<SEC-DOCUMENT>0000950123-11-050928.txt : 20110516
<SEC-HEADER>0000950123-11-050928.hdr.sgml : 20110516
<ACCEPTANCE-DATETIME>20110516171952
ACCESSION NUMBER:		0000950123-11-050928
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20110331
FILED AS OF DATE:		20110516
DATE AS OF CHANGE:		20110516

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:		11848534

	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>c17252e10vq.htm
<DESCRIPTION>FORM 10-Q
<TEXT>
<HTML>
<HEAD>
<TITLE>Form 10-Q</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always"><A HREF="#C17252tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<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 style="font-family: 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>


<!-- xbrl,dc -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 12%"><B>For the quarterly period ended March&nbsp;31, 2011</B></DIV>
<!-- /xbrl,dc -->

<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 style="font-family: 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>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 <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%">
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    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<TR></TR>
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<!-- 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>
<!-- End Table Body -->
</TABLE>
</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="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<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>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>08873</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(Address of principal executive offices)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Zip Code)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>(866)&nbsp;952-1647</B><BR>
(Registrant&#146;s telephone number, including area code)</DIV>


<DIV align="justify" 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 style="font-family: Wingdings">&#254;</FONT> NO <FONT style="font-family: Wingdings">&#111;</FONT>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule&nbsp;405 of Regulation&nbsp;S-T (&#167;232.405 of this chapter) during the preceding 12&nbsp;months
(or for such shorter period that the registrant was required to submit and post such files). Yes
<FONT style="font-family: Wingdings">&#111;</FONT> No <FONT style="font-family: Wingdings">&#111;</FONT>
</DIV>


<DIV align="justify" 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>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">Large accelerated filer <FONT style="font-family: Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Accelerated filer <FONT style="font-family: Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Non-accelerated filer <FONT style="font-family: Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap  align="center" valign="top">Smaller Reporting Company <FONT style="font-family: Wingdings">&#254;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD  nowrap align="center" valign="top">(Do not check if a smaller reporting company)</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="justify" 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 style="font-family: Wingdings">&#111;</FONT> NO <FONT style="font-family: Wingdings">&#254;</FONT>
</DIV>


<DIV align="justify" 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: 5,641,913 shares of Common Stock, par value $.001 per share, were
outstanding as of May&nbsp;9, 2011.
</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 --><!-- /Folio -->
</DIV>

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<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: 7.50in">
<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="C17252tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>TEAMSTAFF, INC.<BR>
FORM 10-Q<BR>
For the Quarter Ended March&nbsp;31, 2011<BR><BR>
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="86%">&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"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C17252101"><B>Part I &#151; Financial Information</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C17252102">Item&nbsp;1. Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C17252103">Consolidated Balance Sheets as of March&nbsp;31, 2011 (Unaudited) and September&nbsp;30, 2010</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C17252104">Consolidated Statements of Operations for the three months ended March&nbsp;31, 2011 and 2010 (Unaudited)</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C17252105">Consolidated Statements of Operations for the six months ended March&nbsp;31, 2011 and 2010 (Unaudited)</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C17252106">Consolidated Statements of Cash Flows for the six months ended March&nbsp;31, 2011 and 2010 (Unaudited)</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C17252107">Notes to Consolidated Financial Statements (Unaudited)</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C17252108">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">18</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C17252109">Item&nbsp;3. Quantitative and Qualitative Disclosures about Market Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C17252110">Item&nbsp;4. Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C17252111"><B>Part II &#151; Other Information</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C17252112">Item&nbsp;1. Legal Proceedings</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C17252113">Item&nbsp;1A. Risk Factors</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C17252114">Item&nbsp;2. Unregistered Sales of Equity Securities and Use of Proceeds</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C17252115">Item&nbsp;3. Defaults Upon Senior Securities</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C17252116">Item&nbsp;4. Removed and Reserved</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C17252117">Item&nbsp;5. Other Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C17252118">Item&nbsp;6. Exhibits</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C17252119">Signatures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33</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 align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c17252exv10w3.htm">Exhibit 10.3</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c17252exv10w4.htm">Exhibit 10.4</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c17252exv31w1.htm">Exhibit 31.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c17252exv31w2.htm">Exhibit 31.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c17252exv32w1.htm">Exhibit 32.1</A></FONT></TD></TR>
</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>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C17252tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left">
<A name="C17252101"></A>
</DIV>

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

<DIV align="left">
<A name="C17252102"></A>
</DIV>

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


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

<DIV align="left">
<A name="C17252103"></A>
</DIV>
<!-- xbrl,bs -->
<DIV align="center" style="font-size: 10pt"><B>CONSOLIDATED BALANCE SHEETS</B></DIV>
<!-- xbrl,body -->

<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="72%">&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 align="center" colspan="2">(unaudited)</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 nowrap align="center" colspan="2"><B>March 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 nowrap align="left" style="border-bottom: 1px solid #000000"><B>ASSETS</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2011</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</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">
    <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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,187</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable, net of allowance for doubtful
accounts of $0 as of March&nbsp;31, 2011 and September&nbsp;30, 2010</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">11,324</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid workers&#146; compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">512</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">246</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">344</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">
    <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>14,007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>13,367</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">
    <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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Furniture and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,259</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Computer equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Computer software</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">960</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Leasehold improvements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</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">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,446</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">
    <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">(643</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,112</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:45px; text-indent:-15px"><B>Equipment and improvements, net</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>271</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>334</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>TRADENAMES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,583</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,583</B></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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>GOODWILL</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,595</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,595</B></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">
    <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>373</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>360</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">
    <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>25,829</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>25,239</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="#C17252tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<!-- xbrl -->

<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="72%">&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 align="center" colspan="2">(unaudited)</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 nowrap align="center" colspan="2"><B>March 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 nowrap align="left" style="border-bottom: 1px solid #000000"><B>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2011</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</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">
    <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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loan payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,474</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">362</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">
    <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">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued payroll</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,569</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,910</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,627</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,887</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">2,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,872</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Liabilities from discontinued operation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">238</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">289</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:45px; text-indent:-15px"><B>Total current liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>17,721</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,838</B></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">
    <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">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>OTHER LONG TERM LIABILITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</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 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">
    <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>17,727</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,851</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">
    <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"><!-- 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">
    <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">
    <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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common stock, $.001 par value; authorized 40,000 shares;
issued 5,642 at March&nbsp;31,2011 and 5,105 at
September&nbsp;30, 2010, outstanding 5,640 at
March&nbsp;31, 2011 and 5,103 at September&nbsp;30, 2010</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">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,736</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,503</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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">(61,616</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(61,096</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Treasury stock, 2 shares at cost at March&nbsp;31, 2011 and September&nbsp;30, 2010</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">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,388</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">
    <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>25,829</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>25,239</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>

<!-- /xbrl,bs -->

<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="#C17252tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

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

<DIV align="left">
<A name="C17252104"></A>
</DIV>
<!-- xbrl,op -->
<DIV align="center" style="font-size: 10pt"><B>CONSOLIDATED STATEMENTS OF OPERATIONS</B></DIV>
<!-- xbrl,body -->

<DIV align="center" style="font-size: 10pt"><B>(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)</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="72%">&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>(Unaudited)</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>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>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 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>2011</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>REVENUES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,444</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,795</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>DIRECT EXPENSES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,826</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>GROSS PROFIT</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,508</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">969</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">
    <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">1,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,832</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD colspan="9">&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">28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</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"><B>Loss from operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(81</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(890</B></TD>
    <TD nowrap><B>)</B></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">
    <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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income</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">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">(62</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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">(40</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(56</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">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(102</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(83</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">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Loss from continuing operations before income taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(183</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(973</B></TD>
    <TD nowrap><B>)</B></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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>INCOME TAX EXPENSE</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">(10</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">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Loss from continuing operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(183</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(983</B></TD>
    <TD nowrap><B>)</B></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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LOSS FROM DISCONTINUED OPERATION</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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss from 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">(25</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">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Loss from discontinued operation</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">(25</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>NET LOSS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(183</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(1,008</B></TD>
    <TD nowrap><B>)</B></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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LOSS PER SHARE &#151; BASIC AND 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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.04</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.20</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss from discontinued operation</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">(0.00</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 loss per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.04</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.20</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>
<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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>WEIGHTED AVERAGE BASIC AND DILUTED
SHARES OUTSTANDING</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,040</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>
<!-- /xbrl,op -->



<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="#C17252tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">




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

<DIV align="left">
<A name="C17252105"></A>
</DIV>
<!-- xbrl,ci -->
<DIV align="center" style="font-size: 10pt"><B>CONSOLIDATED STATEMENTS OF OPERATIONS</B></DIV>
<!-- xbrl,body -->

<DIV align="center" style="font-size: 10pt"><B>(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)</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="72%">&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>(Unaudited)</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>For the Six 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>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 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>2011</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>REVENUES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,588</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>DIRECT EXPENSES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,193</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,257</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"><B>GROSS PROFIT</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,826</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,331</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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">3,123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,489</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>OFFICER SEVERANCE</B></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">310</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">
    <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">59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</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>Loss from operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(356</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,521</B></TD>
    <TD nowrap><B>)</B></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">
    <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="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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">(107</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(53</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">(59</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(57</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 nowrap align="left">&nbsp;</TD>
    <TD align="right">(164</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(103</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">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Loss from continuing operations before income taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(520</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,624</B></TD>
    <TD nowrap><B>)</B></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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>INCOME TAX EXPENSE</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">(10</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">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Loss from continuing operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(520</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,634</B></TD>
    <TD nowrap><B>)</B></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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LOSS FROM DISCONTINUED OPERATION</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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss from 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">(810</TD>
    <TD nowrap>)</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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss from disposal</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">(349</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">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Loss from discontinued operation</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">(1,159</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>NET LOSS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(520</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(2,793</B></TD>
    <TD nowrap><B>)</B></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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LOSS PER SHARE &#151; BASIC AND 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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.33</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss from discontinued operation</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">(0.23</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 loss per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.56</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>
<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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>WEIGHTED AVERAGE BASIC AND DILUTED
SHARES OUTSTANDING</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,985</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>
<!-- /xbrl,ci -->

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

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

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C17252tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

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

<DIV align="left">
<A name="C17252106"></A>
</DIV>
<!-- xbrl,cf -->
<DIV align="center" style="font-size: 10pt"><B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B></DIV>
<!-- xbrl,body -->

<DIV align="center" style="font-size: 10pt"><B>(Amount 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="72%">&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">(Unaudited)</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>For the Six 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>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 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>2011</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(520</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,793</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Adjustments to reconcile net loss to net cash used in operating activities, net of divested business:</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">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Compensation expense related to employee stock option grants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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">14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Compensation expense related to director restricted stock grants</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">138</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loss on retirement of equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Changes in operating assets and liabilities, net of divested business:</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">
    <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">(631</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">(173</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">355</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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">(3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Cash flows from discontinued operation</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">1,121</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:75px; text-indent:-15px">Net cash used in operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,118</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(870</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 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">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash flows from discontinued operation</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">375</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Purchase of equipment, leasehold improvements and software</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">(152</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 (used in) investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">223</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"><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">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net advances on revolving line of credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">(9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Proceeds from sale of Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150</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:45px; text-indent:-15px">Cash flows from discontinued operation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(51</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(83</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 (used in) financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(95</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">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net change in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(742</TD>
    <TD nowrap>)</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">
    <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">1,187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,992</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">
    <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">$</TD>
    <TD align="right">1,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,250</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">
    <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">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash paid during the period for interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24</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">$</TD>
    <TD align="right">58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">49</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>
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<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: 7.50in">


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

<DIV align="left">
<A name="C17252107"></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>March&nbsp;31, 2011 (Unaudited)</B></DIV>


<!-- xbrl,n -->



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>(1)&nbsp;</B><U><B>ORGANIZATION AND BUSINESS:</B></U>
</DIV>
<!-- xbrl,body -->


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">TeamStaff, Inc. and its subsidiaries (&#147;TeamStaff&#148; or the &#147;Company&#148;, also referred to as &#147;we,&#148; &#147;us&#148;
and &#147;our&#148;), provide a range of logistics, healthcare support and technical services to the United
States Department of Veterans Affairs (&#147;DVA&#148;), the United States Department of Defense (&#147;DoD&#148;) and
other US governmental entities. TeamStaff&#146;s primary operations are conducted through its subsidiary
TeamStaff Government Solutions, Inc. (&#147;TeamStaff GS&#148;), located in Loganville, Georgia and its
principal executive office is located at 1 Executive Drive, Suite&nbsp;130, Somerset, New Jersey 08873,
where its telephone number is (866)&nbsp;952-1647.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Company History</I>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">TeamStaff is a New Jersey corporation that was founded in 1969 as a payroll service company. Over
the years, the Company has evolved into a national provider of contract and permanent medical and
administrative staffing services and today, TeamStaff is a full-service provider of logistics,
healthcare support and technical services to Federal Agencies and the Department of Defense. During
the past 18&nbsp;months, the Company has taken numerous steps in an effort to enhance the value of
TeamStaff and has fully focused the Company&#146;s efforts on the government services market, where the
Company believes it has a proven track record of performance. In connection with the refocusing of
the Company&#146;s operations, during the 2010 calendar year, the Company replaced its Chief Executive
Officer and Chief Financial Officer and hired a new Executive Vice President of Corporate
Development, to lead its efforts as a government services provider.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">TeamStaff GS, which is currently the Company&#146;s only operating subsidiary changed its name from RS
Staffing Services, Inc. on February&nbsp;12, 2008 to reflect the subsidiary&#146;s evolving service
offerings. In connection with the evolution of the Company, on December&nbsp;28, 2009, TeamStaff and
TeamStaff Rx, Inc. (&#147;TeamStaff Rx&#148;), a wholly-owned subsidiary, entered into a definitive Asset
Purchase Agreement with Advantage RN, LLC, for the sale of substantially all of the operating
assets of TeamStaff Rx related to the business of providing travel nurse and allied healthcare
professionals for temporary assignments. The closing of this transaction occurred on January&nbsp;4,
2010. As discussed in Note 3 to these consolidated financial statements, where additional
information about this transaction is provided, the results of operations, cash flows and related
assets and liabilities of TeamStaff Rx have been reclassified in the accompanying consolidated
financial statements as a discontinued operation.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">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 business in fiscal year 2004 and other Company business changes,
these &#147;other&#148; subsidiaries are inactive.
</DIV>


<!-- xbrl,n -->
<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>(2)&nbsp;</B><U><B>LIQUIDITY AND SIGNIFICANT ACCOUNTING POLICIES:</B></U>
</DIV>
<!-- xbrl,body -->

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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">At March&nbsp;31, 2011 the Company had a net working capital deficit of approximately $3.7&nbsp;million and
an accumulated deficit of approximately $61.6&nbsp;million. For the year ended September&nbsp;30, 2010, the
Company incurred an operating loss and net loss of approximately $4.3&nbsp;million and $5.8&nbsp;million,
respectively, and incurred an operating loss and net loss of approximately $0.5&nbsp;million for the six
months ended March&nbsp;31, 2011. The Company has a limited amount of cash and equivalents at March&nbsp;31,
2011 and will be required to rely on operating cash flow and periodic funding, to the extent
available, from its line of credit to sustain the operations of the Company unless it elects to
pursue and is successful in obtaining additional debt or equity funding, as discussed below.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">In an effort to improve the Company&#146;s cash flows and financial position, the Company has recently
taken measures which are expected to enhance its liquidity by approximately $1,000,000 as a result
of increasing the maximum availability of its credit facility and receiving funding of and/or
commitments for additional equity and/or debt financing. In that regard, as of February&nbsp;14, 2011,
the Company&#146;s largest shareholder, Wynnefield Capital, Inc., and certain of its directors and
executive officers provided assurances for future financings whereby they collectively agreed to
provide up to $500,000 of additional capital to the Company if it determines, prior to February&nbsp;28,
2012, that such funds are required (the &#147;Commitments&#148;). As described in Note 7, $150,000 of such
capital was provided on March&nbsp;31, 2011. In addition, as described in Note 6, on February&nbsp;9, 2011,
the Company entered into a further amendment of its Loan and Security Agreement with Presidential
Financial Corporation, pursuant to which they agreed to increase the maximum availability under the
Loan and Security Agreement by an additional $500,000 and provide an unbilled receivable facility
within the
</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: 7.50in">




<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">limits of the Loan and Security Agreement.
Following this increase, the maximum availability under this loan facility is $3,000,000; subject
to eligible accounts receivable. At March&nbsp;31, 2011 the amount available was $323,000. In addition,
as described in greater detail below, the parties agreed to amend certain other provisions of the
Loan Agreement, including an extension of the term of the Loan Agreement for an additional year and
the Lender agreed not to seek to terminate the Loan Agreement without cause until after February
29, 2012. In addition, pursuant to its current credit facility, the financial institution also has
the ability to terminate the Company&#146;s line of credit immediately upon the occurrence of a defined
event of default, including among others, a material adverse change in the Company&#146;s circumstances
or if the financial institution deems itself to be insecure in the ability of the Company to repay
its obligations or, as to the sufficiency of the collateral. At present, the financial institution
has not declared an event of default.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Management believes, at present, that: (a)&nbsp;cash and cash equivalents of approximately $1.3&nbsp;million
as of March&nbsp;31, 2011, (b)&nbsp;the capital available pursuant to the Commitments, (c)&nbsp;the amounts
available under its line of credit (which, in turn, is limited by the amount of eligible assets)
(d)&nbsp;forecasted operating cash flow; (e)&nbsp;the ultimate non-payment of certain liabilities currently
contested by the Company (classified as current at March&nbsp;31, 2011) in fiscal 2011, or the
applicable portion of 2012 and (f)&nbsp;effects of cost reduction programs and initiatives should be
sufficient to support the Company&#146;s operations for twelve months from the date of these financial
statements. However, should any of these factors not occur substantially as currently expected,
there could be a material adverse effect on the Company&#146;s ability to access the level of liquidity
necessary for it to sustain operations at current levels for the next twelve months. In such an
event, management may be forced to make further reductions in spending or to further extend payment
terms with suppliers, liquidate assets where possible, and/or to suspend or curtail planned
programs. Any of these actions could materially harm the Company&#146;s business, financial position,
results of operations and future prospects.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Due to the foregoing and to address any need for additional capital, the Company intends to pursue
equity, equity-based and/or debt financing alternatives or other financing in order to raise needed
funds. While the remaining Commitments are unconditional, the specific terms of any financing which
the Company may request under these remaining Commitments are subject to final negotiation among
the parties and the approval of the members of the Company&#146;s Board of Directors that are
independent of the other parties involved in accordance with the Company&#146;s policy for approving
related-party transactions. Further, such arrangements would be required to be structured in such a
manner so as to comply with the listing requirements of the Nasdaq Stock Market. The parties also
agreed that if the additional financing would be pursuant to a debt instrument, that any such debt
would not mature prior to February&nbsp;28, 2012. If the Company raises additional funds by selling
shares of common stock or convertible securities, the ownership of its existing shareholders will
be diluted. Further, if additional funds are raised through the issuance of equity or debt
securities, such additional securities may have powers, designations, preferences or rights senior
to our currently outstanding securities. Except for the remaining Commitments, the Company does not
have any firm agreements with any third-parties for such transactions and no assurances can be
given that the Company will be successful in raising any additional capital from financings, or
that additional financing, if at all available, can be obtained on acceptable terms to us. Any
inability to obtain required financing on sufficiently favorable terms could have a material
adverse effect on our business, financial position, and results of operations.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company derives a substantial amount of revenue from agencies of the Federal government and, as
described in greater detail in Note 8 on May&nbsp;5, 2011 was notified of a positive response from the
DVA on proposals submitted in 2010 for renewal (and expansion) of contracts that generated, in
aggregate, approximately 45% of its revenue in the year ended September&nbsp;30, 2010, in respect of
which the Company holds order cover through June&nbsp;30, 2011 under existing contracts. In addition,
the Company also holds contractual order cover through June&nbsp;30, 2011 in respect of contracts that
generated close to a further 50% of its revenue in the year ended September&nbsp;30, 2010, which are not
yet the subject of requests for proposals at present. The Company believes, based on its past
experience with the DVA, that such contracts are likely in due course, to be further extended by
the DVA on a sole source basis, although no assurances can be given that this will occur.
</DIV>


