees were terminated because they
could not satisfy English proficiency requirements imposed by the Federal government. TeamStaff GS
has produced all documents that it believes were required by the subpoena and has submitted its
position statement to the EEOC. It is unclear, at present, if or when the EEOC will respond.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">As a commercial enterprise and employer, we are subject to various claims and legal actions in the
ordinary course of business. These matters can include professional liability, employment-relations
issues, workers&#146; compensation, tax, payroll and employee-related matters and inquiries and
investigations by governmental agencies regarding our employment practices. We are not aware of
any pending or threatened litigation that we believe is reasonably likely to have a material
adverse effect on our results of operations, financial position or cash flows.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->23<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In connection with its medical staffing business, TeamStaff is exposed to potential liability for
the acts, errors or omissions of its temporary medical employees. The professional liability
insurance policy provides up to $5.0&nbsp;million aggregate coverage with a $2.0&nbsp;million per occurrence
limit. Although TeamStaff believes the liability insurance is reasonable under the circumstances
to protect it from liability for such claims, there can be no assurance that such insurance will be
adequate to cover all potential claims.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">TeamStaff is engaged in no other litigation, the effect of which would be anticipated to have a
material adverse impact on TeamStaff&#146;s results of operations, financial position or cash flows.
</DIV>
<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>ITEM 1A: RISK FACTORS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In addition to the other information set forth in this report, you should carefully consider the
factors discussed in the &#147;Risk Factors&#148; section in our Annual Report on Form 10-K for the year
ended September&nbsp;30, 2008, which could materially affect our business, results of operations,
financial condition or liquidity. The risks identified by TeamStaff
in its reports are not the only risks
facing us. Additional risks and uncertainties not currently known to us or that we currently
believe are immaterial also may materially adversely affect our business, results of operations,
financial condition or liquidity. We believe that except for the additional risk factor set forth
below, there have not been any material changes from the risk factors as previously disclosed in
our Annual Report on Form 10-K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>The recent global economic crisis may harm our business, operating results and financial condition.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The recent global economic crisis has caused a tightening in the credit markets, increases in the
rates of default and bankruptcy, and extreme volatility in credit, equity and fixed income markets.
These macroeconomic developments could negatively affect our business, operating results or
financial condition under a number of different scenarios. For example, demand for travelers has
softened due to hospital budget constraints and continued low patient census. On the supply side,
during a period of economic instability, travelers prefer the security of a permanent position.
Additionally, a poor economic climate has had an adverse impact on hospital staff wanting to leave
their position and take a travel assignment with us. The current economic environment could also
subject us to increased credit risk should customers be unable to pay us, or delay paying us, for
previously provided services. In addition, weakness in the market for our customers could result in
delays in them paying their obligations to us. This would further increase our credit risk exposure
and, potentially, harm our results of operations. In addition, financial institution difficulties
and/or failures may make it more difficult either to utilize our existing credit facility or
otherwise obtain financing, if needed, for our operations, investing activities or financing
activities.
</DIV>
<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">During the period covered by this report, the Company did not issue any securities that were
not registered under the Securities Act of 1933, as amended, except as has been reported in
previous filings with the SEC.
</DIV>
<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>ITEM 3: DEFAULTS UPON SENIOR SECURITIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">None.
</DIV>
<DIV align="left">
<A name="115"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">None.
</DIV>
<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>ITEM 5: OTHER INFORMATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">None.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->24<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>ITEM 6: EXHIBITS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The exhibits designated with an asterisk (*) are filed herewith. All other exhibits have been
previously filed with the Commission and, pursuant to 17 C.F.R. Secs. 20l.24 and 240.12b-32, are
incorporated by reference to the document referenced in brackets following the descriptions of such
exhibits. The exhibits designated with a number sign (#) indicate a management contract or
compensation plan or arrangement.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="77%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Exhibit No.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Description</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.1</TD>
    <TD nowrap valign="top" align="left">#</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Employment Agreement between the Company and Kevin Wilson dated October&nbsp;3, 2008 (filed as
Exhibit&nbsp;10.1 to Current Report on Form&nbsp;8-K filed on October&nbsp;8, 2008).</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.2</TD>
    <TD nowrap valign="top" align="left">#</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Employment Agreement between the Company and Dale West dated December&nbsp;3, 2008 (filed as
Exhibit&nbsp;10.1 to Current Report on Form&nbsp;8-K filed on December&nbsp;9, 2008).</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">31.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002*</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">31.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002*</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">32.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002*</DIV></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->25<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="118"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><U><B>SIGNATURES</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Pursuant to the requirements of Section&nbsp;13 or 15(d) 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.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">TEAMSTAFF, INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Rick Filippelli
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Rick Filippelli&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Executive Officer<BR>
(Principal Executive Officer)&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">     /s/ Cheryl Presuto
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Cheryl Presuto&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Financial Officer<BR>
(Principal Accounting Officer)&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Dated: February&nbsp;17, 2009
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->26<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left">
<A name="118"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><U><B>EXHIBIT INDEX</B></U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="77%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Exhibit No.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Description</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.1</TD>
    <TD nowrap valign="top" align="left">#</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Employment Agreement between the Company and Kevin Wilson dated October&nbsp;3, 2008 (filed as