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


<DIV align="justify" 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 2010 Annual Report on Form 10-K which was filed on February&nbsp;14,
2011. 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 periods. The results of operations and
cash flows for such interim periods are not necessarily indicative of the results for the full
year.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

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

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<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



<DIV align="justify" 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 in consolidation. Certain prior
period amounts have been reclassified to conform to the current period presentation. The results of
operations, cash flows and related assets and liabilities of TeamStaff Rx have been reclassified to
a discontinued operation in the accompanying consolidated financial statements from those of
continuing businesses for all periods presented.
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">TeamStaff accounts for its revenues in accordance with ACS 605-45, <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 contract staffing customers as gross revenue because, among other things,
TeamStaff is the primary obligor in the contract staffing arrangement; TeamStaff has pricing
latitude; TeamStaff selects contract 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 contract 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 contract employees which have not yet been billed to the customer as of the
end of the accounting period.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">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 had 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 in 2008 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 on assignment at the
time 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 March&nbsp;31,
2011, the amount of the remaining accounts receivable with the DVA approximates $9.3&nbsp;million and
the related accrued salary and benefits for direct costs approximates $8.7&nbsp;million. The Company has
been and continues to be in discussions with representatives of the DVA regarding the matter and
anticipates resolution during fiscal 2011. In addition, TeamStaff is 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 additional revenue and gross profit are estimated to be between $0.4&nbsp;million and $0.6
million. At present, the Company expects to collect such amounts during fiscal 2011, based on
current discussions and collection efforts. Because these amounts are subject to further government
review, no assurances can be given that we will indeed receive the amounts recorded as accounts
receivable, 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>


<DIV align="justify" 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
contract staffing business include wages, employment related taxes and reimbursable expenses.
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">In accordance with applicable accounting standards, TeamStaff does not amortize the goodwill
associated with TeamStaff GS. TeamStaff continues to review its goodwill for possible impairment or
loss of value at least annually or more frequently upon the occurrence of an event or when
circumstances indicate that a reporting unit&#146;s carrying amount is greater than its fair value. At
September&nbsp;30, 2010, we performed a goodwill impairment analysis. For the purposes of this analysis,
our estimates of fair value are based on the income approach, which estimates the fair value of the
TeamStaff GS unit based on the future discounted cash flows. Based on the results of the work
performed, the Company has concluded that no impairment loss on goodwill was warranted at September
30, 2010. Major assumptions in the valuation study were the estimates of probability weighted
future cash flows, the estimated terminal value of TeamStaff GS and the discount factor applied to
the estimated future cash flows and terminal value. Estimates of future cash flows were developed
by management having regard to current expectations and potential future opportunities. A terminal
value for the forecast period was estimated based upon data of public companies that management
believes to be similar with respect to the Company&#146;s economics, products and markets. The discount
factor used was a cost of capital estimate obtained from a leading third party data provider. The
resulting estimated fair value of goodwill exceeded the carrying value at September&nbsp;30, 2010 by
more than 40%, resulting in no impairment charge being taken against goodwill. However, a
non-renewal of a major contract or other substantial changes in the assumptions used in the
valuation study could have a material adverse effect on the valuation of goodwill in future periods
and the resulting charge would be material to future periods&#146; results of operations.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

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

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<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">If an impairment of all the goodwill became necessary, a charge of up to $8.6&nbsp;million would be
expensed in the Consolidated
Statement of Operations. All remaining goodwill is attributable to the TeamStaff GS reporting unit.
TeamStaff has concluded, at present, that an interim impairment test is not required and there is
not any required impairment of goodwill.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Intangible Assets</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">As required by applicable accounting standards, TeamStaff does not amortize its tradenames, an
indefinite life intangible asset. TeamStaff continues to review its indefinite life intangible
assets for possible impairment or loss of value at least annually or more frequently upon the
occurrence of an event or when circumstances indicate that an asset&#146;s carrying amount is greater
than its fair value. At September&nbsp;30, 2010, we performed an intangible asset impairment analysis.
For the purposes of this analysis, our estimates of fair value are based on the income approach,
which estimates the fair value of the intangible assets based on the future discounted cash flows.
Based on the results of the work performed, the Company concluded that an impairment loss on
intangible assets in the amount of $1.3&nbsp;million was warranted at September&nbsp;30, 2010. Major
assumptions in the valuation study were the estimates of probability weighted future cash flows,
the estimated terminal value of the Company and the discount factor applied to the estimated future
cash flows and terminal value. Estimates of future cash flows were developed by management having
regard to current expectations and potential future opportunities. A terminal value for the
forecast period was estimated based upon data of public companies that management believes to be
similar with respect to the Company&#146;s economics, products and markets. The discount factor used was
a cost of capital estimate obtained from a leading third party data provider. The resulting
estimated fair value of tradenames were less than the carrying value at September&nbsp;30, 2010 by
approximately $1.3&nbsp;million, resulting in an impairment charge of that amount being taken against
the tradenames. In addition, a non-renewal of a major contract or other substantial changes in the
assumptions used in the valuation study could have a material adverse effect on the valuation of
tradenames in future periods and a resulting charge would be material to future periods&#146; results of
operations. If an additional impairment write off of all the tradenames and intangible assets
became necessary, a charge of up to $2.6&nbsp;million would be expensed in the Consolidated Statement of
Operations. Teamstaff has concluded, at present, that an interim impairment test is not required
and there is not any required impairment of its tradenames.
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">TeamStaff accounts for income taxes in accordance with the &#147;liability&#148; method, whereby 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 consolidated balance
sheet when it is determined that it is more likely than not that the asset will be realized. This
guidance 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. At March&nbsp;31, 2011,
the Company provided a 100% deferred tax valuation allowance of approximately $14.4&nbsp;million.
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">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 applicable guidance. As of March&nbsp;31, 2011,
there is $153,000 remaining in unrecognized compensation expense related to non-vested option
awards and $150,000 remaining for unvested restricted stock expense for a total unrecognized stock
expense of $303,000 to be recognized in future periods.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Stock Options and Restricted Stock</I>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">There was share-based compensation expense for options for the three months ended March&nbsp;31, 2011
and March&nbsp;31, 2010 of $17,000 and $56,000, respectively. There was share-based compensation expense
for options for the six months ended March&nbsp;31, 2011 and March&nbsp;31, 2010 of $49,000 and $70,000,
respectively.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">During the three months ended
March&nbsp;31, 2011, Teamstaff did not grant any options. During the six
months ended March&nbsp;31, 2011, TeamStaff granted 250,000 options per the terms of an employment
agreement with the Company&#146;s Executive Vice President and recorded share-based compensation expense
of $18,000 in connection with this grant and $31,000 for all other awards.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">During the three months ended March&nbsp;31, 2010, TeamStaff did not grant any shares of restricted
stock. During the six months ended March&nbsp;31, 2010, TeamStaff granted 42,500 shares of restricted
stock to non-employee directors under its 2006 Long Term Incentive Plan (&#147;2006 Plan&#148;), at the
closing price on the award date of $1.34. All of these shares vested immediately. Stock
compensation expense associated with these grants and all other grants totaled $57,000 and $138,000
for the three and six months ended March&nbsp;31, 2010, respectively.
</DIV>

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

<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#C17252tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">




<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">During the three months ended March&nbsp;31, 2011, Teamstaff did not grant any shares of restricted
stock. During the six months ended March&nbsp;31, 2011, TeamStaff granted 35,000 shares of restricted
stock to non-employee directors under its 2006 Long Term Incentive Plan, at the closing price on
the award date of $.56. All of these shares vested immediately. Stock compensation expense
associated with these grants was $20,000 and $14,000 for all other grants for the six months ended
March&nbsp;31, 2011. During the three months ended March&nbsp;31, 2011, 32,500 shares of restricted stock
vested. During the six months ended March&nbsp;31, 2011, 77,500 shares of restricted stock vested.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The stock option activity for the six months ended March&nbsp;31, 2011 is as follows:
</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"><B>Weighted</B></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"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></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"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Remaining</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Aggregate</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>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Contractual</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Intrinsic</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>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Term</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Value</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>
    <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, September&nbsp;30, 2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">722,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD colspan="17">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options outstanding, March&nbsp;31, 2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">972,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.3</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: 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="justify" style="font-size: 10pt; margin-top: 10pt">At March&nbsp;31, 2011, there were 222,500 options outstanding that were vested and exercisable and an
additional 750,000 options outstanding that vest to the recipients when the market value of the
Company&#146;s stock achieves and maintains defined levels. The Company used a binomial valuation model
and various probability factors in establishing the fair value of these options.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e.,
the difference between the Company&#146;s closing stock price on the last trading day of the period and
the exercise price, times the number of shares) that would have been received by the option holders
had all option holders exercised their in the money options on those dates. This amount changes
based on the fair market value of the Company&#146;s stock.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The restricted stock activity for the six months ended March 31, 2011 is as follows:
</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="72%">&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"><B>Weighted</B></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"><B>Average</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>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Grant Date</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Fair Value</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restricted stock outstanding, September&nbsp;30, 2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.56</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Issued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(77,500</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restricted stock outstanding, March&nbsp;31, 2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.42</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="justify" style="font-size: 10pt; margin-top: 10pt">At March&nbsp;31, 2011, there were 52,500 shares of unvested restricted stock outstanding. As of March
31, 2011, there is $150,000 remaining costs related to non-vested restricted stock awards.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">At March&nbsp;31, 2011, the Company had reserved 35,000 shares of common stock for issuance under
various option, shares and warrant plans and arrangements.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Changes in Shareholders&#146; Equity </B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">During the three months ended March&nbsp;31, 2011, additional paid in capital increased by $17,000 as a
result of stock compensation expense and $150,000 as a result of an equity raise. During the six
months ended March&nbsp;31, 2011, additional paid-in capital increased by $83,000 as a result of
recognized stock compensation expense and $150,000 as a result of the equity raise (see Note 7).
For the six months ended March 31, 2011, there were a total of 536,681 shares issued.
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Loss per share is calculated by dividing loss 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. As such effects are anti-dilutive, there were no differences in the
number of weighted average shares outstanding in determining basic and diluted loss per share in
each of the three and six months ended March&nbsp;31, 2011 and 2010.
</DIV>

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

<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#C17252tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">




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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>(3)&nbsp;</B><U><B>DISCONTINUED OPERATION:</B></U>
</DIV>
<!-- xbrl,body -->


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U><B>Sale of TeamStaff Rx</B></U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Based on an analysis of historical and forecasted results and the Company&#146;s strategic initiative to
focus on core business, in the fourth quarter of fiscal 2009, the Company approved and committed to
a formal plan to divest the operations of TeamStaff Rx, Inc. a former wholly-owned subsidiary of
the Company. In evaluating the facets of TeamStaff Rx&#146;s operations, management concluded that this
business component met the definition of a discontinued operation. Accordingly, the results of
operations, cash flows and related assets and liabilities of TeamStaff Rx for all periods presented
have been reclassified in the accompanying consolidated financial statements from those of
continuing businesses.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Effective December&nbsp;28, 2009, TeamStaff and TeamStaff Rx entered into a definitive Asset Purchase
Agreement with Advantage RN, providing for the sale of substantially all of the operating assets of
TeamStaff Rx related to TeamStaff Rx&#146;s business of providing travel nurse and allied healthcare
professionals for temporary assignments to Advantage RN. The closing of this transaction occurred
on January&nbsp;4, 2010. The Asset Purchase Agreement provides that the purchased assets were acquired
by Advantage RN for a purchase price of up to $425,000, of which: (i) $350,000 in cash was paid at
the closing, and (ii) $75,000 was subject to an escrowed holdback as described in the Asset
Purchase Agreement. On March&nbsp;25, 2010, the Company and Advantage RN completed the analysis related
to escrow release conditions and reached an agreement as to the final purchase price. Of the
$75,000 held in escrow, $25,000 was returned to the Company and $50,000 was released to Advantage
RN, resulting in a final purchase price of $375,000. Additionally, Advantage RN was obligated to
make rent subsidy payments to TeamStaff Rx totaling $125,000, consisting of: (i) $25,000 paid at
closing, and (ii)&nbsp;an additional $100,000 payable in 10 equal monthly installments beginning on
March&nbsp;1, 2010. The last rent payment received from Advantage RN was in July&nbsp;2010. They have since
vacated the premises and ceased making installment payments. The Company intends to pursue a claim
against Advantage RN for all amounts owed. The Company has provided an allowance for their estimate
of uncollectible sub-lease funding. Under the terms of the Asset Purchase Agreement, Advantage RN
has not assumed any debts, obligations or liabilities of TeamStaff Rx nor did it purchase any
accounts receivable outstanding as of the closing date.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Condensed results of the discontinued operation are as follows:
</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="6" style="border-bottom: 1px solid #000000">For the Three Months Ended</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">For the Six 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="2">March 31,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">March 31,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">March 31,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">March 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD 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">2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</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">Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,418</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Direct expenses</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>
    <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">(1,255</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling, general and administrative expenses</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">(33</TD>
    <TD nowrap>)</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">(971</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense), net</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">8</TD>
    <TD>&nbsp;</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">(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>
    <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">Loss from 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">(25</TD>
    <TD nowrap>)</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">(810</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from disposal</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>
    <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">(349</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>
    <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">Net loss</DIV></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">(25</TD>
    <TD nowrap>)</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">(1,159</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>
    <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="justify" style="font-size: 10pt; margin-top: 10pt">Included in selling, general and administrative expense from discontinued operations for the six
months ended March&nbsp;31, 2010 is a charge of $0.1&nbsp;million for severance to certain TeamStaff Rx
employees, $0.3&nbsp;million in various accrued expenses related to the sale and shut down of the
business, and a loss on the disposal of TeamStaff Rx approximating $0.3&nbsp;million principally from
recognition of the remaining unfunded operating lease payments. There were no tax benefits
associated with the losses from the discontinued operation.
</DIV>

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

<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C17252tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">




<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The following chart details the remaining liabilities from the discontinued operation (amounts in
thousands):
</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">March 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">2010 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">2011 Balance</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued expenses and other
current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">289</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(51</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">238</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">$</TD>
    <TD align="right">289</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(51</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">238</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>


<!-- xbrl,n -->



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>(4)&nbsp;</B><U><B>COMMITMENTS AND CONTINGENCIES: </B></U>
</DIV>
<!-- xbrl,body -->

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


<DIV align="justify" 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 had 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, the potential exists for related penalties
and interest. Based upon the most recent correspondence from the IRS and an assessment of open
periods, we believe that our liability of $1.2&nbsp;million at March&nbsp;31, 2011 (recorded in accounts
payable) is fairly stated. Interest expense would accrue on such amounts through the ultimate
payment date, unless waived by the IRS. No payments related to this matter were made during the
fiscal year ended September&nbsp;30, 2010, and the three and six months ended March&nbsp;31, 2011, while in
the fiscal year ended September&nbsp;30, 2009, the Company paid $1.1&nbsp;million, related to this matter.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Management believes that the ultimate resolution of these remaining payroll tax matters will not
have a significant adverse effect on its financial position or future results of operations.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Rent Subsidy from Advantage RN</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">In connection with our disposition of TeamStaff Rx, Advantage RN was obligated to make rent subsidy
payments to TeamStaff Rx totaling $125,000, consisting of: (i) $25,000 paid at closing, and (ii)&nbsp;an
additional $100,000 payable in 10 equal monthly installments beginning on March&nbsp;1, 2010. The last
rent payment received from Advantage RN was in July&nbsp;2010. They have since vacated the premises and
ceased making installment payments. The Company intends to pursue a claim against Advantage RN for
all amounts owed, which the Company presently estimates is $50,000. The Company has provided an
allowance for the estimated uncollectible sub-lease funding.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

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

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C17252tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



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


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


<DIV align="justify" 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 and then 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 contract 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="justify" 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 investigation of other parties.
</DIV>


<DIV align="justify" 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: (i)&nbsp;a $3.0
million promissory note, of which $1.5&nbsp;million in principal and interest of $150,000 was paid in
June&nbsp;2006; and (ii)&nbsp;certain stock in the Company. 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 principal payable and accrued interest payable. Such agreement was
extended to August&nbsp;31, 2010, but has not been further renewed. As of March&nbsp;31, 2011, the amount has
not been settled and negotiations with the former owners of RS Staffing Services are as yet to be
resolved. The Company recognized expenses related to legal representation and costs incurred in
connection with the investigation and dispute in the amount of $40,000 and $56,000 during the three
months ended March&nbsp;31, 2011 and 2010, respectively, as a component of other income (expense). The
Company recognized expenses related to legal representation and costs incurred in connection with
the investigation and dispute in the amount of $59,000 and $57,000 during the six months ended
March&nbsp;31, 2011 and 2010, respectively, as a component of other income (expense). Cumulative costs
related to this matter approximate $1.8&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 set off the payment of such expenses against the
remaining principal and accrued interest due to the former owners of RS Staffing Services. The
former owners of RS Staffing Services have notified the Company of their disagreement with the
Company&#146;s course of action and of the existence of partial counter-claims in regard to allegations
that the Company without due cause failed to permit them to sell certain of their stock in the
Company at a time when the Company&#146;s per share price was higher than its current per share price.
The parties have unsuccessfully attempted to negotiate a settlement and the claimants have
indicated their intention to proceed to mediation, as provided for in the stock purchase agreement.
</DIV>


<DIV align="justify" 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 and accrued interest from notice date forward, if any, or in defending the partial
counter-claims. Accordingly, the Company has expensed costs incurred related to the investigation
through March&nbsp;31, 2011.
</DIV>


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


<DIV align="justify" 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 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="justify" 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 or other matters. 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="justify" 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 contract
medical employees. The professional liability insurance policy provides up to $5,000,000 aggregate
coverage with a $2,000,000 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>
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



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


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">On December&nbsp;1, 2010, the Company named John F. Armstrong as our Executive Vice President of
Corporate Development. On February&nbsp;7, 2011, the Company and Mr.&nbsp;Armstrong entered into an
employment agreement. The following is a description of the terms of employment agreed upon by the
Company and Mr.&nbsp;Armstrong. Mr.&nbsp;Armstrong&#146;s appointment as Executive Vice President of Corporate
Development commenced December&nbsp;1, 2010 and the employment agreement will expire on November&nbsp;30,
2013. Mr.&nbsp;Armstrong will receive an initial base salary of $215,000 per annum. Mr.&nbsp;Armstrong may
receive an annual bonus of up to 50% of base salary based on performance targets and other key
objectives established by the Management Resources and Compensation Committee of the board of
directors. Target bonus will be adjusted by 2% of base salary for every 1% of variance between
targets and actual results and no bonus will be awarded if results are less than 90% of target and
no bonus will exceed 70% of base salary. For the Company&#146;s 2011 fiscal year, $40,000 of the
potential bonus will be guaranteed provided Mr.&nbsp;Armstrong remains employed as of the date on which
the bonus payment is made. The Company granted Mr.&nbsp;Armstrong options to purchase 250,000 shares of
common stock under our 2006 Plan. The options vested or shall vest as follows: 50,000 options
vested immediately; 100,000 options shall vest if the closing price of the Company&#146;s common stock
equals or exceeds $3.00 per share for ten consecutive trading days; an additional 50,000 options
shall vest if the closing price of the Company&#146;s common stock equals or exceeds $5.00 per share for
ten consecutive trading days; and an additional 50,000 options shall vest if the closing price of
the Company&#146;s common stock equals or exceeds $7.00 per share for ten consecutive trading days. The
options, to the extent vested, shall be exercisable for a period of ten years at the per share
exercise price equal to the fair market value of the Company&#146;s common stock on the date his
employment commenced.
</DIV>


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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U><B>(5)</B></U> <U><B>PREPAID WORKERS&#146; COMPENSATION</B></U><B>:</B>
</DIV>
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<DIV align="justify" 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;16, 2003, inclusive.
Payments for the policy were made to a 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 June&nbsp;2009 and March&nbsp;2008, Zurich reduced the collateral requirements on
outstanding workers&#146; compensation claims and released $114,000 and $350,000, 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 March&nbsp;31, 2011, the remaining prepaid asset
of $0.3&nbsp;million will be received within the next twelve months. This amount is reflected on
TeamStaff&#146;s balance sheet as of March&nbsp;31, 2011 as a current asset, in addition to approximately
$0.2&nbsp;million related to current policy deposits.
</DIV>


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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>(6)&nbsp;</B><U><B>DEBT:</B></U>
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Current Facility</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">On July&nbsp;29, 2010, TeamStaff GS entered into a Loan and Security Agreement (the &#147;Loan Agreement&#148;)
with Presidential Financial Corporation (the &#147;Lender&#148;). Under the Loan Agreement, the Lender agreed
to provide a two (2)&nbsp;year loan and security facility to TeamStaff GS in an aggregate amount of up
to $1.5&nbsp;million, subject to the terms and conditions of the Loan Agreement. In November&nbsp;2010, the
Lender agreed, by means of an amendment to the Loan Agreement, to increase the maximum amount
available under the facility from $1.5&nbsp;million to $2.5&nbsp;million. In February&nbsp;2011 the Company and
Lender further increased the maximum availability under the Loan Agreement by an additional
$500,000 to $3.0&nbsp;million and provided an unbilled receivable facility within the limits of the Loan
Agreement. An interest rate premium of 2% is payable in respect of any advances secured by unbilled
accounts receivable, which are subject to a sub-facility limit of $500,000 and an advance rate of
75%. The loan is secured by a security interest and lien on all of TeamStaff GS&#146;s accounts, account
deposits, letters of credit and investment property, chattel paper, furniture, fixtures and
equipment, instruments, investment property, general intangibles, deposit accounts, inventory,
other property, all proceeds and products of the foregoing (including proceeds of any insurance
policies and claims against third parties for loss of any of the foregoing) and all books and
records related thereto. TeamStaff GS&#146;s ability to request loan advances under the Loan Agreement
is subject to: (i)&nbsp;computation of TeamStaff GS&#146;s advance availability limit based on &#147;eligible
accounts receivables&#148;
(as defined in the Loan Agreement) multiplied by the &#147;Accounts Advance Rate&#148; established by the
Lender which initially shall be 85% and may be increased or decreased by the Lender in exercise of
its discretion; and (ii)&nbsp;compliance with the covenants and conditions of the loan. The loan was
initially for a term of 24&nbsp;months and after giving effect to the February&nbsp;2011 amendment, which
also extended the term of the Loan Agreement by 12&nbsp;months, will mature on July&nbsp;29, 2013.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Interest on the loan accrues on the daily unpaid balance of the loan advances secured by billed
receivables. Following the February&nbsp;2011 amendment to the Loan Agreement, the interest rate under
the Loan and Security Agreement is the greater of (a)&nbsp;3.25% or (b)(i) 1.95% above the Wall Street
Journal Prime rate on the accounts receivable portion of the credit line and (ii)&nbsp;3.95% above the
Wall Street Journal Prime rate on the unbilled accounts portion. The interest rate at March&nbsp;31,
2011 was 5.2%. In addition, TeamStaff GS will pay certain other related fees and expense
reimbursements including a monthly service charge of 0.65% based on the average daily loan balance
which shall accrue daily and be due and payable on the last day of each month so long as the Loan
Agreement is outstanding. At March&nbsp;31, 2011, the amount of the unused availability under the line
was $323,000. The amount outstanding as of March&nbsp;31, 2011 was $1,474,000.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Loan Agreement requires compliance with customary covenants and contains restrictions on the
Company&#146;s ability to engage in certain transactions. Among other matters, under the loan agreement
we may not, without consent of the Lender, (i)&nbsp;merge or consolidate with another entity, form any
new subsidiary or acquire any interest in a third party; (ii)&nbsp;acquire any assets except in the
ordinary course of business; (iii)&nbsp;enter into any transaction outside the ordinary course of
business; (iv)&nbsp;sell or transfer collateral; (v)&nbsp;make any loans to, or investments in, any affiliate
or enter into any transaction with an affiliate other than on an arms-length basis; (vi)&nbsp;incur any
debt outside the ordinary course of business; (vii)&nbsp;pay or declare any dividends or other
distributions; or (viii)&nbsp;redeem, retire or purchase any of our equity interests exceeding $50,000.
In addition, the Loan Agreement requires TeamStaff GS to maintain a minimum tangible net worth of
at least $1,000,000 on a trailing 12-month basis. Further, without the consent of the Lender, the
Company is also restricted from making any payments in respect of other outstanding indebtedness.
The Lender may terminate the Loan Agreement at any time upon 60&nbsp;days written notice after February
29, 2012 and the Loan Agreement provides for customary events of default following which the Lender
may, at its option, terminate the loan agreement and accelerate the repayment of any amount
outstanding. The defined events of default include, among other things, a material adverse change
in the Company&#146;s circumstances, or if the Lender deems itself insecure in the ability of the
Company to repay its obligations, or as to the sufficiency of the collateral.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">As part of the February&nbsp;2011 amendment, the Lender also agreed to waive the Company&#146;s
non-compliance with the covenant under the Loan Agreement to furnish them with a copy of TeamStaff
GS&#146; financial statements within 90&nbsp;days after the end of its fiscal year. In addition to granting
this waiver, the Lender also agreed to modify this covenant to require that the Company provide
them, within 90&nbsp;days after the end of each fiscal year, audited consolidated financial statements
of the Company and its subsidiaries as of the end of such fiscal year and, in addition, at the same
time, furnish consolidating income statement and balance sheet schedules, including a
reconciliation with TeamStaff GS&#146;s financial information.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">TeamStaff has concurrently executed a Corporate Guaranty Agreement with Lender pursuant to which it
has guaranteed all of the obligations of Teamstaff GS under the Loan Agreement.
</DIV>


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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>(7)&nbsp;SHAREHOLDERS&#146; EQUITY</B>
</DIV>

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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">On March&nbsp;31, 2011, the Company entered into a Securities Purchase Agreement (the &#147;<U>Purchase
Agreement</U>&#148;) with a limited number of accredited investors pursuant to which the Company sold an
aggregate of $225,000 for 459,181 shares of its Common Stock to such persons in a private
transaction (the &#147;Equity Investment&#148;). The purchasers participating in the transaction are members
of the Company&#146;s Board of Directors and management team (the &#147;<U>Purchasers</U>&#148;). The transaction
closed on March&nbsp;31, 2011. Of this amount, the Company received $150,000 in total cash proceeds for
the purchase of the shares of Common Stock and three of the purchasers agreed with the Company to
pay the purchase price for the shares of Common Stock by granting an offsetting credit to the
Company for an amount equal to the purchase price and authorizing the Company to apply such credit
against any obligation of the Company to such person within twelve months of the closing date,
except for base salary. The shares to which the credit relates are to be held by the Company until
the credit is applied and will be cancelled upon the one year anniversary to the extent the credit
is not applied. The aggregate amount of such credits totaled $75,000. The Company intends to use
these proceeds for general working capital. The value ascribed to the Equity Investment was based
on the fair value of the Company&#146;s stock on March&nbsp;31, 2011.
</DIV>


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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>(8)&nbsp;</B><U><B>SUBSEQUENT EVENTS:</B></U>
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Management evaluated subsequent events through the date these financial statements were issued.
Based on this evaluation, the Company has determined, except for the matter described below, that
no subsequent events have occurred which require disclosure through the date that
these financial statements are issued.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">On May&nbsp;5, 2011, TeamStaff GS entered into a single source Blanket Purchase Agreement with the DVA
for the procurement of integrated medical support for the Department of Veterans Affairs&#146;
Consolidated Mail Outpatient Pharmacy (&#147;CMOP&#148;) program. The tasks to be performed include pharmacy
and pharmacy technician services in support of pharmacy production management at seven locations.
The maximum total value under this award is expected to be approximately $140,000,000 pursuant to
site-specific task orders to be rendered by the DVA. Work is expected to begin on July&nbsp;1, 2011 and
may continue for a five year term expiring April&nbsp;30, 2016. The agreement is subject to the Federal
Acquisition Regulations and there can be no assurance as to the actual amount of services that the
Company will ultimately provide under the agreement.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



<DIV align="left">
<A name="C17252108"></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="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 2:</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B></DIV></TD>
</TR>
</TABLE>
</DIV>

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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">This report 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 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 report:
our ability to continue to recruit qualified healthcare and other professionals and administrative
staff at reasonable costs; our ability to obtain any needed financing; our ability to attract and
retain sales and operational personnel; our ability to secure contract awards, including the
ability to secure renewals of contracts under which we currently provide services; our ability to
enter into contracts with United States Government facilities and agencies on terms attractive to
us and to secure orders related to those contracts; changes in the timing of orders for and our
placement of professionals and administrative staff; the overall level of demand for the services
we provide; the variation in pricing of the contracts under which we place professionals; our
ability to manage growth effectively; the performance of our management information and
communication systems; the effect of existing or future government legislation and regulation;
changes in government and customer priorities and requirements (including changes to respond to the
priorities of Congress and the Administration, budgetary constraints, and cost-cutting
initiatives); economic, business and political conditions domestically; 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; the competitive environment for our services; the effect of
recognition by us of an impairment to goodwill and intangible assets; other tax and regulatory
issues and developments; and the effect of adjustments by us to accruals for self-insured
retentions.
</DIV>


<DIV align="justify" 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, 2010 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="justify" style="font-size: 10pt; margin-top: 10pt"><U><B>Critical Accounting Policies and Estimates</B></U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">See Note 2 of TeamStaff&#146;s 2010 Annual Report on
Form 10-K as well as &#147;Critical Accounting Policies and Estimates&#148;
contained therein for a discussion on critical accounting policies and estimates.
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">In accordance with applicable accounting standards, TeamStaff does not amortize the goodwill
associated with TeamStaff GS. TeamStaff continues to review its goodwill for possible impairment or
loss of value at least annually or more frequently upon the occurrence of an event or when
circumstances indicate that a reporting unit&#146;s carrying amount is greater than its fair value. At
September&nbsp;30, 2010, we performed a goodwill impairment analysis. For the purposes of this analysis,
our estimates of fair value are based on the income approach, which estimates the fair value of the
TeamStaff GS unit based on the future discounted cash flows. Based on the results of the work
performed, the Company has concluded that no impairment loss on goodwill was warranted at September
30, 2010. Major assumptions in the valuation study were the estimates of probability weighted
future cash flows, the estimated terminal value of the company and the discount factor applied to
the estimated future cash flows and terminal value. Estimates of future cash flows were developed
by management having regard to current expectations and potential future opportunities. A terminal
value for the forecast period was estimated based upon data of public companies that management
believes to be similar with respect to the Company&#146;s economics, products and markets. The discount
factor used was a cost of capital estimate obtained from a leading third party data provider. The
resulting estimated fair value of goodwill exceeded the carrying value at September&nbsp;30, 2010 by
more than 40%, resulting in no impairment charge being taken against goodwill. However, a
non-renewal of a major contract or other substantial changes in the assumptions used in the
valuation study could have a material adverse effect on the valuation of goodwill in future periods
and the resulting charge would be material to future periods&#146; results of operations.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">




<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">If an impairment of all the goodwill became necessary, a charge of up to $8.6&nbsp;million would be
expensed in the Consolidated
Statement of Operations. All remaining goodwill is attributable to the TeamStaff GS reporting
unit.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Intangible Assets</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">As required by applicable accounting standards, TeamStaff does not amortize its tradenames, since
such asset is an indefinite life intangible asset. TeamStaff continues to review its indefinite
life intangible assets for possible impairment or loss of value at least annually or more
frequently upon the occurrence of an event or when circumstances indicate that an asset&#146;s carrying
amount is greater than its fair value. At September&nbsp;30, 2010, we performed an intangible asset
impairment analysis. For the purposes of this analysis, our estimates of fair value are based on
the income approach, which estimates the fair value of the intangible assets based on the future
discounted cash flows. Based on the results of the work performed, the Company has concluded that
an impairment loss on intangible assets in the amount of $1.3&nbsp;million was warranted at September
30, 2010. Major assumptions in the valuation study were the estimates of probability weighted
future cash flows, the estimated terminal value of the company and the discount factor applied to
the estimated future cash flows and terminal value. Estimates of future cash flows were developed
by management having regard to current expectations and potential future opportunities. A terminal
value for the forecast period was estimated based upon data of public companies that management
believes to be similar with respect to the Company&#146;s economics, products and markets. The discount
factor used was a cost of capital estimate obtained from a leading third party data provider. The
resulting estimated fair value of tradenames were less than the carrying value at September&nbsp;30,
2010 by approximately $1.3&nbsp;million, resulting in an impairment charge of that amount being taken
against the tradenames. In addition, a non-renewal of a major contract or other substantial changes
in the assumptions used in the valuation study could have a material adverse effect on the
valuation of tradenames in future periods and a resulting charge would be material to future
periods&#146; results of operations. If an additional impairment write off of all the tradenames and
intangible assets became necessary, a charge of up to $2.6&nbsp;million would be expensed in the
Consolidated Statement of Operations. TeamStaff has concluded, at present, that there is not any
required impairment of its tradenames.
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">TeamStaff accounts for income taxes in accordance with the &#147;liability&#148; method, whereby 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 consolidated balance
sheet when it is determined that it is more likely than not that the asset will be realized. This
guidance 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. At March&nbsp;31, 2011,
the Company provided a 100% deferred tax valuation allowance of approximately $14.4&nbsp;million.
</DIV>


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


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">We are a New Jersey corporation that was founded in 1969 as a payroll service company. Over the
years, we evolved into a national provider of contract and permanent medical and administrative
staffing services and today TeamStaff is a full-service provider of logistics, healthcare support
and technical services to Federal Agencies and the Department of Defense. During the past 18
months, we have taken numerous steps in an effort to enhance the value of TeamStaff and have fully
focused our efforts on the government services market, where we believe we have a proven track
record of performance. In connection with the refocusing of our operations, we have replaced our
Chief Executive Officer and Chief Financial Officer and hired a new Executive Vice President of
Corporate Development, to lead our efforts as a government services provider.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Having completed an extensive review and analysis of its core competencies, prospective growth
markets within the Federal and DoD space, and its competitiveness within the addressable markets,
TeamStaff has determined its three principal lines of services for its 2011 fiscal year are as
follows:
</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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify"><I>Logistics &#038; Technical Services </I>&#151; This line of service draws heavily upon TeamStaff GS&#146; proven
logistics expertise and processes in areas involving supply chain management, performance-based
logistics, inventory management, statistical process control, packaging/handling/storage &#038;
transportation, and supply support operations. In addition, it embodies program and project
management, engineering and prototype fabrication services, equipment and non-tactical vehicle
operations and maintenance, hazardous material management, facilities and shipyard support
services and more. In fiscal 2010, approximately 45% of our revenue was derived from this line of
service.
</DIV></TD>
</TR>
</TABLE>
</DIV><P align="center" style="font-size: 10pt">&nbsp;

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

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify"><I>Healthcare Delivery Solutions </I>&#151; Leveraging a strong heritage in medical, pharmaceutical, and
associated facilities management
TeamStaff is well-positioned to expand and diversify its customer base in this area.
TeamStaff-developed tools such as the web-based Practicioner Resource Allocation Tool coupled
with expert recruiting talent and tools provide for a degree of differentiation needed to compete
favorably in this space. Professional services have included critical care, medical/surgical,
emergency room/trauma center, behavioral health and trauma brain injury. Allied support includes
a wide range including MRI technology, diagnostic sonography, phlebotomy, dosimetry, physical
therapy, pharmaceuticals and others. In fiscal 2010 approximately 45% of our revenue was derived
from this line of service.</DIV></TD>
</TR>

</TABLE>
</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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify"><I>Contingency/Staff Augmentation </I>&#151; This line of service combines the ability to provide disaster
and emergency response services with our legacy staffing and workforce augmentation services.
TeamStaff&#146;s outstanding track record of response during hurricanes Rita and Katrina demonstrates
its ability to support major federal and DoD opportunities in this area. General staffing and
selective recruitment process outsourcing are key components of this business area. Less than
five percent of fiscal 2010 revenue was derived from this line of service.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Management believes that streamlining the Company&#146;s strategic focus around these three lines of
services serves to align its resourcing and investments decisions around a cohesive set of business
objectives. Equally important in this evolution is the decision to exit previous market focus areas
with high barriers to entry and traditionally low margins for the Company (including commercial &#038;
federal IT and general administrative temporary staffing services).
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">TeamStaff&#146;s principal operations are conducted through its subsidiary, TeamStaff Government
Solutions, Inc. (&#147;TeamStaff GS&#148;), a wholly-owned subsidiary of TeamStaff, Inc. TeamStaff GS, which
is currently the Company&#146;s only operating subsidiary changed its name from RS Staffing Services,
Inc. on February&nbsp;12, 2008 to reflect the subsidiary&#146;s evolving service offerings. In connection
with the evolution of our company, on December&nbsp;28, 2009, TeamStaff and TeamStaff Rx, Inc.
(&#147;TeamStaff Rx&#148;), a wholly-owned subsidiary, entered into a definitive Asset Purchase Agreement
with Advantage RN, LLC, for the sale of substantially all of the operating assets of TeamStaff Rx
related to our business of providing travel nurse and allied healthcare professionals for temporary
assignments. The closing of this transaction occurred on January&nbsp;4, 2010.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">TeamStaff provides logistics, healthcare support and other technical services to U.S. government
entities through TeamStaff GS and is completely focused on successfully performing, effectively
partnering, and profitably growing its direct and in-direct (as a sub-contractor to others)
business with federal government agencies, namely the Department of Veteran Affairs (the &#147;DVA&#148;) and
the Department of Defense (DoD). In recent years the Company has provided services for a range of
DoD clients including but not limited to, the US Army Installation Management Commands at Fort
Benning and Fort Gordon, GA, the Army Transportation Center at Fort Eustis, VA, Patrick Air Force
Base, FL, Seymore Johnson Air Force Base, NC, Madigan and Tripler Army Medical Centers, WA and HI
respectively, National Naval Medical Centers, and the Army Corps of Engineers. In addition to its
largest customer, the Department of Veteran Affairs, other federal non-DoD customers have included
the Department of Energy, the Department of Homeland Security, the Department of Treasury, the
Forestry Service, FEMA and the Center for Disease Control.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">TeamStaff remains particularly dependent on the continuation of its relationship with the DVA. As
previously reported, in January&nbsp;2008 TeamStaff GS was issued purchase orders to provide support
services at six of the DVA&#146;s seven consolidated pharmacy distribution centers from the DVA national
contracting office. Although the current task orders expired on December&nbsp;31, 2009, continuation of
services extensions for locations serviced by TeamStaff GS have been granted by the DVA to us
through June&nbsp;30, 2011 with respect to both pharmaceutical services and logistic services. The DVA
released a new request for proposal related to pharmaceutical services in 2010 and the Company
submitted a proposal in a timely manner. The DVA has not as of yet published a request for
proposals with respect to the provision of logistic services at these locations. On May&nbsp;5, 2011,
TeamStaff GS entered into a single source Blanket Purchase Agreement with the DVA for the
procurement of pharmaceutical services at all seven of the DVA&#146;s consolidated pharmacy distribution
centers. This is expected to result in an increase in the annual run-rate of pharmaceutical
services provided by the Company over that being performed under the expiring contracts as the
maximum total value under this award is expected to be approximately $140,000,000 pursuant to
site-specific task orders to be rendered by the DVA. The terms of these arrangements are expected
to begin on July&nbsp;1, 2011 and may continue for a five year term expiring April&nbsp;30, 2016. The
agreement is subject to the Federal Acquisition Regulations and there can be no assurance as to the
actual amount of services that the Company will ultimately provide under the agreement.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">TeamStaff&#146;s new leadership and management team possess significant experience in operating and
growing government services businesses and manages over 800 employees in over 20 states. Committed
to providing top-quality services, TeamStaff&#146;s managers are trained and certified (where
applicable) in management processes utilized by the DoD and other Federal agencies. TeamStaff GS
has developed a strong track record of delivering best-value and on-schedule services to its varied
clients. TeamStaff has an on-going process to tailor its infrastructure to align with its remaining
core business of government services.
</DIV>