Exhibit&nbsp;10.1 to Current Report on Form&nbsp;8-K filed on October&nbsp;8, 2008).</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.2</TD>
    <TD nowrap valign="top" align="left">#</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Employment Agreement between the Company and Dale West dated December&nbsp;3, 2008 (filed as
Exhibit&nbsp;10.1 to Current Report on Form&nbsp;8-K filed on December&nbsp;9, 2008).</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">31.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002*</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">31.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002*</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">32.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002*</DIV></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->27<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>c81237exv31w1.htm
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<HTML>
<HEAD>
<TITLE>Filed by Bowne Pure Compliance</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Exhibit&nbsp;31.1</B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>CERTIFICATIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">I, Rick J. Filippelli, certify that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">1. I have reviewed this quarterly report on Form&nbsp;10-Q of TeamStaff, Inc.;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">2.&nbsp;Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">3.&nbsp;Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this report;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">4.&nbsp;The registrant&#146;s other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under my supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to me by others within those
entities, particularly during the period in which this report is being prepared;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">b) designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">c) Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented
in this report my conclusions about the effectiveness of the disclosure controls and procedures, as
of the end of the period covered by this report based on such evaluation; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">d) Disclosed in this report any change in the registrant&#146;s internal control over financial
reporting that occurred during the registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant&#146;s internal control over financial reporting; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">5.&nbsp;I have disclosed, based on my most recent evaluation of internal control over financial
reporting, to the registrant&#146;s auditors and the audit committee of the registrant&#146;s board of
directors (or persons performing the equivalent functions):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant&#146;s
ability to record, process, summarize and report financial information; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant&#146;s internal control over financial reporting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Date: February&nbsp;17, 2009
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">                                                   /s/ Rick J. Filippelli
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Rick J. Filippelli&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>c81237exv31w2.htm
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<HTML>
<HEAD>
<TITLE>Filed by Bowne Pure Compliance</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Exhibit&nbsp;31.2</B></DIv>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>
CERTIFICATIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">I, Cheryl Presuto, certify that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">1. I have reviewed this quarterly report on Form&nbsp;10-Q of TeamStaff, Inc.;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">2.&nbsp;Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">3.&nbsp;Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this report;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">4.&nbsp;The registrant&#146;s other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under my supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to me by others within those
entities, particularly during the period in which this report is being prepared;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">b) designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">c) Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented
in this report my conclusions about the effectiveness of the disclosure controls and procedures, as
of the end of the period covered by this report based on such evaluation; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">d) Disclosed in this report any change in the registrant&#146;s internal control over financial
reporting that occurred during the registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant&#146;s internal control over financial reporting; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">5.&nbsp;I have disclosed, based on my most recent evaluation of internal control over financial
reporting, to the registrant&#146;s auditors and the audit committee of the registrant&#146;s board of
directors (or persons performing the equivalent functions):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant&#146;s
ability to record, process, summarize and report financial information; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant&#146;s internal control over financial reporting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Date: February&nbsp;17, 2009
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">                                                   /s/ Cheryl Presuto
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Cheryl Presuto&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>c81237exv32w1.htm
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
<HTML>
<HEAD>
<TITLE>Filed by Bowne Pure Compliance</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Exhibit&nbsp;32.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER<BR>
TEAMSTAFF, INC.<BR>
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO<BR>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In connection with the Quarterly Report of TeamStaff, Inc. (&#147;TeamStaff&#148;) on Form 10-Q for the
period ending December&nbsp;31, 2008 as filed with the Securities and Exchange Commission on the date
hereof, the undersigned, being, Rick J. Filippelli, Chief Executive Officer, and Cheryl Presuto,
Chief Financial Officer and Principal Accounting Officer, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002, that:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended; and</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The information contained in the report fairly presents, in all material respects, the
financial condition and results of operations of TeamStaff.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Date: February&nbsp;17, 2009
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Rick J. Filippelli
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Rick J. Filippelli <br>
Chief Executive Officer<br>
(Principal Executive Officer)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Cheryl Presuto
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Cheryl Presuto<br>
Chief Financial Officer<br>
(Principal Accounting Officer)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">This Certification is being furnished solely to accompany the Form 10-Q pursuant to 18 U.S.C.
Section&nbsp;1350, as adopted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002, and shall not
be deemed &#147;filed&#148; by TeamStaff for purposes of Section&nbsp;18 of the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date
of the Form 10-Q, irrespective of any general incorporation language contained in such filing. A
signed original of this written statement required by Section&nbsp;906 has been provided to TeamStaff
and will be retained by TeamStaff and furnished to the Securities and Exchange Commission or its
staff upon request.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>



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</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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