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

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

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">




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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">TeamStaff has developed a strategic plan which leverages the core competencies of TeamStaff GS in
the areas of: (1)&nbsp;Logistics and Technical Services, (2)&nbsp;Healthcare Delivery Solutions and (3)
Contingency &#038; Staff Augmentation Services. The Company has a long history of providing these
services to federal clients, the DVA in particular. The ompany has transitioned its executive
management team to better align with its government services focus and the new business development
focus will seek to compete in a much larger scale for business opportunities in the three lines of
business cited above. All commercial staffing business and resources have been divested or
replaced.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">During the second quarter of fiscal 2011, the government services market overall was severely
impacted by the Federal governments&#146; dependence upon a Continuing Resolution for fiscal year
funding. Many government contract awards were delayed, while others were operating with reduced
funding. TeamStaff weathered this period with no significant erosion to its work level or revenue
stream during the second quarter of fiscal 2011 and was able to achieve a significant reduction in its loss
from operations after achieving an improved gross margin and significantly reducing Selling, General
and Administrative expenses.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Management remains committed to expanding its business with the DVA, which has been our largest
customer (95% of revenue in fiscal 2010) followed by the DoD, while leveraging its strengths to
profitably grow new business in adjacent logistics and healthcare accounts. Having developed a
more robust pipeline of new business opportunities for both near-term and long-term objectives, we
continue to see delays in government agency awards, due in part, to the Continuing Resolution and
shortage in the government acquisition workforce. New business development processes have been put
into place and new resources with successful track records in these areas have been secured. Over
recent months the Company has developed a substantial new business pipeline and is working to
implement an accelerated growth plan though the typical sales cycle is 18 to 24&nbsp;months for major
awards. In addition, the Company has established several new teaming and partnership arrangements
with key companies with a view to assisting in profitably growing the business. Meanwhile
expenditures continue to be constrained and the Company has implemented cost reduction initiatives
such as: indirect personnel hiring freeze and headcount reductions; a temporary furlough program
and salary freezes; restricted travel; terminated non-value added vendor agreements and negotiated
significant cost reductions with continuing vendors.; and consolidated our benefit plans, resulting
in additional savings.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Though our nation&#146;s economy continues to create headwinds for all markets, management has found
that many government services industry analysts project a favorable market outlook. Based on its
research and market analysis, management believes that the federal government&#146;s healthcare budget
remains a top priority and that U.S. Defense Logistics Agency will continue to be the largest
contractor base agency. Further, there has been an increase in mergers and acquisition activity
within the government services space due to an interest on the part of acquirers to reposition
capability and customer portfolios in areas where future growth is anticipated. Management also
believes that the most significant of the federal government&#146;s in-sourcing efforts have been
completed. Further, management has found that many analysts continue to view the federal services
market remains as an attractive growth area with quality customer credit (i.e. federal government)
as a focus of buyer group portfolios and that strategically-focused and niche firms that can offer
a differentiated product or service offering to support high demand areas will be considered higher
value companies. Although we cannot provide any assurances of our growth or profitability, based on
these factors, management believes that TeamStaff&#146;s new strategic direction to leverage and invest
in its government services strengths within its market sector offers the potential for
significantly enhanced shareholder value in the foreseeable future.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Further, under the new leadership team, the Company has developed a substantial qualified pipeline
of opportunities to bid for contracts with DoD and other Federal agencies through fiscal year 2012.
Many of these are through teaming arrangements with other strategic partner companies.
</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: 7.50in">



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


<DIV align="justify" 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="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="6" style="border-bottom: 1px solid #000000"><B>Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Six 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>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 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>2011</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2011</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD colspan="17">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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>
    <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">
    <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">85.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">90.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">86.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">88.7</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>
    <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">14.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">13.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">11.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <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">14.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">18.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">14.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">16.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Officer Severance</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>
    <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">1.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <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">0.3</TD>
    <TD nowrap>%</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">0.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.3</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>
    <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">(Loss) income from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-0.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-9.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-1.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-7.4</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-1.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-0.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-0.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-0.5</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>
    <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">(Loss) income from continuing operations
before tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-1.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-9.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-2.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-7.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense (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 nowrap align="right">-0.1</TD>
    <TD nowrap>%</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>
    <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">(Loss) income from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-1.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-10.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-2.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-7.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from discontinued operation</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">-0.3</TD>
    <TD nowrap>%</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">-5.6</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>
    <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">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-1.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-10.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-2.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">-13.5</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>
    <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="justify" style="font-size: 10pt; margin-top: 10pt">Revenues from TeamStaff&#146;s operations for the three months ended March&nbsp;31, 2011 and 2010 were $10.4
million and $9.8&nbsp;million, respectively, which represent an increase of $0.6&nbsp;million or 6% over the
prior fiscal year period. The increase in revenues is due primarily to the impact of increased
overtime as well as net increases in headcount at certain Government facilities related to federal
government &#147;out sourcing&#148; certain positions.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Revenues from TeamStaff&#146;s operations for the six months ended March&nbsp;31, 2011 and 2010 were $21.0
million and $20.6&nbsp;million respectively, which represents an increase of $0.4&nbsp;million or 1.9% over
the prior fiscal period. The increase in revenues from continuing operations is due primarily to
the impact of increased overtime as well as net increases in headcount at certain Government
facilities related to federal government &#147;out sourcing&#148; certain positions.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Direct expenses for the three months ended March&nbsp;31, 2011 and 2010 were $8.9&nbsp;million and $8.8
million, respectively. As a percentage of revenue, direct expenses were 85.6% and 90.1%,
respectively, for the three months ended March&nbsp;31, 2011 and 2010. See the discussion on gross
profit directly below for an explanation of the decrease in direct expenses as a percentage of
revenue.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Direct expenses for the six months ended March&nbsp;31, 2011 and 2010 were $18.2&nbsp;million and $18.3
million. As a percentage of revenue, direct expenses were 86.6% and 88.7%, respectively, for the
six months ended March&nbsp;31, 2011 and 2010. See the discussion on gross profit directly below for an
explanation of the reduction in direct expenses as a percentage of revenue.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Gross profit for the three months ended March&nbsp;31, 2011 and 2010 were $1.5&nbsp;million and $1.0&nbsp;million,
respectively which represents an increase of $0.5&nbsp;million or 50% over the prior fiscal year period.
Gross profit from continuing operations, as a percentage of revenue, was 14.4% and 9.9%, for the
three months ended March&nbsp;31, 2011 and 2010, respectively. The key drivers for the period over
period increase in gross profit (as a percentage of revenue) were greater overtime at certain
government facilities which earn a higher gross profit margin and a reduction in direct expenses of
approximately $0.2&nbsp;million related to obtaining an independent trustee consent in fiscal 2011 to
utilization of surplus assets in a medical benefit plan which the Company had previously funded in
connection with a completed commercial contract.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Gross profit for the six months ended March&nbsp;31, 2011 and 2010 were $2.8&nbsp;million and $2.3&nbsp;million,
respectively which represents an increase $0.5&nbsp;million or 22% over the prior fiscal year period.
Gross profit from continuing operations, as a percentage of revenue, was 13.4% and 11.3%, for the
six months ended March&nbsp;31, 2011 and 2010, respectively. The key drivers for the period over period
increase in gross profit (as a percentage of revenue) are greater overtime at certain government
facilities which earn a higher gross profit margin and a reduction in direct expenses of
approximately $0.2&nbsp;million related to obtaining independent trustee consent in the second quarter of
fiscal 2011 to
utilization of surplus assets in a benefit plan which the Company had previously funded in
connection with a no longer on-going commercial contract.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Selling, general and administrative (&#147;SG&#038;A&#148;) expenses for the three months ended March&nbsp;31, 2011 and
2010 were $1.6&nbsp;million and $1.8&nbsp;million, respectively, which represent a decrease of $0.2&nbsp;million,
or 11.1%. The decrease is primarily due to cost reduction initiatives, which have included:
headcount reductions; a temporary furlough program; and negotiating significant cost reductions
with vendors.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">SG&#038;A expenses for the six months ended March&nbsp;31, 2011 and 2010 were $3.1&nbsp;million and $3.5&nbsp;million,
respectively, which represent a decrease of $0.4&nbsp;million, or 11.4%. The decrease reflects cost
reduction initiatives, which have included: headcount reductions; a temporary furlough program; and
negotiating significant cost reductions with vendors.
Officer severance for the Company&#146;s former Chief Executive Officer in the amount of $0.3&nbsp;million
during the six months ended March&nbsp;31, 2010 did not reoccur in the six months ended March&nbsp;31, 2011.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Depreciation and amortization expense was approximately $28,000 and $27,000 for the three months
ended March&nbsp;31, 2011 and 2010, respectively.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Depreciation and amortization expense was approximately $59,000 and $53,000 for the six months
ended March&nbsp;31, 2011 and 2010, respectively.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Loss from operations for the three months ended March&nbsp;31, 2011 was $0.1&nbsp;million as compared to loss
from operations for the three months ended March&nbsp;31, 2010 of $.9&nbsp;million. This represents an
improvement of $0.8&nbsp;million in results from operations from the prior fiscal period. The
improvement is due to the above mentioned increase in gross profits and reduction in SG&#038;A expenses
for the three months ended March&nbsp;31, 2011.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Loss from operations for the six months ended March&nbsp;31, 2011 was $0.4&nbsp;million as compared to loss
from operations for the six months ended March&nbsp;31, 2010 of $1.5&nbsp;million. This represents an
improvement of $1.1&nbsp;million in results from operations from the prior fiscal period. The
improvement is due to the above mentioned increase in gross profits, reduction in SG&#038;A expenses and
non-recurring of officer severance in the six months ended March&nbsp;31, 2011.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Interest income and other income were negligible for the three and six months ended March&nbsp;31, 2011
and 2010. The comparative increases in interest income arose due to increased collateral deposits.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Interest expense for the three months ended March&nbsp;31, 2011 and 2010 was approximately $62,000 and
$30,000 respectively. The increase of $32,000 was due to increased borrowings with our existing
credit facility.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Interest expense for the six months ended December&nbsp;31, 2010 and 2009 was approximately $107,000 and
$53,000 respectively. The increase of $54,000 was due to increased borrowings with our existing
credit facility.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company recorded other expense of $40,000 and $56,000, for the three months ended March&nbsp;31,
2011 and 2010, respectively, and $59,000 and $57,000 for the six months ended March&nbsp;31, 2011 and
2010, respectively, related to legal representation and investigation and dispute related 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 expenses because the subpoena relates to activity prior to the
acquisition.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company has provided a 100% deferred tax valuation allowance because it believes that it cannot
be considered more likely than not that it will be able to realize the full benefit of the deferred
tax asset. The Company determined that negative evidence, 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, concluded
that a valuation allowance was necessary. In assessing the need for a valuation allowance, the
Company historically has considered all positive and negative evidence, including scheduled
reversals of deferred tax liabilities, prudent and feasible tax planning strategies and recent
financial performance. The Company did not record a Federal or State tax benefit for the three
months ended March&nbsp;31, 2011 and 2010.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Loss from continuing operations for the three months ended March&nbsp;31, 2011 was $0.2&nbsp;million, or
$0.04 per basic and diluted share, as compared to loss from continuing operations of $1.0&nbsp;million,
or $0.20 per basic and diluted share, for the three months ended March&nbsp;31, 2010.
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Loss from continuing operations for the six months ended March&nbsp;31, 2011 was $0.5&nbsp;million, or $0.10
per basic and diluted share, as compared to loss from continuing operations of $1.6&nbsp;million, or
$0.33 per basic and diluted share, for the six months ended March&nbsp;31, 2010.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">There was no net income or loss from discontinued operations for the three months or six months
ended March&nbsp;31, 2011.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Loss from discontinued operations for the three months ended March&nbsp;31, 2010 was $25,000 or $0.00
per basic and diluted share arising from operations of the TeamStaff Rx discontinued business.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Loss from discontinued operations for the six months ended March&nbsp;31, 2010 was $1.2&nbsp;million or $0.23
per basic and diluted share, with loss
from operations of the TeamStaff Rx discontinued business of $0.8&nbsp;million. This includes the
operating loss as well as a charge of $0.1&nbsp;million for severance to certain TeamStaff Rx employees
and $0.3&nbsp;million in various accrued expenses related to the sale and shut down of the business.
Loss from disposal of the TeamStaff Rx discontinued business was $0.3&nbsp;million. Included in this
loss are expenses approximating $0.3&nbsp;million principally from recognition of the remaining unfunded
operating lease payments, net of estimated rent subsidy, as well as legal expenses related to the
sale.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Net loss for the three months ended March&nbsp;31, 2011 was $0.2&nbsp;million, or $0.04 per basic and diluted
share, as compared to net loss of $1.0&nbsp;million, or $0.20 per basic and diluted share, for the three
months ended March&nbsp;31, 2010. This represents a reduction in net loss of $0.8&nbsp;million primarily due
to improved gross profit of $0.5&nbsp;million coupled with reductions of $0.3&nbsp;million in SG&#038;A expenses.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Net loss for the six months ended March&nbsp;31, 2011 was $0.5&nbsp;million, or $0.10 per basic and diluted
share, as compared to net loss of $2.8&nbsp;million, or $0.56 per basic and diluted share, for the six
months ended March&nbsp;31, 2010. This represents a reduction in net loss of $2.3&nbsp;million primarily due
to improved gross profit of $0.5&nbsp;million and reductions of $0.4&nbsp;million in SG&#038;A expenses, as well
as both officer severance in the amount of $0.3&nbsp;million and loss from discontinued operations of
$1.2&nbsp;million recorded in the six months ended March&nbsp;31, 2010 and not in the six months ended March
31, 2011
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">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 had 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 in 2008 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 on assignment at the
time 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 March&nbsp;31,
2011, the amount of the remaining accounts receivable with the DVA approximates $9.3&nbsp;million and
the related accrued salary and benefits for direct costs approximates $8.7&nbsp;million. The Company has
been and continues to be in discussions with representatives of the DVA regarding the matter and
anticipates resolution during fiscal 2011. In addition, TeamStaff is 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 additional revenue and gross profit are estimated to be between $0.4&nbsp;million and $0.6
million. At present, the Company expects to collect such amounts during fiscal 2011 based on
current discussions and collection efforts. Because these amounts are subject to further government
review, no assurances can be given that we will indeed receive the amounts recorded as accounts
receivable, 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>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">At March&nbsp;31, 2011, the Company had a net working capital deficit of approximately $3.7&nbsp;million and
an accumulated deficit of approximately $61.6&nbsp;million. The Company has a limited amount of cash and
equivalents at March&nbsp;31, 2011 and will be required to rely on operating cash flow and periodic
funding, to the extent available, from its line of credit to sustain the operations of the Company
unless it elects to pursue and is successful in obtaining additional debt or equity funding.
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">In an effort to improve our cash flows and financial position, we have recently taken measures
which are expected to enhance our liquidity by approximately $1,000,000 as a result of increasing
the maximum availability of our credit facility and receiving funding of and/or commitments for
additional equity and/or debt financing. As of February&nbsp;14, 2011, our largest shareholder,
Wynnefield Capital, Inc., and certain of our directors and executive officers provided assurances
for future financings whereby they collectively agreed to provide up to $500,000 of additional
capital to us if we determine, prior to February&nbsp;28, 2012, that such funds are required (the
&#147;Commitments&#148;). As described in Note 7 to the accompanying financial statements, $150,000 of such
capital was provided in cash on March&nbsp;31, 2011 through the equity investments provided by members
of our board and management team. In addition, a further $75,000 of credits were granted by
certain
individuals against Company obligations due such persons. In addition, as described in greater
detail below, on February&nbsp;9, 2011, we entered into a further amendment of our Loan Agreement with
Presidential Financial Corporation, pursuant to which they agreed to increase our maximum
availability under the Loan Agreement by an additional $500,000 and provide an unbilled receivable
facility within the limits of the Loan Agreement. Following this increase, the maximum availability
under this loan facility is $3,000,000; limited to eligible accounts receivable.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Management believes that: (a)&nbsp;cash and cash equivalents of approximately $1.3&nbsp;million as of March
31, 2011, (b)&nbsp;the available capital pursuant to the Commitments, (c)&nbsp;the amounts available under
its line of credit (which, in turn, is limited by the amount of eligible assets), (d)&nbsp;forecasted
operating cash flow, (e)&nbsp;the ultimate non-payment of certain liabilities we are currently
contesting (classified as current at March&nbsp;31, 2011) in fiscal 2011, or the applicable portion of
2012 and (f)&nbsp;the effects of cost reduction programs and initiatives, will be sufficient to support
our operations for twelve months from the date of these financial statements. However, should any
of these factors not occur substantially as currently expected, there could be a material adverse
effect on our ability to access the level of liquidity necessary for us to sustain operations at
current levels for the next twelve months. In such an event, management may be forced to make
further reductions in spending or to further extend payment terms with suppliers, liquidate assets
where possible, and/or to suspend or curtail planned programs. Any of these actions could
materially harm our business, results of operations and future prospects.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Due to the foregoing and to address any need for additional capital, we intend to pursue equity,
equity-based and/or debt financing alternatives or other financing in order to raise needed funds.
While the remaining Commitments are unconditional, the specific terms of any financing which we may
request under the Commitments are subject to final negotiation among the parties and the approval
of members of our Board of Directors that are independent of the remaining other parties involved
in accordance with our policy for approving related-party transactions. Further, the transactions
will also be required to be structured in such a manner so as to comply with the listing
requirements of the Nasdaq Stock Market. If we raise additional funds by selling shares of common
stock or convertible securities, the ownership of our existing shareholders will be diluted.
Further, if additional funds are raised though the issuance of equity or debt securities, such
additional securities may have powers, designations, preferences or rights senior to our currently
outstanding securities. Except for the remaining Commitments, we do not have any firm agreements
with any third-parties for such transactions and no assurances can be given that we will be
successful in raising any additions capital from financings, or that additional financing, if at
all available, can be obtained on acceptable terms to us. Any inability to obtain required
financing on sufficiently favorable terms could have a material adverse effect on our business,
results of operations, financial condition, cash flows and liquidity.
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Net cash used in operating activities for the six months ended March&nbsp;31, 2011 was $1.1&nbsp;million.
This decrease in cash was primarily driven by net loss, an increase in accounts receivable due to a
slowdown in cash collections that occurred during this period and a decrease in the accrued
expenses.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Net cash used in operating activities for the six months ended March&nbsp;31, 2010 was $.0.9&nbsp;million.
This decrease in cash was primarily driven by net losses offset by an increase in accounts payable,
accrued payroll and accrued expenses.
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Net cash used in investing activities for the six months ended March&nbsp;31, 2011 was $12,000 for costs
related to the purchase of fixed assets.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Net cash used in investing activities for the six months ended March&nbsp;31, 2010, included proceeds of
$375,000 on the disposal of Teamstaff RX, offset by $152,000 primarily for costs associated with
the purchase and implementation of a new computer operating systems for TeamStaff GS to fulfill
Defense Contract Audit Agency costs accounting system requirements for the award of certain larger
value government contracts.
</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: 7.50in">



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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Net cash provided by financing activities was $1.2&nbsp;million for the six months ended March&nbsp;31, 2011.
The increase is primarily the result of borrowing $1.1&nbsp;million on the credit facility to fund
operations during the six months ended March&nbsp;31, 2011 and the receipt of $150,000 cash proceeds
from the Commitments.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Net cash used in financing activities for the six months ended March&nbsp;31, 2010 was $0.1&nbsp;million used
to pay off in full capital lease obligations related to the discontinued operation as well as
scheduled repayment of capital lease obligations for continuing operations.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Cash Flows</I>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">As of March&nbsp;31, 2011, TeamStaff had cash and cash equivalents of $1.3&nbsp;million and net accounts
receivable of $12.0&nbsp;million. At March&nbsp;31, 2011, the amount of the accounts receivable associated
with the DVA retroactive billings approximates $9.3&nbsp;million and was unbilled at March&nbsp;31, 2011. At
March&nbsp;31, 2011 there was $1.5&nbsp;million of debt outstanding under the Loan Agreement. As of September
30, 2010, there was $0.4&nbsp;million of debt outstanding. Unused availability (as defined) totaled
$0.03&nbsp;million and $0.6&nbsp;million, at March&nbsp;31, 2011 and September&nbsp;30, 2010, respectively, net of
required collateral reserves per the Loan Agreement for certain payroll and tax liabilities. The
average daily outstanding balance on the facility for the six months ended March&nbsp;31, 2011 was $1.2
million. As of March&nbsp;31, 2011, we had a working capital deficit of $3.7&nbsp;million. The Company also
classifies a $1.5&nbsp;million note payable related to the acquisition of RS Staffing Services as a
current liability (See Note 4 of Notes to Consolidated Financial Statements). However, the Company
plans to pursue its right of offset against the note for legal expenses incurred and has a good
faith belief that we will recover such amounts. The Company believes that it has adequate liquidity
resources to fund operations over the next twelve months in view of the additional funding
committed by the Company&#146;s Lender and other parties in February&nbsp;2011 as discussed in the notes to
the consolidated financial statements.
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">On July&nbsp;29, 2010, TeamStaff GS entered into a Loan and Security Agreement (the &#147;Loan Agreement&#148;)
with Presidential Financial Corporation (the &#147;Lender&#148;). Under the Loan Agreement, the Lender agreed
to provide a two (2)&nbsp;year loan and security facility to TeamStaff GS in an aggregate amount of up
to $1.5&nbsp;million, subject to the terms and conditions of the Loan Agreement. In November&nbsp;2010, the
Lender agreed, by means of an amendment to the Loan Agreement to increase the maximum amount
available under the facility from $1.5&nbsp;million to $2.5&nbsp;million (See Note 6). In February&nbsp;2011 the
Company and Lender further increased the maximum availability under the Loan Agreement by an
additional $500,000 to $3.0&nbsp;million and to provide an unbilled receivable facility within the
limits of the Loan Agreement. An interest rate premium of 2% is payable in respect of any advances
secured by unbilled accounts receivable, which are subject to a sub-facility limit of $500,000 and
an advance rate of 75%. The loan is secured by a security interest and lien on all of TeamStaff
GS&#146;s accounts, account deposits, letters of credit and investment property, chattel paper,
furniture, fixtures and equipment, instruments, investment property, general intangibles, deposit
accounts, inventory, other property, all proceeds and products of the foregoing (including proceeds
of any insurance policies and claims against third parties for loss of any of the foregoing) and
all books and records related thereto. TeamStaff GS&#146;s ability to request loan advances under the
Loan Agreement is subject to: (i)&nbsp;computation of TeamStaff GS&#146;s advance availability limit based on
&#147;eligible accounts receivables&#148; (as defined in the Loan Agreement) and subject to certain
requirements discussed in Note 6 multiplied by the &#147;Accounts Advance Rate&#148; established by the
Lender which initially shall be 85% and may be increased or decreased by the Lender in exercise of
its discretion; and (ii)&nbsp;compliance with the covenants and conditions of the loan. The loan was
initially for a term of 24&nbsp;months and after giving effect to the February&nbsp;2011 amendment, which
also extended the term of the Loan Agreement by 12&nbsp;months, will mature on July&nbsp;29, 2013.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Interest on the loan accrues on the daily unpaid balance of the loan advances secured by billed
receivables. Following the February&nbsp;2011 amendment to the Loan Agreement, the interest rate under
the Loan and Security Agreement is the greater of: (a)&nbsp;3.25% or (b)(i) 1.95% above the Wall Street
Journal Prime rate on the accounts receivable portion of the credit line and (ii)&nbsp;3.95% above the
Wall Street Journal Prime rate on the unbilled accounts portion. The interest rate at March&nbsp;31,
2011 was 5.2%. In addition, TeamStaff GS will pay certain other related fees and expense
reimbursements including a monthly service charge of 0.65% based on the average daily loan balance
which shall accrue daily and be due and payable on the last day of each month so long as the Loan
Agreement is outstanding. At March&nbsp;31, 2011, the amount of the unused availability under the line
was $323,000. The amount outstanding as of March&nbsp;31, 2011 was $1,474,000.
</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: 7.50in">



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Loan Agreement requires compliance with customary covenants and contains restrictions on the
Company&#146;s ability to engage in certain transactions. Among other matters, under the Loan Agreement,
we may not, without consent of the Lender, (i)&nbsp;merge or consolidate with another entity, form any
new subsidiary or acquire any interest in a third party; (ii)&nbsp;acquire any assets except in the
ordinary course of business; (iii)&nbsp;enter into any transaction outside the ordinary course of
business; (iv)&nbsp;sell or transfer collateral; (v)&nbsp;make any loans to, or investments in, any affiliate
or enter into any transaction with an affiliate other than on an arms-length basis; (vi)&nbsp;incur any
debt outside the ordinary course of business; (vii)&nbsp;pay or declare any dividends or other
distributions; or (viii)&nbsp;redeem, retire or purchase any of our equity interests exceeding $50,000.
In addition, the Loan Agreement requires TeamStaff GS to maintain a minimum tangible net worth of
at least $1,000,000 on a trailing 12-month basis. Further, without the consent of the Lender, the
Company is also restricted from making any payments in respect of other outstanding indebtedness.
The Lender may terminate the Loan Agreement at any time upon 60&nbsp;days written notice after February
29, 2012 and the Loan Agreement provides for customary events of default following which the Lender
may, at its option, terminate the loan agreement and accelerate the repayment of any amount
outstanding. The defined events of default include, among other things, a material adverse change
in the Company&#146;s circumstances, or if the Lender deems itself insecure in the ability of the
Company to repay its
obligations, or as to the sufficiency of the collateral.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">As part of the February&nbsp;2011 amendment, the Lender also agreed to waive the Company&#146;s
non-compliance with the covenant under the Loan Agreement to furnish them with a copy of TeamStaff
GS&#146; financial statements within 90&nbsp;days after the end of its fiscal year. In addition to granting
this waiver, the Lender also agreed to modify this covenant to require that the Company provide
them, within 90&nbsp;days after the end of each fiscal year, audited consolidated financial statements
of the Company and its subsidiaries as of the end of such fiscal year and, in addition, at the same
time, furnish consolidating income statement and balance sheet schedules, including a
reconciliation with TeamStaff GS&#146;s financial information.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">TeamStaff has concurrently executed a Corporate Guaranty Agreement with Lender pursuant to which it
has guaranteed all of the obligations of Teamstaff GS under the Loan Agreement.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Under the Loan Agreement our customers make payments directly to a bank account controlled by our
Lender over which we have no control and which is used to pay down our loans. As a result, our
access to cash resources is substantially at the discretion of the Lender and could cease in the
event of a default on our Loan Agreement.
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">As described in greater detail in the notes to the consolidated financial statements, TeamStaff had
received notices from IRS 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. 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 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 ($1.2&nbsp;million at March&nbsp;31, 2011)
has been recorded in accounts payable. Management believes that the ultimate resolution of these
remaining payroll tax matters will not have a significant adverse effect on its financial position
or future results of operations.
</DIV>









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

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

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">




<DIV align="justify" 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>Contractual</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>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 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">Debt (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,991</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,987</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating Leases (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">595</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">266</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</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"><!-- Blank Space -->
    <TD colspan="17">&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">$</TD>
    <TD align="right">3,586</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">38</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><DIV style="text-align: justify">Represents the maximum amount of notes payable related to the acquisition of
TeamStaff GS, and capital lease obligations.</DIV></TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Represents lease payments net of sublease income, including those of discontinued operations.</DIV></TD>
</TR>

</TABLE>



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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">On December&nbsp;1, 2010, the Company named John F. Armstrong as our Executive Vice President of
Corporate Development. On February&nbsp;7, 2011, the Company and Mr.&nbsp;Armstrong entered into an
employment agreement. The following is a description of the terms of employment agreed upon by the
Company and Mr.&nbsp;Armstrong. Mr.&nbsp;Armstrong&#146;s appointment as Executive Vice President of Corporate
Development commenced December&nbsp;1, 2010 and the employment agreement will expire on November&nbsp;30,
2013. Mr.&nbsp;Armstrong will receive an initial base salary of $215,000 per annum. Mr.&nbsp;Armstrong may
receive an annual bonus of up to 50% of base salary based on performance targets and other key
objectives established by the Management Resources and Compensation Committee of the board of
directors. Target bonus will be adjusted by 2% of base salary for every 1% of variance between
targets and actual results and no bonus will be awarded if results are less than 90% of target and
no bonus will exceed 70% of base salary. For the Company&#146;s 2011 fiscal year, $40,000 of the
potential bonus will be guaranteed provided Mr.&nbsp;Armstrong remains employed as of the date on which
the bonus payment is made. The Company granted Mr.&nbsp;Armstrong options to purchase 250,000 shares of
common stock under our 2006 Plan. The options vested or shall vest as follows: 50,000 options
vested immediately; 100,000 options shall vest if the closing price of the Company&#146;s common stock
equals or exceeds $3.00 per share for ten consecutive trading days; an additional 50,000 options
shall vest if the closing price of the Company&#146;s common stock equals or exceeds $5.00 per share for
ten consecutive trading days; and an additional 50,000 options shall vest if the closing price of
the Company&#146;s common stock equals or exceeds $7.00 per share for ten consecutive trading days. The
options, to the extent vested, shall be exercisable for a period of ten years at the per share
exercise price equal to the fair market value of the Company&#146;s common stock on the date his
employment commenced.
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">We have not created, and are not party to, any special-purpose or off-balance sheet entities for
the purpose of raising capital, incurring debt or operating parts of our business that are not
consolidated into our financial statements. We do not have any arrangements or relationships with
entities that are not consolidated into our financial statements that are reasonably likely to
materially affect our liquidity or the availability of our capital resources. We have entered into
various agreements by which we may be obligated to indemnify the other party with respect to
certain matters. Generally, these indemnification provisions are included in contracts arising in
the normal course of business under which we customarily agree to hold the indemnified party
harmless against losses arising from a breach of representations related to such matters as
intellectual property rights. Payments by us under such indemnification clauses are generally
conditioned on the other party making a claim. Such claims are generally subject to challenge by us
and to dispute resolution procedures specified in the particular contract. Further, our obligations
under these arrangements may be limited in terms of time and/or amount and, in some instances, we
may have recourse against third parties for certain payments made by us. It is not possible to
predict the maximum potential amount of future payments under these indemnification agreements due
to the conditional nature of our obligations and the unique facts of each particular agreement.
Historically, we have not made any payments under these agreements that have been material
individually or in the aggregate. As of our most recent fiscal year end we were not aware of any
obligations under such indemnification agreements that would require material payments.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->28<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



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


<DIV align="justify" 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>

<DIV align="left">
<A name="C17252109"></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="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 3:</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B></DIV></TD>
</TR>
</TABLE>
</DIV>

<DIV align="justify" 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, TeamStaff, Inc.,
effective in July&nbsp;29, 2010, interest on our revolving credit facility accrues on the daily unpaid
balance of the loan advances secured by billed receivables. Following the February&nbsp;2011 amendment
to this arrangement, the applicable interest rate is the greater of (a)&nbsp;3.25% or (b)(i) 1.95% above
the Wall Street Journal Prime rate on the accounts receivable portion of the credit line and (ii)
3.95% above the Wall Street Journal Prime rate on the unbilled accounts portion. The interest rate
at March&nbsp;31, 2011 was 5.2%. An interest rate premium of 2% is payable in respect of any advances
secured by unbilled accounts receivable, which are subject to a sub-facility limit of $500,000 and
an advance rate of 75%. In addition, TeamStaff GS will pay certain other related fees and expense
reimbursements including a monthly service charge of 0.65% based on the average daily loan balance
which shall accrue daily and be due and payable on the last day of each month so long as the Loan
Agreement is outstanding. Material increases in the Prime rate could have an adverse effect on our
results of operations, the status of the revolving credit facility as well as interest costs.
</DIV>

<DIV align="left">
<A name="C17252110"></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="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 4:</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>CONTROLS AND PROCEDURES</B></DIV></TD>
</TR>
</TABLE>
</DIV>

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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Our CEO and President and Chief Financial Officer, after evaluating the effectiveness of our
disclosure controls and procedures (as defined in Rule&nbsp;13a-15(e) or 15d-15(e) under the Exchange
Act) as of the end of the period covered by this report, has concluded that, based on the
evaluation of these controls and procedures, our 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 CEO and President and Chief
Financial Officer, to allow timely decisions regarding required disclosure.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Our management, including our CEO and President and Chief Financial Officer, does not expect that
our disclosure controls and procedures or our internal controls will prevent all errors and all
fraud. A control system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met. Further, the design of a
control system must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within our company have been detected. Our management, however,
believes our disclosure controls and procedures are in fact effective to provide reasonable
assurance that the objectives of the control system are met.
</DIV>


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


<DIV align="justify" 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 fiscal quarter ended
March&nbsp;31, 2011, 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 -->29<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#C17252tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="left">
<A name="C17252111"></A>
</DIV>

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

<DIV align="left">
<A name="C17252112"></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="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 1:</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>LEGAL PROCEEDINGS</B></DIV></TD>
</TR>
</TABLE>
</DIV>

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


<DIV align="justify" 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
contract 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="justify" 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 investigation of other parties.
</DIV>


<DIV align="justify" 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; (i)&nbsp;a $3.0
million promissory note, of which $1.5&nbsp;million in principal and interest of $150,000 was paid in
June&nbsp;2006 (ii)&nbsp;and common stock in the Company. 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 principal payable and accrued interest payable. Such agreement was
extended to August&nbsp;31, 2010, but has not been further renewed. As of March&nbsp;31, 2011, the amount has
not been settled and negotiations with the former owners of RS Staffing Services are as yet to be
resolved. The Company recognized expenses related to legal representation and costs incurred in
connection with the investigation and dispute in the amount of $40,000 and $56,000 in the three
months ended March&nbsp;31, 2011 and 2010 and $59,000 and $57,000 in the six months ended March&nbsp;31,
2011 and 2010, respectively, as a component of other income (expense). Cumulative costs related to
this matter approximate $1.8&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 set-off the payment of such expenses against the
remaining principal and accrued interest due to the former owners of RS Staffing Services. The
former owners of RS Staffing Services have notified the Company of their disagreement with the
Company&#146;s course of action and of the alleged existence of partial counter-claims based on the
Company&#146;s alleged failure to permit them to transfer certain shares of the Company&#146;s stock at a
time when the Company&#146;s per share price was higher than its current per share price. The parties
have unsuccessfully attempted to negotiate a settlement and the claimants have indicated their
intention to proceed to mediation, as provided for in the stock purchase agreement.
</DIV>


<DIV align="justify" 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 and accrued interest from notice date forward, if any, or in defending the partial
counter-claims. Accordingly, the Company has expensed costs incurred related to the investigation
through March&nbsp;31, 2011.
</DIV>


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


<DIV align="justify" 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="justify" 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="justify" style="font-size: 10pt; margin-top: 10pt">TeamStaff is engaged in no other litigation, which would be anticipated to have a material adverse
impact on TeamStaff&#146;s 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 -->30<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C17252tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



<DIV align="left">
<A name="C17252113"></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="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 1A:</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>RISK FACTORS</B></DIV></TD>
</TR>
</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Our operating results and financial condition have varied in the past and may in the future vary
significantly depending on a number of factors. 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, 2010 for a discussion of the risks
associated with our business, financial condition and results of operations. These factors, among
others, could have a material adverse effect upon our business, results of operations, financial
condition or liquidity and cause our actual results to differ materially from those contained in
statements made in this report and presented elsewhere by management from time to time. 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 there have been no material changes in our risk factors from those disclosed in our
Annual Report on Form 10-K for the fiscal year ended September&nbsp;30, 2010.
</DIV>

<DIV align="left">
<A name="C17252114"></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="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 2:</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS</B></DIV></TD>
</TR>
</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">As previously reported, on March&nbsp;31, 2011, the Company entered into a Securities Purchase Agreement
(the &#147;Purchase Agreement&#148;) with a limited number of accredited investors pursuant to which
the Company sold an aggregate of $225,000 of shares of its Common Stock to such persons in a
private transaction (the &#147;Equity Investment&#148;). The purchasers participating in the transaction are
members of the Company&#146;s Board of Directors and management team (the &#147;Purchasers&#148;).
Pursuant to the Purchase Agreement, the Company sold to the Purchasers a total of 459,181 shares of
its Common Stock. The transaction closed on March&nbsp;31, 2011. Of this amount, the Company received
$150,000 in total cash proceeds for the purchase of the shares of Common Stock and three of the
purchasers, agreed with the Company to pay the purchase price for the shares of Common Stock by
granting an offsetting credit to the Company for an amount equal to the purchase price and
authorizing the Company to apply such credit against any obligation of the Company to such person
within twelve months of the closing date, except for base salary. The aggregate amount of such
credits totaled $75,000. The Company intends to use these proceeds for general working capital.
The value ascribed to the shares issued in the Equity Investment was based on the fair value of the Company&#146;s common stock on March 31, 2011.
Based in part upon the representations of the Purchasers in the Purchase Agreement, the shares of
Common Stock were offered and sold in a private placement to accredited investors (as such term is
defined in Rule&nbsp;501(a), as promulgated under the Securities Act of 1933, as amended), without
registration under the Securities Act and the securities laws of certain states, in reliance on the
exemption provided by Section&nbsp;4(2) of the Securities Act and similar exemptions under applicable
state laws. The securities sold in the Equity Investment may not be offered or sold in the United
States absent registration or an applicable exemption from registration requirements.
</DIV>

<DIV align="left">
<A name="C17252115"></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="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 3:</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>DEFAULTS UPON SENIOR SECURITIES</B></DIV></TD>
</TR>
</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">We have entered into a Loan Agreement with Presidential Financial Corporation (&#147;Lender&#148;) which
requires compliance with customary covenants and restrictions on our ability to, among other
things, dispose of certain assets, engage in certain transactions, incur indebtedness and pay
dividends, and TeamStaff GS&#146;s tangible net worth. As part of the amendment to the Loan Agreement we
entered into with the Lender on February&nbsp;9, 2011, the Lender agreed to waive our non-compliance
with the covenant under the Loan Agreement to furnish them with a copy of TeamStaff GS&#146; financial
statements within 90&nbsp;days after the end of its fiscal year.
</DIV>

<DIV align="left">
<A name="C17252116"></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="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 4:</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>REMOVED AND RESERVED</B></DIV></TD>
</TR>
</TABLE>
</DIV>
<DIV align="left">
<A name="C17252117"></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="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 5:</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>OTHER INFORMATION</B></DIV></TD>
</TR>
</TABLE>
</DIV>

<DIV align="justify" 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 -->31<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#C17252tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



<DIV align="left">
<A name="C17252118"></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="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 6:</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>EXHIBITS</B></DIV></TD>
</TR>
</TABLE>
</DIV>

<DIV align="justify" 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. 201.24 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="86%">&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" style="background: #cceeff">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.1</TD>
    <TD nowrap valign="top"> #</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Employment Agreement between the Company and John F. Armstrong, dated February&nbsp;7, 2011 (filed as Exhibit
10.34 to the Company&#146;s Annual Report on Form&nbsp;10-K for the fiscal year ended September&nbsp;30, 2010).</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Third Amendment to Secured Promissory Note and Loan and Security Agreement with Presidential Financial
Corporation dated February&nbsp;9, 2011 (filed as Exhibit&nbsp;10.35 to the Company&#146;s Annual Report on Form&nbsp;10-K
for the fiscal year ended September&nbsp;30, 2010).</DIV></TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.3</TD>
    <TD nowrap valign="top">*</TD>
    <TD>&nbsp;</TD>

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Form of Subscription Agreement</DIV></TD>
</TR>

<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.4</TD>
    <TD nowrap valign="top">*</TD>
    <TD>&nbsp;</TD>

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Form of Subscription Agreement</DIV></TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">31.1</TD>
    <TD nowrap valign="top">*</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of Chief Executive Officer pursuant to Section&nbsp;17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a).</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">31.2</TD>
    <TD nowrap valign="top">*</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of Chief Financial Officer pursuant to Section&nbsp;17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a).</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">32.1</TD>
    <TD nowrap valign="top">*</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of Chief Executive Officer and Chief Financial Officer pursuant to 17 CFR 240.13a-14(b) or
17 CFR 240.15d-14(b) and Section&nbsp;1350 of Chapter&nbsp;63 of Title 18 of the United States Code.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

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

<P align="center" style="font-size: 10pt"><!-- Folio -->32<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left">
<A name="C17252119"></A>
</DIV>

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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">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"><B>TEAMSTAFF, INC.</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Zachary C. Parker
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Zachary C. Parker&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap  colspan="2" align="left">Chief Executive Officer<br>
(Principal Executive Officer)&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">                    /s/ John E. Kahn
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">John E. Kahn&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD  nowrap colspan="2" align="left">Chief Financial Officer<br>
(Principal Accounting Officer)&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Dated: May&nbsp;16, 2011
</DIV>

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

<P align="center" style="font-size: 10pt"><!-- Folio -->33<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>2
<FILENAME>c17252exv10w3.htm
<DESCRIPTION>EXHIBIT 10.3
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 10.3</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><b>Exhibit 10.3</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="25%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>Name of Subscriber</I>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Agreement No.</I></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">CONFIDENTIAL SUBSCRIPTION AGREEMENT
</DIV>


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


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">Private Sale of Securities
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">Consisting of up to approximately 500,000 Shares of Common Stock
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">Aggregate Offering Amount: $250,000
</DIV>




<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>THIS SUBSCRIPTION AGREEMENT CONTAINS MATERIAL NONPUBLIC INFORMATION CONCERNING TEAMSTAFF, INC.
AND IS PREPARED SOLELY FOR THE USE OF THE OFFEREE NAMED ABOVE. ANY USE OF THIS INFORMATION FOR ANY
PURPOSE OTHER THAN IN CONNECTION WITH THE CONSIDERATION OF AN INVESTMENT IN THE SECURITIES OFFERED
HEREBY MAY SUBJECT THE USER TO CRIMINAL AND CIVIL LIABILITY.</B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK AND
IMMEDIATE DILUTION AND MAY BE PURCHASED ONLY BY PERSONS WHO QUALIFY AS &#147;ACCREDITED INVESTORS&#148; UNDER
RULE 501 (a)&nbsp;OF REGULATION D UNDER THE SECURITIES ACT.</B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>THIS DOCUMENT HAS NOT BEEN FILED WITH OR REVIEWED BY THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR ANY OTHER COMMISSION OR REGULATORY AUTHORITY, AND HAS NOT BEEN FILED WITH OR REVIEWED
BY THE ATTORNEY GENERAL OF ANY STATES NOR HAS ANY SUCH COMMISSION, AUTHORITY OR ATTORNEY GENERAL
DETERMINED WHETHER IT IS ACCURATE OR COMPLETE OR PASSED UPON OR ENDORSED THE MERITS OF THIS
OFFERING. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>TEAMSTAFF, INC.</B><BR>
1 Executive Drive<BR>
Somerset, NJ 08873<BR>
Tel. (866)&nbsp;352-5304
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>March
7, 2011</B>
</DIV>

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

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

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CONFIDENTIAL SUBSCRIPTION AGREEMENT</B>
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Items to be delivered by all Investors:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">a. One (1)&nbsp;completed and executed Subscription Agreement, including the Investor
Questionnaire.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">b. Payment in the amount of subscription, by wire transfer of funds or check. All
checks should be made payable TeamStaff, Inc. in the total amount of the Securities
subscribed for.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">c. Wired funds should be directed as follows:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>BECKER &#038; POLIAKOFF, LLP<BR>
ATTORNEY IOLA ACCOUNT #2<BR>
ACCOUNT NO.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">Signature Bank<BR>
261 Madison Avenue<BR>
New York, New York 10016<BR>
ABA No.&nbsp;026013576
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>THE SUBSCRIBER IS RESPONSIBLE FOR ALL WIRE TRANSFER FEES IMPOSED BY THE SUBSCRIBER&#146;S BANK.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ALL DOCUMENTS SHOULD BE RETURNED TO:</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">TeamStaff, Inc.<BR>
c/o Becker &#038; Poliakoff, LLP<BR>
45 Broadway, 8<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> Floor<BR>
New York, New York 10006
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>THE FOLLOWING EXHIBITS ARE ANNEXED TO<BR>
AND FORM PART OF THIS SUBSCRIPTION AGREEMENT:</B>
</DIV>

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

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

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The undersigned (the &#147;<U>Subscriber</U>&#148; or the &#147;<U>Purchaser</U>&#148;) hereby subscribes to
purchase from TeamStaff, Inc., a New Jersey corporation (the &#147;<U>Company</U>&#148;), shares of the
Company&#146;s Common Stock, at a purchase price per share equal to closing bid price as reported by
Nasdaq on the Closing Date (the &#147;<U>Purchase Price</U>&#148;). The Company is offering hereby (the
&#147;<U>Offering</U>&#148;) a maximum of approximately 500,000 shares of its Common Stock (the &#147;<U>Common
Shares</U>&#148;).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Article&nbsp;I</B><BR>
<U><B>SALE OF SECURITIES</B></U>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><B>1.1 Sale of Securities; Offering Period</B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%"><B>(a)&nbsp;</B>Subject to the terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, the Company hereby agrees to issue and sell to the Subscriber and
the Subscriber agrees to purchase from the Company, upon Closing, the Common Shares as described
herein for the Purchase Price as set forth on the signature page of this Subscription Agreement
executed by the Subscriber. The number of Common Shares purchased hereunder by a Subscriber shall
be as specified on the signature page of this Subscription Agreement executed by the Subscriber.
The Company may reject any subscription in whole or in part. The securities being offered consist
of a total of up to approximately 500,000 Common Shares, par value $0.001 per share. The Common
Shares are being offered at the Purchase Price for a minimum subscription amount of $25,000, unless
waived by the Company. This Offering is only being made to &#147;accredited investors&#148; (as defined in
Rule&nbsp;501 under the Securities Act of 1933, as amended (the &#147;<U>Securities Act</U>&#148;)) in reliance
upon an exemption from registration under Section&nbsp;4(2) of the Securities Act and/or Regulation&nbsp;D
promulgated thereunder, and on similar exemptions under applicable state laws, and by officers and
directors of the Company. The Common Shares may be referred to herein as the &#147;<U>Securities</U>&#148;.
The Closing Date will be the date on which this Agreement is counter-signed by the Company, which
shall occur after the close of trading on Nasdaq.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%"><B>(b)&nbsp;</B>The Common Shares are being offered during the offering period commencing on the date set
forth on the cover page of this Subscription Agreement and terminating on the earlier of (a)&nbsp;5:00
p.m. (New York time) on April&nbsp;15, 2011, or (b)&nbsp;the date on which all Common Shares authorized for
sale have been sold (the &#147;<U>Offering Period</U>&#148;).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>High Risk Investment.</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">This investment is speculative and should only be made by investors who can afford the risk of
loss of their entire investment. The proceeds from the sale of the Common Shares will be used to
fund short term capital needs to enable the Company to maintain operations until additional funding
is received. The Company may sell additional securities after the completion of this transaction to
further fund its operations. Unless the Company is successful in completing these additional
funding transactions, or is able to generate sufficient revenue from operations, the Company may be
forced to significantly curtail its operations and the Subscribers will lose their entire
investment.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Summary of Offering</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="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="75%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top"><B>Offering Summary:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">The Company is offering a maximum of approximately 500,000 Common Shares solely to accredited investors
on a best efforts basis.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD align="left" 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 align="left" valign="top"><B>Restricted Offerees</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify">This Offering is restricted to officers and directors of the Company.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD align="left" 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 align="left" valign="top"><B>Minimum Subscription:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify">The minimum subscription amount for the Common Shares is $25,000, although the Company may accept
subscriptions in lesser amounts in its sole discretion.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD align="left" 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 align="left" valign="top"><B>No Registration Rights:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify">Subscribers shall be entitled to no registration rights and are receiving restricted shares of the
Company.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD align="left" 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 align="left" valign="top"><B>Subscription Procedure:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify">In order to subscribe for the Common Shares, each prospective subscriber must complete, execute and
deliver to the Company a signature page evidencing such prospective subscriber&#146;s execution of this
Subscription Agreement along with a completed confidential Purchaser Questionnaire.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD align="left" 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 align="left" valign="top"><B>Restrictions on
Transferability:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify">The Common Shares have not been registered under the Securities Act or under the securities laws of the
United States or of any state or other jurisdiction. As a result, the Common Shares may not be
transferred without registration under the Securities Act, or, if applicable, the securities laws of
any state or other jurisdiction, unless in the opinion of counsel to the Company, such registration is
not then required because of the availability of an exemption from registration.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD align="left" 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 align="left" valign="top"><B>Investment:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify">An investment in the Company is highly speculative, and each investor bears the risk of losing his, her
or its entire investment. All Purchasers must complete and execute a Subscription Agreement and a
confidential Purchaser Questionnaire. Purchasers must set forth representations in such documents that
he, she or it is purchasing the Common Shares for investment purposes only and without a view toward
distribution. The Common Shares are suitable investments only for sophisticated investors for whom an
investment in the Common Shares does not constitute a complete investment program and who fully
understand, are willing to assume, and who have the financial resources necessary to withstand, the
risks involved in investing in the Common Shares and who can bear the potential loss of their entire
investment. The Common Shares are being offered and sold only to persons who qualify as &#147;accredited
investors,&#148; as defined under Regulation&nbsp;D of the Securities Act.</DIV></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>1.2 No Escrow; No Minimum Offering Amount</B>. The Subscriber acknowledges and agrees that all
subscription amounts will be immediately released to the Company and in closings held, from time to
time, as determined by the Company at any time during the Offering Period. During the Offering
Period, subscription funds will not be placed into the escrow account and closings will be held
from time to time up to the sale of the maximum amount of Common Shares described in this
Subscription Agreement or the expiration of the Offering Period. The final Closing shall be either
the date on which this Offering is fully subscribed or the last date during the Offering Period on
which the Company accepts a subscription, whichever is latest. Each closing of the transactions
contemplated hereunder (the
&#147;<U>Closing</U>&#148;) shall be deemed to occur at the offices of Becker &#038; Poliakoff, LLP, 45 Broadway,
8<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> Floor, New York, New York 10006, or at such other place as shall be mutually
agreeable to the parties, at 11:00&nbsp;a.m., New York Time, on such other date as shall be mutually
agreeable to the parties.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><B>1.3 Closing Matters</B>. At each Closing the following actions shall be taken:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(a)&nbsp;each Subscriber shall deliver its Purchase Price in immediately available United States
funds to the escrow account established for the Offering;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(b)&nbsp;the Company shall cause its stock transfer agent to deliver certificates representing the
Common Shares subscribed for to each Subscriber; and
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(c)&nbsp;each of the Company and the Subscriber shall deliver to the other signed copies of this
Substriction Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>1.4 Use of Proceeds. </B>The Company intends to use the proceeds derived from this Offering to
satisfy its working capital requirements and general corporate purposes. Management reserves the
right to utilize the net proceeds of the Offering in a manner in the best interests of the Company.
The amount of the net proceeds that will be invested in particular areas of the Company&#146;s business
will depend upon future economic conditions and business opportunities. To the extent that the
Company continues to incur losses from operations, such losses will be funded from its general
funds, including the net proceeds of this Offering.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>1.5 Company Information. </B>As an officer and/or director of TeamStaff, you acknowledge that you
are fully aware of all aspects of the Company&#146;s business, the risks of an investment in the Company
and the risks of a purchase of restricted Common Stock of the Company. You have been provided with
information on the status of other business and financial transactions that are pending and have
not been publically disclosed. You also have been given access to the officers of the Company to
obtain any additional information you have deemed necessary.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>1.6 Non-public Information. </B>The fact of this offering, and certain other material financial
and business matters that have not been publically disclosed, constitute material non-public
information of the Company. <B>Any use of this information by you, or any other person to whom you
have communicated such information, for any purpose other than your consideration of an investment
in TeamStaff, may be a criminal offense and subject you to criminal and civil liability.</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><B>1.7 Subscriber Information</B>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="96%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&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"><B>(a)</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap><B>Name(s) of SUBSCRIBER(s): </B><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>(b)</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Principal Amount of Securities Subscribed for:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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

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

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="96%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>(c)</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Accredited Investor Status</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Subscriber acknowledges and agrees that the offering and sale of the Securities are
intended to be exempt from registration under the Securities Act, by virtue of Section&nbsp;4(2) thereof
and/or Regulation&nbsp;D promulgated thereunder. In accordance therewith and in furtherance thereof,
the Subscriber represents and warrants to and agrees with the Company as follows &#091;Please check statements
applicable to the Subscriber&#093;:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">The Subscriber is an Accredited Investor because the Subscriber is (check appropriate item):
</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a bank as defined in Section&nbsp;3(a)(2) of the Securities Act;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a broker or dealer registered pursuant to Section&nbsp;15 of the Securities Exchange
Act of 1934 as amended (the &#147;<U>Exchange Act</U>&#148;);</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">an insurance company as defined in Section&nbsp;2(13) of the Securities Act;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">an investment company registered under the Investment Company Act of 1940, as
amended or a business development company as defined in Section&nbsp;2(a)(48) of such
act;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d)&nbsp;of the Small Business Investment Act of
1958;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">an employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, as amended, if the investment decision is
made by a plan fiduciary, as defined in Section&nbsp;3(21) of such Act, which is either
a bank, savings and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of $5,000,000
or, if a self-directed plan, with investment decisions made solely by persons that
are accredited investors;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a private business development company as defined in Section&nbsp;202(a)(22) of the
Investment Advisers Act of 1940, as amended;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">an organization described in Section&nbsp;501(c)(3) of the Internal Revenue Code, a
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the securities offered, with total assets in
excess of $5,000,000;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a natural person whose individual net worth or joint net worth with that
person&#146;s spouse, at the time of his purchase exceeds $l,000,000;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a natural person who had an individual income in excess of $200,000 in each of
the two most recent years or joint income with that person&#146;s spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching the
same income level in the current year;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the securities offered, whose purchase is directed by a
sophisticated person as described in Rule&nbsp;506(b)(2)(ii) of the Exchange Act; or</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">an entity in which all of the equity owners are accredited investors. (If this
alternative is checked, the Subscriber must identify each equity owner and provide
statements signed by each demonstrating how each qualifies as an accredited
investor.)</DIV></TD>
</TR>

</TABLE>
</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: 7.50in">

<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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a plan established and maintained by a state, its political subdivisions, or any
agency or instrumentality thereof, for the benefit of its employees, if such plan
has total assets in excess of $5,000,000</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a director or officer of the Company.</DIV></TD>
</TR>

</TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><B>(d)&nbsp;Additional Information.</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">The Subscriber has completed the signature page to this Subscription Agreement.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Article&nbsp;II</B><BR>
<U><B>REPRESENTATIONS AND WARRANTIES OF COMPANY</B></U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company hereby represents and warrants to the Purchasers as of the date of this Agreement
as follows:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(A)&nbsp;The Company is duly organized, validly existing and in good standing under the laws of its
state of incorporation, with all requisite power and authority to own, lease, license, and use its
properties and assets and to carry out the business in which it is engaged, except where the
failure to have or be any of the foregoing may not be expected to have a material adverse effect on
the Company&#146;s presently conducted businesses. The Company is not in violation of any of the
provisions of its articles of incorporation, bylaws or other organizational or charter documents.
The Company is duly qualified to transact the business in which it is engaged and is in good
standing as a foreign corporation in every jurisdiction in which its ownership, leasing, licensing
or use of property or assets or the conduct of its business make such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may be, could not,
individually or in the aggregate, have or reasonably be expected to result in (i)&nbsp;a material and
adverse effect on the legality, validity or enforceability of this Agreement, (ii)&nbsp;a material and
adverse effect on the results of operations, assets, prospects, business or condition (financial or
otherwise) of the Company, taken as a whole, or (iii)&nbsp;an adverse impairment to the Company&#146;s
ability to perform on a timely basis its obligations hereunder (any of (i), (ii)&nbsp;or (iii), a
&#147;<U>Material Adverse Effect</U>&#148;).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(B)&nbsp;The
Company is currently authorized to issue 40,000,000 shares of Common Stock, $0.001
par value per share and 5,000,000 shares of Preferred Stock, $0.10 par value per share. Except as
may be described in this Agreement, no securities of the Company are entitled to preemptive or
similar rights, and no entity or person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions contemplated by this
Agreement unless any such rights have been waived. The issue and sale of the Securities will not
(except pursuant to their terms thereunder), immediately or with the passage of time, obligate the
Company to issue shares of Common Stock or other securities to any entity or person and will not
result in a right of any holder of Company securities to adjust the exercise, conversion, exchange
or reset price under such securities.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(C)&nbsp;The Company has the requisite corporate power and authority to enter into, deliver and
consummate the transactions contemplated by this Agreement, to issue and sell the Securities and
deliver the Common Shares, and otherwise to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation by it of the transactions contemplated thereby have
been duly authorized by the Company and no further action is required by the Company in connection
therewith. When executed and delivered by the Company, this Agreement will constitute the legal,
valid and binding obligation of the Company, enforceable as to the Company in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, arrangement,
fraudulent conveyance or transfer, moratorium or other laws or court decisions, now or hereinafter
in effect, relating to or affecting the rights of creditors generally and as may be limited by
general principles of equity and the discretion of the court having jurisdiction in an enforcement
action (regardless of whether such enforceability is considered in a proceeding in equity or at
law).
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(D)&nbsp;The Company is not required to obtain any consent, waiver, authorization or order of, give
any notice to, or make any filing or registration with, any court or other federal, state, local or
other governmental authority or other person or entity in connection with the execution, delivery
and performance by the Company of this Agreement or the issuance, sale or delivery of the
Securities other than (i)&nbsp;any filings required by state securities laws, (ii)&nbsp;the filing of a
Notice of a Sale of Securities on Form&nbsp;D with the Commission under Regulation&nbsp;D of the Securities
Act, (iii)&nbsp;those that have been made or obtained prior to or contemporaneously with the date of
this Agreement, and (iv)&nbsp;filings pursuant to the Exchange Act.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(E)&nbsp;The execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby in accordance with the terms
and conditions described herein do not and will not: (i)&nbsp;conflict with or violate any provision of
the Company&#146;s certificate or articles of incorporation, bylaws or other organizational or charter
documents, or (ii)&nbsp;violate, conflict with, or constitute a default or breach (or an event that
with notice or lapse of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice, lapse of time or
both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or
otherwise) or other understanding to which the Company is a party or by which any property or asset
of the Company is bound or affected, or (iii)&nbsp;result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or governmental authority to
which the Company is subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company is bound or affected; except in the case of each of
clauses (ii)&nbsp;and (iii), such as could not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(F)&nbsp;The Common Shares have been duly authorized and, when issued and paid for in accordance
with this Agreement, will be duly and validly issued, fully paid and nonassessable and will be
issued free and clear of all liens and encumbrances, other than restrictions on transfer under
applicable securities laws.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(G)&nbsp;Except as disclosed in the SEC Reports, there is no pending or, to the best knowledge of
the Company, threatened action, suit, proceeding or investigation before any court, governmental
agency or body, or arbitrator having jurisdiction over the Company, or any of its affiliates that
would affect the execution by the Company or the performance by the Company of its obligations
under this Agreement, and all other agreements entered into by the Company relating hereto. Except
as disclosed in the SEC Reports, there is no pending or, to the best knowledge of the Company,
threatened action, suit, proceeding or investigation before any court, governmental agency or body,
or arbitrator having jurisdiction over the Company, or any of its affiliates which litigation if
adversely determined could have a material adverse effect on the Company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(H)&nbsp;The Company has no liabilities or obligations which are material, individually or in the
aggregate, which are not disclosed in the SEC Reports, other than those incurred in the ordinary
course of the Company&#146;s businesses and which, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the Company&#146;s financial condition.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Article&nbsp;III</B><BR>
<U><B>REPRESENTATIONS AND WARRANTIES OF PURCHASERS</B></U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">By signing this Agreement, each undersigned Purchaser hereby represents and warrants to the
Company as follows as an inducement to the Company to accept the subscription of the Purchaser:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(A)&nbsp;The Purchaser acknowledges and agrees that (i)&nbsp;the offering and sale of the Securities are
intended to be exempt from registration under the Securities Act by virtue of Section&nbsp;4(2) of the
Securities Act and/or Regulation&nbsp;D promulgated thereunder, (ii)&nbsp;the Securities have not been
registered under the Securities Act and (iii)&nbsp;that the Company has represented to the Purchaser
(assuming the veracity of the representations of the Purchaser made herein that the Securities have
been offered and sold by the Company in reliance upon an exemption from registration provided in
Section&nbsp;4(2) of the Securities Act and Regulation&nbsp;D thereunder. In accordance therewith and in
furtherance thereof, the Purchaser represents and warrants to and agrees with the Company that it
is an accredited investor (as defined in Rule&nbsp;501 promulgated under the Securities Act) for the
reason indicated in Article&nbsp;I of this Subscription Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(B)&nbsp;The Purchaser hereby represents and warrants that the Purchaser is acquiring the
Securities hereunder for its own account for investment and not with a view to distribution, and
with no present intention of distributing the Securities or selling the Securities for
distribution. The Purchaser understands that the Securities are being sold to the Purchaser in a
transaction which is exempt from the registration requirements of the Securities Act. Accordingly,
the Purchaser acknowledges that it has been advised that the Securities have not been registered
under the Securities Act and are being sold by the Company in reliance upon the veracity of the
Purchaser&#146;s representations contained herein and upon the exemption from the registration
requirements provided by the Securities Act and the securities laws of all applicable states. The
Purchaser&#146;s acquisition of the Securities shall constitute a confirmation of the foregoing
representation and warranty and understanding thereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(C)&nbsp;The Purchaser (or its &#147;<U>Purchaser Representative</U>&#148;, if any) has such knowledge and
experience in financial and business matters as is required for evaluating the merits and risks of
making this investment, and the Purchaser or its Purchaser Representative(s) has received such
information requested by the Purchaser concerning the business, management and financial affairs of
the Company in order to evaluate the merits and risks of making this investment. Further, the
Purchaser acknowledges that the Purchaser has had the opportunity to ask questions of, and receive
answers from, the officers of the Company concerning the terms and conditions of this investment
and to obtain information relating to the organization, operation and business of the Company and
of the Company&#146;s contracts, agreements and obligations or needed to verify the accuracy of any
information contained herein or any other information about the Company. Except as set forth in
this Agreement, no representation or warranty is made by the Company to induce the Purchaser to
make this investment, and any representation or warranty not made herein or therein is specifically
disclaimed and no information furnished to the Purchaser or the Purchaser&#146;s advisor(s) in
connection with the sale were in any way inconsistent with the information stated herein. The
Purchaser further understands and acknowledges that no person has been authorized by the Company to
make any representations or warranties concerning the Company, including as to the accuracy or
completeness of the information contained in this Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(D)&nbsp;The Purchaser is making the foregoing representations and warranties with the intent that
they may be relied upon by the Company in determining the suitability of the sale of the Securities
to the Purchaser for purposes of federal and state securities laws. Accordingly, each Purchaser
represents and warrants that the information stated herein is true, accurate and complete, and
agrees to notify and supply corrective information promptly to the Company as provided above if any
of such information becomes inaccurate or incomplete. The Purchaser has completed this Agreement
and Questionnaire, has delivered it herewith and represents and warrants that it is accurate and
true in all respects and that it accurately and completely sets forth the financial condition of
the Purchaser on the date hereof. The Purchaser has no reason to expect there will be any material
adverse change in its financial condition and will advise the Company of any such changes occurring
prior to the closing or termination of the Offering.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(E)&nbsp;The Purchaser is not subscribing for any of the Securities as a result of or subsequent to
any advertisement, article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, any seminar or meeting, or any solicitation of
a subscription by a person not previously known to the Purchaser in connection with investments
in Securities generally.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(F)&nbsp;The Purchaser has received or obtained access to certain information regarding the
Company, including this Agreement, the SEC Reports and other accompanying documents of the Company
receipt of which is hereby acknowledged. The Purchaser has carefully reviewed all information
provided to it and has carefully evaluated and understands the risks described therein related to
the Company and an investment in the Company, and understands and has relied only on the
information provided to it in writing by the Company relating to this investment. No agent prepared
any of the information to be delivered to prospective investors in connection with this
transaction. Prospective investors are advised to conduct their own review of the business,
properties and affairs of the Company before subscribing to purchase the Securities.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(G)&nbsp;The Purchaser also understands and agrees that, although the Company will use its best
efforts to keep the information provided in this Agreement strictly confidential, the Company or
its counsel may present this Agreement and the information provided in answer to it to such parties
as they may deem advisable if called upon to establish the availability under any federal or state
securities laws of an exemption from registration of the private placement or if the contents
thereof are relevant to any issue in any action, suit or proceeding to which the Company or its
affiliates is a party, or by which they are or may be bound or as otherwise required by law or
regulatory authority.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(H)&nbsp;The individual signing below on behalf of any entity hereby warrants and represents that
he/she is authorized to execute this Agreement on behalf of such entity. If an individual, the
Purchaser has reached the age of majority in the state in which the Purchaser resides. The
execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all requisite action, if any, in respect thereof on the part of
Purchasers and no other proceedings on the part of Purchasers are necessary to consummate the
transactions contemplated hereby. This Agreement has been duly and validly executed and delivered
by Purchasers and constitutes a valid and binding obligation of Purchasers, enforceable against
Purchasers in accordance with its terms (subject to applicable bankruptcy, insolvency and similar
laws affecting creditors&#146; rights generally and subject, as to enforceability, to general principles
of equity (whether applied in a proceeding in equity or at law)).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(I)&nbsp;The Purchaser is aware that the offering of the Securities involves securities for which
only a limited trading market exists, thereby requiring any investment to be maintained for an
indefinite period of time. The purchase of the Securities involves risks which the Purchaser has
evaluated, and the Purchaser is able to bear the economic risk of the purchase of such Securities
and the loss of its entire investment. The undersigned is able to bear the substantial economic
risk of the investment for an indefinite period of time, has no need for liquidity in such
investment and can afford a complete loss of such investment. The Purchaser&#146;s overall commitment to
investments that are not readily marketable is not, and his acquisition of the Securities will not
cause such overall commitment to become, disproportionate to his net worth and the Purchaser has
adequate means of providing for its current needs and contingencies.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(J)&nbsp;The Purchaser acknowledges and agrees that there is no &#147;minimum&#148; offering amount for the
Securities offered hereby. The Purchaser acknowledges and agrees that funds may be immediately
released to the Company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(K)&nbsp;In entering into this Agreement and in purchasing the Securities, the Purchaser further
acknowledges that:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(i)&nbsp;The Company has informed the Purchaser that the Securities have not been offered for sale
by means of general advertising or solicitation and the Purchaser acknowledges that it has either a
pre-existing personal or business relationship with either the Company or any of its officers,
directors or controlling person, of a nature and duration such as would enable a reasonable prudent
investor to be
aware of the character, business acumen, and general business and financial circumstances of the
Company and an investment in the Securities.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

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

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

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(ii)&nbsp;Neither the Securities nor any interest therein may be resold by the Purchaser in the
absence of a registration under the Securities Act or an exemption from registration. In
particular, the Purchaser is aware that all of the foregoing described Securities will be
&#147;restricted securities&#148;, as such term is defined in Rule&nbsp;144 promulgated under the Securities Act
(&#147;<U>Rule&nbsp;144</U>&#148;), and they may not be sold pursuant to Rule&nbsp;144, unless the conditions thereof
are met. Other than set forth in this Agreement, the Company has no obligation to register any
securities purchased or issuable hereunder.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(iii)&nbsp;The following legends (or similar language) shall be placed on the certificate(s) or
other instruments evidencing the Securities:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE &#147;ACT&#148;), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH
NOTES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1)&nbsp;A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2)&nbsp;THE COMPANY RECEIVES
AN OPINION OF COUNSEL TO THE HOLDER OF SUCH NOTES, WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH NOTES MAY BE OFFERED, SOLD,
PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(iv)&nbsp;The Company may at any time place a stop transfer order on its transfer books against
the Securities. Such stop order will be removed, and further transfer of the Securities will be
permitted, upon an effective registration of the respective Securities, or the receipt by the
Company of an opinion of counsel satisfactory to the Company that such further transfer may be
effected pursuant to an applicable exemption from registration.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(L)&nbsp;The Company has employed its own legal counsel in connection with the Offering. The
Purchasers have not been represented by independent counsel in connection with the preparation of
this Agreement or the terms of this Offering and no investigation of the merits or fairness of the
Offering has been conducted on behalf of the Purchasers. Prospective Purchasers should consult
with their own legal, tax and financial advisors with respect to the Offering made pursuant to this
Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(M)&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> (insert name of Purchaser Representative: <U>if none leave
blank</U><I>) </I>has acted as the Purchaser&#146;s Purchaser Representative for purposes of the private
placement exemption under the Act. If the Purchaser has appointed a Purchaser Representative
(which term is used herein with the same meaning as given in Rule 501(h) of Regulation&nbsp;D), the
Purchaser has been advised by his Purchaser Representative as to the merits and risks of an
investment in the Company in general and the suitability of an investment in the Securities for the
Purchaser in particular.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(N)&nbsp;The undersigned hereby acknowledges that officers, affiliates, employees and directors of
the Company and/or the Selling Agents may purchase Securities in the Offering.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(O)&nbsp;It never has been represented, guaranteed or warranted by the Company, any of the
officers, directors, stockholders, partners, employees or agents of the Company, or any other
persons, whether expressly or by implication, that: (i)&nbsp;the Company or the Purchasers will realize
any given percentage of profits and/or amount or type of consideration, profit or loss as a result
of the Company&#146;s activities or the Purchaser&#146;s investment in the Company; or (ii)&nbsp;the past
performance or experience of the
management of the Company, or of any other person, will in any way indicate the predictable
results of the ownership of the Securities or of the Company&#146;s activities.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(P)&nbsp;The Purchaser acknowledges that any delivery to it of this Agreement relating to the
Securities prior to the determination by the Company of its suitability as a Purchaser shall not
constitute an offer of the Securities until such determination of suitability shall be made, and
the Purchaser hereby agrees that it shall promptly return this Agreement and the other Offering
documents to the Company upon request. The Purchaser understands that the Company shall have the
right to accept or reject this subscription in whole or in part. Unless this subscription is
accepted in whole or in part by the Company this subscription shall be deemed rejected in whole.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Article&nbsp;IV</B><BR>
<U><B>INDEMNIFICATION</B></U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>4.1 Indemnification by the Company</B>. The Company agrees to defend, indemnify and hold harmless
the Purchasers and shall reimburse Purchasers for, from and against each claim, loss, liability,
cost and expense (including without limitation, interest, penalties, costs of preparation and
investigation, and the reasonable fees, disbursements and expenses of attorneys, accountants and
other professional advisors) (collectively, &#147;<U>Losses</U>&#148;) directly or indirectly relating to,
resulting from or arising out of any untrue representation, misrepresentation, breach of warranty
or non-fulfillment of any covenant, agreement or other obligation by or of the Company contained
herein or in any certificate, document, or instrument delivered to Purchasers pursuant hereto.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>4.2 Indemnification by Purchasers</B>. Purchasers agrees to defend, indemnify and hold harmless
the Company and shall reimburse the Company for, from and against all Losses directly or indirectly
relating to, resulting from or arising out of any untrue representation, misrepresentation, breach
of warranty or non-fulfillment of any covenant, agreement or other obligation of the Purchasers
contained herein or in any certificate, document or instrument delivered to the Company pursuant
hereto.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>4.3 Procedure</B>. The indemnified party shall promptly notify the indemnifying party of any
claim, demand, action or proceeding for which indemnification may be sought under Sections&nbsp;4.1 or
4.2 of this Agreement, and, if such claim, demand, action or proceeding is a third party claim,
demand, action or proceeding (collectively, a &#147;<U>Claim</U>&#148;), the indemnifying party will have
the right at its expense to assume the defense thereof using counsel reasonably acceptable to the
indemnified party. The indemnified party shall have the right to participate, at its own expense,
with respect to any such third party Claim. In connection with any such third party Claim,
Purchasers and the Company shall cooperate with each other and provide each other with access to
relevant books and records in their possession. No such third party Claim shall be settled without
the prior written consent of the indemnified party, which shall not be unreasonably withheld. If a
firm written offer is made to settle any such third party Claim and the indemnifying party proposes
to accept such settlement and the indemnified party refuses to consent to such settlement, then:
(i)&nbsp;the indemnifying party shall be excused from, and the indemnified party shall be solely
responsible for, all further defense of such third party Claim; and (ii)&nbsp;the maximum liability of
the indemnifying party relating to such third party Claim shall be the amount of the proposed
settlement if the amount thereafter recovered from the indemnified party on such third party Claim
is greater than the amount of the proposed settlement.
</DIV>

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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.1 Survival</B>. The representations and warranties set forth in Articles II and III
hereof shall survive the Closing. No investigation made by or on behalf of either party shall
affect the representations and warranties made pursuant to this Agreement. No party makes any
additional or implied representations other than those set forth herein.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.2 Expenses</B>. Each party hereto shall bear and pay all costs and expenses incurred by it in
connection with the transactions contemplated hereby, including fees and expenses of its own
brokers, finders, financial consultants, accountants and counsel.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.3 Entire Agreement</B>. This Agreement, including the Exhibits, contains the entire agreement
and understanding of the parties with respect to its subject matter. This Agreement supersedes all
prior arrangements and understandings between the parties, either written or oral, with respect to
its subject matter.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.4 Binding Effect of Subscription</B>. The Purchaser hereby acknowledges and agrees, subject to
any applicable state securities laws that the subscription and application hereunder are
irrevocable, that the Purchaser is not entitled to cancel, terminate or revoke this Agreement and
that this Agreement shall survive the death or disability of the Purchaser and shall be binding
upon and inure to the benefit of the Purchaser and his heirs, executors, administrators,
successors, legal representatives, and assigns. If the Purchaser is more than one person, the
obligations of the Purchaser hereunder shall be joint and several, and the agreements,
representations, warranties, and acknowledgments herein contained shall be deemed to be made by and
be binding upon each such person and his heirs, executors, administrators, successors, legal
representatives, and assigns.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.5 Captions</B>. The table of contents and captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.6 Amendments; Waivers</B>. No provision of this Agreement may be waived or amended except in a
written instrument signed, in the case of an amendment, by the Company and the Purchasers holding a
majority of the Securities subscribed for in the Offering or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought (in the case of the Purchasers, such waiver
shall be in writing and approved by a majority of the Purchasers). No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such right.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.7 Notices</B>. Any notice, demand or other communication which any party hereto may be
required, or may elect, to give to anyone interested hereunder shall be sufficiently given if (a)
deposited, postage prepaid, in a United States mail box, stamped, registered or certified mail,
return receipt requested, addressed to such address as may be listed on the books of the Company,
or, if to the Company, the Company&#146;s executive office, or (b)&nbsp;delivered personally at such address.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.8 Execution</B>. This Agreement may be executed through the use of separate signature pages or
in any number of counterparts, and each of such counterparts shall, or all purposes, constitute one
agreement binding on all parties, notwithstanding that all parties are not signatories to the same
counterpart.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.9 Severability</B>. Each provision of this Agreement is intended to be severable from every
other provisions, and the invalidity or illegality of any portion hereof, shall not affect the
validity or legality of the remainder hereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.10 Non-Assignment</B>. This Agreement is not transferable or assignable by the Purchaser except
as may be provided herein.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.11 Governing Law</B>. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced in accordance with
the internal laws of the State of New Jersey, without regard to the principles of conflicts of law
thereof. Each party agrees that all proceedings concerning the interpretations, enforcement and
defense of the
transactions contemplated by this Agreement (whether brought against a party hereto or its
respective Affiliates, employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the State of New Jersey (the &#147;<U>New Jersey Courts</U>&#148;). Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New Jersey Courts for the
adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any proceeding, any claim that it is not personally subject to the jurisdiction of any New Jersey
Court, or that such proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to process being served
in any such proceeding by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury in any proceeding
arising out of or relating to this Agreement or the transactions contemplated hereby. If either
party shall commence a proceeding to enforce any provisions of this Agreement, then the prevailing
party in such proceeding shall be reimbursed by the other party for its reasonable attorney&#146;s fees
and other reasonable costs and expenses incurred with the investigation, preparation and
prosecution of such Proceeding.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.12 Successors and Assigns</B>. This Agreement shall be binding upon and inure to the benefit of
the Company, the Purchasers and their respective successors and permitted assigns.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Signature pages to Subscription Agreement Follows</B>
</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: 7.50in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement to be executed
by their signature as natural persons or by individuals by their duly authorized officers as of the

&nbsp;_____&nbsp;
day of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2011.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>THE COMPANY:</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>TEAMSTAFF, INC.:</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="40%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV></B>
Zachary Parker,
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chief Executive Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

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

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

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

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>EXECUTION BY AN INDIVIDUAL</B><BR>
(Not applicable to entities)
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">IF YOU ARE PURCHASING SECURITIES WITH YOUR SPOUSE, YOU MUST BOTH SIGN THIS SIGNATURE PAGE.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">PLEASE INDICATE DESIRED TYPE OF OWNERSHIP OF SECURITIES:
</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"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Individual</DIV></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"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Joint Tenants (rights of survivorship)</DIV></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"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Tenants in Common (no rights of survivorship)</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">I represent that the foregoing information is true and correct.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">IN WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement and agrees to the
terms hereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Dated: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> ___, 2011
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Subscription Amount: $<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Number of Shares of Common Stock to be purchased: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</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="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&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">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Name of Investor &#151; Please Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Signature)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Name of co-Investor &#151; Please Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Signature of Co-Investor)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</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="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px"><I>Exact name Shares are to be issued under</I>:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>Address for Delivery of Certificates</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>(if not the same as in Questionnaire):</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

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

<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /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: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PARTNERSHIP SIGNATURE PAGE</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The undersigned PARTNERSHIP hereby represents and warrants that the person signing this
Subscription Agreement on behalf of the PARTNERSHIP is a general partner of the PARTNERSHIP, has
been duly authorized by the PARTNERSHIP to acquire the Securities and sign this Subscription
Agreement on behalf of the PARTNERSHIP and, further, that the undersigned PARTNERSHIP has all
requisite authority to purchase such Securities and enter into the Subscription Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">IN WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement and agrees to the
terms hereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Dated: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> _____, 2011
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Subscription Amount: $<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Number of Shares of Common Stock to be purchased: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</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="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" colspan="3">Name of Partnership<BR>
(Please Type or Print)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Signature)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Please Type or Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Please Type or Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</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="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px"><I>Exact name Shares are to be issued under</I>:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>Address for Delivery of Certificates</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>(if not the same as in Questionnaire):</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

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

<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /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: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CORPORATION/LIMITED LIABILITY COMPANY SIGNATURE PAGE</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The undersigned CORPORATION or LIMITED LIABILITY COMPANY hereby represents and warrants that the
person signing this Subscription Agreement on behalf of the CORPORATION or LIMITED LIABILITY
COMPANY has been duly authorized by all requisite action on the part of the CORPORATION or LIMITED
LIABILITY COMPANY to acquire the Securities and sign this Subscription Agreement on behalf of the
CORPORATION or LIMITED LIABILITY COMPANY and, further, that the undersigned CORPORATION or LIMITED
LIABILITY COMPANY has all requisite authority to purchase the Securities and enter into this
Subscription Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">IN WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement and agrees to the
terms hereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Dated: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> _____, 2011
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Subscription
Amount: $<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Number of Shares of Common Stock to be purchased: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</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="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" colspan="3"><DIV style="margin-left:0%">Name of Corporation<br>
Or Limited Liability Company<br>
(Please Type or Print)</div></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Signature
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Please Type or Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Please Type or Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</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="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px"><I>Exact name Shares are to be issued under</I>:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>Address for Delivery of Certificates</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>(if not the same as in Questionnaire):</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</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">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>TRUST/RETIREMENT PLAN SIGNATURE PAGE</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The undersigned TRUST or RETIREMENT PLAN hereby represents and warrants that the persons signing
this Subscription Agreement on behalf of the TRUST or RETIREMENT PLAN are duly authorized to
acquire the Securities and sign this Subscription Agreement on behalf of the TRUST or RETIREMENT
PLAN and, further, that the undersigned TRUST or RETIREMENT PLAN has all requisite authority to
purchase such Securities and enter into the Subscription Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">IN WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement and agrees to the
terms hereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Dated: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> _____, 2011
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Subscription
Amount: $<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Number of Shares of Common Stock to be purchased: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</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="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" colspan="3">Title of Trust or Retirement Plan<BR>
(Please Type or Print)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top" colspan="2"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Signature of Trustee or<BR>
Authorized Signatory
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" colspan="2" nowrap>Name of
Trustee:</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Please Type or Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top" colspan="2"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Signature of Co-Trustee if
applicable
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" colspan="2" nowrap>Name of
Co-Trustee:</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Please Type or Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</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="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px"><I>Exact name Shares are to be issued under</I>:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>Address for Delivery of Certificates</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>(if not the same as in Questionnaire):</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



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

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



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>3
<FILENAME>c17252exv10w4.htm
<DESCRIPTION>EXHIBIT 10.4
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 10.4</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>Exhibit&nbsp;10.4</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="25%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>Name of Subscriber</I>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Agreement No.</I></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">CONFIDENTIAL SUBSCRIPTION AGREEMENT
</DIV>


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


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">Private Sale of Securities
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">Consisting of up to approximately 500,000 Shares of Common Stock
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">Aggregate Offering Amount: $250,000
</DIV>




<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>THIS SUBSCRIPTION AGREEMENT CONTAINS MATERIAL NONPUBLIC INFORMATION CONCERNING TEAMSTAFF, INC.
AND IS PREPARED SOLELY FOR THE USE OF THE OFFEREE NAMED ABOVE. ANY USE OF THIS INFORMATION FOR ANY
PURPOSE OTHER THAN IN CONNECTION WITH THE CONSIDERATION OF AN INVESTMENT IN THE SECURITIES OFFERED
HEREBY MAY SUBJECT THE USER TO CRIMINAL AND CIVIL LIABILITY.</B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK AND
IMMEDIATE DILUTION AND MAY BE PURCHASED ONLY BY PERSONS WHO QUALIFY AS &#147;ACCREDITED INVESTORS&#148; UNDER
RULE 501 (a)&nbsp;OF REGULATION D UNDER THE SECURITIES ACT.</B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>THIS DOCUMENT HAS NOT BEEN FILED WITH OR REVIEWED BY THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR ANY OTHER COMMISSION OR REGULATORY AUTHORITY, AND HAS NOT BEEN FILED WITH OR REVIEWED
BY THE ATTORNEY GENERAL OF ANY STATES NOR HAS ANY SUCH COMMISSION, AUTHORITY OR ATTORNEY GENERAL
DETERMINED WHETHER IT IS ACCURATE OR COMPLETE OR PASSED UPON OR ENDORSED THE MERITS OF THIS
OFFERING. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>TEAMSTAFF, INC.</B><BR>
1 Executive Drive<BR>
Somerset, NJ 08873<BR>
Tel. (866)&nbsp;352-5304
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>March
7, 2011</B>
</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: 7.50in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CONFIDENTIAL SUBSCRIPTION AGREEMENT</B>
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Items to be delivered by all Investors:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">a. One (1)&nbsp;completed and executed Subscription Agreement, including the Investor
Questionnaire.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">b. Payment in the amount of subscription by granting a credit to the Company of
amounts payable by the Company to the Purchaser.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">c. The Purchaser hereby grants the Company a credit in the amount of $<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
against any obligation of the Company to the Purchaser payable within twelve months of the
Closing Date, except for base salary.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>THE SUBSCRIBER IS RESPONSIBLE FOR ALL WIRE TRANSFER FEES IMPOSED BY THE SUBSCRIBER&#146;S BANK.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ALL DOCUMENTS SHOULD BE RETURNED TO:</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">TeamStaff, Inc.<BR>
c/o Becker &#038; Poliakoff, LLP<BR>
45 Broadway, 8<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> Floor<BR>
New York, New York 10006
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>THE FOLLOWING EXHIBITS ARE ANNEXED TO<BR>
AND FORM PART OF THIS SUBSCRIPTION AGREEMENT:</B>
</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">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The undersigned (the &#147;<U>Subscriber</U>&#148; or the &#147;<U>Purchaser</U>&#148;) hereby subscribes to
purchase from TeamStaff, Inc., a New Jersey corporation (the &#147;<U>Company</U>&#148;), shares of the
Company&#146;s Common Stock, at a purchase price per share equal to closing bid price as reported by
Nasdaq on the Closing Date (the &#147;<U>Purchase Price</U>&#148;). The Company is offering hereby (the
&#147;<U>Offering</U>&#148;) a maximum of approximately 500,000 shares of its Common Stock (the &#147;<U>Common
Shares</U>&#148;).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Article&nbsp;I</B><BR>
<U><B>SALE OF SECURITIES</B></U>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><B>1.1 Sale of Securities; Offering Period</B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%"><B>(a)&nbsp;</B>Subject to the terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, the Company hereby agrees to issue and sell to the Subscriber and
the Subscriber agrees to purchase from the Company, upon Closing, the Common Shares as described
herein for the Purchase Price as set forth on the signature page of this Subscription Agreement
executed by the Subscriber. The number of Common Shares purchased hereunder by a Subscriber shall
be as specified on the signature page of this Subscription Agreement executed by the Subscriber.
The Company may reject any subscription in whole or in part. The securities being offered consist
of a total of up to approximately 500,000 Common Shares, par value $0.001 per share. The Common
Shares are being offered at the Purchase Price for a minimum subscription amount of $25,000, unless
waived by the Company. This Offering is only being made to &#147;accredited investors&#148; (as defined in
Rule&nbsp;501 under the Securities Act of 1933, as amended (the &#147;<U>Securities Act</U>&#148;)) in reliance
upon an exemption from registration under Section&nbsp;4(2) of the Securities Act and/or Regulation&nbsp;D
promulgated thereunder, and on similar exemptions under applicable state laws, and by officers and
directors of the Company. The Common Shares may be referred to herein as the &#147;<U>Securities</U>&#148;.
The Closing Date will be the date on which this Agreement is counter-signed by the Company, which
shall occur after the close of trading on Nasdaq.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%"><B>(b)&nbsp;</B>The Common Shares are being offered during the offering period commencing on the date set
forth on the cover page of this Subscription Agreement and terminating on the earlier of (a)&nbsp;5:00
p.m. (New York time) on April&nbsp;15, 2011, or (b)&nbsp;the date on which all Common Shares authorized for
sale have been sold (the &#147;<U>Offering Period</U>&#148;).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%"><B>(c)&nbsp;</B>The Purchaser hereby elects to pay the Purchase Price by granting a credit (the &#147;Credit&#148;)
to the Company for amount of the Purchase Price. The Credit, at the option of the Company, may be
used for any obligation of the Company to the Purchaser payable within twelve months of the Closing
Date except for base salary. The Common Shares shall be held by the Company as security for the
payment of the Purchase Price until the Purchase Price is paid in full through the application of
the Credit by the Company. In the event the Credit is insufficient to pay the Purchase Price in
full, upon the one year anniversary of the Closing Date, such number of Common Shares equal to the
Credit divided by the Purchase Price shall be delivered to the Purchaser, and the remainder of the
Common Shares shall be surrendered for cancellation to the Company. The Company shall have no
recourse against the Purchaser for any amount of the Purchase Price.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>High Risk Investment.</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">This investment is speculative and should only be made by investors who can afford the risk of
loss of their entire investment. The proceeds from the sale of the Common Shares will be used to
fund short term capital needs to enable the Company to maintain operations until additional funding
is received. The Company may sell additional securities after the completion of this transaction to
further fund its operations. Unless the Company is successful in completing these additional
funding transactions, or is able to generate sufficient revenue from operations, the Company may be
forced to significantly curtail its operations and the Subscribers will lose their entire
investment.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&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">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Summary of Offering</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="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="75%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top"><B>Offering Summary:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify">The Company is offering a maximum of approximately 500,000 Common Shares solely to accredited investors
on a best efforts basis.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD align="left" 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 align="left" valign="top"><B>Restricted Offerees</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify">This Offering is restricted to officers and directors of the Company.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD align="left" 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 align="left" valign="top"><B>Minimum Subscription:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify">The minimum subscription amount for the Common Shares is $25,000, although the Company may accept
subscriptions in lesser amounts in its sole discretion.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD align="left" 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 align="left" valign="top"><B>No Registration Rights:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify">Subscribers shall be entitled to no registration rights and are receiving restricted shares of the
Company.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD align="left" 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 align="left" valign="top"><B>Subscription Procedure:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify">In order to subscribe for the Common Shares, each prospective subscriber must complete, execute and
deliver to the Company a signature page evidencing such prospective subscriber&#146;s execution of this
Subscription Agreement along with a completed confidential Purchaser Questionnaire.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD align="left" 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 align="left" valign="top"><B>Restrictions on
Transferability:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify">The Common Shares have not been registered under the Securities Act or under the securities laws of the
United States or of any state or other jurisdiction. As a result, the Common Shares may not be
transferred without registration under the Securities Act, or, if applicable, the securities laws of
any state or other jurisdiction, unless in the opinion of counsel to the Company, such registration is
not then required because of the availability of an exemption from registration.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD align="left" 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 align="left" valign="top"><B>Investment:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify">An investment in the Company is highly speculative, and each investor bears the risk of losing his, her
or its entire investment. All Purchasers must complete and execute a Subscription Agreement and a
confidential Purchaser Questionnaire. Purchasers must set forth representations in such documents that
he, she or it is purchasing the Common Shares for investment purposes only and without a view toward
distribution. The Common Shares are suitable investments only for sophisticated investors for whom an
investment in the Common Shares does not constitute a complete investment program and who fully
understand, are willing to assume, and who have the financial resources necessary to withstand, the
risks involved in investing in the Common Shares and who can bear the potential loss of their entire
investment. The Common Shares are being offered and sold only to persons who qualify as &#147;accredited
investors,&#148; as defined under Regulation&nbsp;D of the Securities Act.</DIV></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>1.2 No Escrow; No Minimum Offering Amount</B>. The Subscriber acknowledges and agrees that all
subscription amounts will be immediately released to the Company and in closings held, from time to
time, as determined by the Company at any time during the Offering Period. During the Offering
Period, subscription funds will not be placed into the escrow account and closings will be held
from time to time up to the sale of the maximum amount of Common Shares described in this
Subscription Agreement or the expiration of the Offering Period. The final Closing shall be either
the date on which this Offering is fully subscribed or the last date during the Offering Period on
which the Company accepts a subscription, whichever is latest. Each closing of the transactions
contemplated hereunder (the &#147;<U>Closing</U>&#148;) shall be deemed to occur at the offices of Becker &#038;
Poliakoff, LLP, 45 Broadway, 8<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> Floor,
New York, New York 10006, or at such other place as shall be mutually agreeable to the parties, at
11:00&nbsp;a.m., New York Time, on such other date as shall be mutually agreeable to the parties.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><B>1.3 Closing Matters</B>. At each Closing the following actions shall be taken:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(a)&nbsp;each Subscriber shall deliver its Purchase Price in immediately available United States
funds to the escrow account established for the Offering;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(b)&nbsp;the Company shall cause its stock transfer agent to deliver certificates representing the
Common Shares subscribed for to each Subscriber; and
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(c)&nbsp;each of the Company and the Subscriber shall deliver to the other signed copies of this
Substriction Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>1.4 Use of Proceeds. </B>The Company intends to use the proceeds derived from this Offering to
satisfy its working capital requirements and general corporate purposes. Management reserves the
right to utilize the net proceeds of the Offering in a manner in the best interests of the Company.
The amount of the net proceeds that will be invested in particular areas of the Company&#146;s business
will depend upon future economic conditions and business opportunities. To the extent that the
Company continues to incur losses from operations, such losses will be funded from its general
funds, including the net proceeds of this Offering.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>1.5 Company Information. </B>As an officer and/or director of TeamStaff, you acknowledge that you
are fully aware of all aspects of the Company&#146;s business, the risks of an investment in the Company
and the risks of a purchase of restricted Common Stock of the Company. You have been provided with
information on the status of other business and financial transactions that are pending and have
not been publically disclosed. You also have been given access to the officers of the Company to
obtain any additional information you have deemed necessary.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>1.6 Non-public Information. </B>The fact of this offering, and certain other material financial
and business matters that have not been publically disclosed, constitute material non-public
information of the Company. <B>Any use of this information by you, or any other person to whom you
have communicated such information, for any purpose other than your consideration of an investment
in TeamStaff, may be a criminal offense and subject you to criminal and civil liability.</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><B>1.7 Subscriber Information</B>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="96%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&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"><B>(a)</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap><B>Name(s) of SUBSCRIBER(s): </B><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>(b)</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Principal Amount of Securities Subscribed for:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt; text-indent: 4%">&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">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="96%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>(c)</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Accredited Investor Status</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Subscriber acknowledges and agrees that the offering and sale of the Securities are
intended to be exempt from registration under the Securities Act, by virtue of Section&nbsp;4(2) thereof
and/or Regulation&nbsp;D promulgated thereunder. In accordance therewith and in furtherance thereof,
the Subscriber
represents and warrants to and agrees with the Company as follows &#091;Please check statements
applicable to the Subscriber&#093;:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">The Subscriber is an Accredited Investor because the Subscriber is (check appropriate item):
</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a bank as defined in Section&nbsp;3(a)(2) of the Securities Act;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a broker or dealer registered pursuant to Section&nbsp;15 of the Securities Exchange
Act of 1934 as amended (the &#147;<U>Exchange Act</U>&#148;);</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">an insurance company as defined in Section&nbsp;2(13) of the Securities Act;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">an investment company registered under the Investment Company Act of 1940, as
amended or a business development company as defined in Section&nbsp;2(a)(48) of such
act;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d)&nbsp;of the Small Business Investment Act of
1958;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">an employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, as amended, if the investment decision is
made by a plan fiduciary, as defined in Section&nbsp;3(21) of such Act, which is either
a bank, savings and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of $5,000,000
or, if a self-directed plan, with investment decisions made solely by persons that
are accredited investors;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a private business development company as defined in Section&nbsp;202(a)(22) of the
Investment Advisers Act of 1940, as amended;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">an organization described in Section&nbsp;501(c)(3) of the Internal Revenue Code, a
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the securities offered, with total assets in
excess of $5,000,000;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a natural person whose individual net worth or joint net worth with that
person&#146;s spouse, at the time of his purchase exceeds $l,000,000;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a natural person who had an individual income in excess of $200,000 in each of
the two most recent years or joint income with that person&#146;s spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching the
same income level in the current year;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the securities offered, whose purchase is directed by a
sophisticated person as described in Rule&nbsp;506(b)(2)(ii) of the Exchange Act; or</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">an entity in which all of the equity owners are accredited investors. (If this
alternative is checked, the Subscriber must identify each equity owner and provide
statements signed by each demonstrating how each qualifies as an accredited
investor.)</DIV></TD>
</TR>

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

<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /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: 7.50in">

<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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a plan established and maintained by a state, its political subdivisions, or any
agency or instrumentality thereof, for the benefit of its employees, if such plan
has total assets in excess of $5,000,000</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a director or officer of the Company.</DIV></TD>
</TR>

</TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><B>(d)&nbsp;Additional Information.</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">The Subscriber has completed the signature page to this Subscription Agreement.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Article&nbsp;II</B><BR>
<U><B>REPRESENTATIONS AND WARRANTIES OF COMPANY</B></U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company hereby represents and warrants to the Purchasers as of the date of this Agreement
as follows:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(A)&nbsp;The Company is duly organized, validly existing and in good standing under the laws of its
state of incorporation, with all requisite power and authority to own, lease, license, and use its
properties and assets and to carry out the business in which it is engaged, except where the
failure to have or be any of the foregoing may not be expected to have a material adverse effect on
the Company&#146;s presently conducted businesses. The Company is not in violation of any of the
provisions of its articles of incorporation, bylaws or other organizational or charter documents.
The Company is duly qualified to transact the business in which it is engaged and is in good
standing as a foreign corporation in every jurisdiction in which its ownership, leasing, licensing
or use of property or assets or the conduct of its business make such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may be, could not,
individually or in the aggregate, have or reasonably be expected to result in (i)&nbsp;a material and
adverse effect on the legality, validity or enforceability of this Agreement, (ii)&nbsp;a material and
adverse effect on the results of operations, assets, prospects, business or condition (financial or
otherwise) of the Company, taken as a whole, or (iii)&nbsp;an adverse impairment to the Company&#146;s
ability to perform on a timely basis its obligations hereunder (any of (i), (ii)&nbsp;or (iii), a
&#147;<U>Material Adverse Effect</U>&#148;).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(B)&nbsp;The Company
is currently authorized to issue 40,000,000 shares of Common Stock, $0.001
par value per share and 5,000,000 shares of Preferred Stock, $0.10 par value per share. Except as
may be described in this Agreement, no securities of the Company are entitled to preemptive or
similar rights, and no entity or person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions contemplated by this
Agreement unless any such rights have been waived. The issue and sale of the Securities will not
(except pursuant to their terms thereunder), immediately or with the passage of time, obligate the
Company to issue shares of Common Stock or other securities to any entity or person and will not
result in a right of any holder of Company securities to adjust the exercise, conversion, exchange
or reset price under such securities.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(C)&nbsp;The Company has the requisite corporate power and authority to enter into, deliver and
consummate the transactions contemplated by this Agreement, to issue and sell the Securities and
deliver the Common Shares, and otherwise to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation by it of the transactions contemplated thereby have
been duly authorized by the Company and no further action is required by the Company in connection
therewith. When executed and delivered by the Company, this Agreement will constitute the legal,
valid and binding obligation of the Company, enforceable as to the Company in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, arrangement,
fraudulent conveyance or transfer, moratorium or other laws or court decisions, now or hereinafter
in effect, relating to or affecting the rights of creditors generally and as may be limited by
general principles of equity and the discretion of the court having jurisdiction in an enforcement
action (regardless of whether such enforceability is considered in a proceeding in equity or at
law).
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&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: 7.50in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(D)&nbsp;The Company is not required to obtain any consent, waiver, authorization or order of, give
any notice to, or make any filing or registration with, any court or other federal, state, local or
other governmental authority or other person or entity in connection with the execution, delivery
and performance by the Company of this Agreement or the issuance, sale or delivery of the
Securities other than (i)&nbsp;any filings required by state securities laws, (ii)&nbsp;the filing of a
Notice of a Sale of Securities on Form&nbsp;D with the Commission under Regulation&nbsp;D of the Securities
Act, (iii)&nbsp;those that have been made or obtained prior to or contemporaneously with the date of
this Agreement, and (iv)&nbsp;filings pursuant to the Exchange Act.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(E)&nbsp;The execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby in accordance with the terms
and conditions described herein do not and will not: (i)&nbsp;conflict with or violate any provision of
the Company&#146;s certificate or articles of incorporation, bylaws or other organizational or charter
documents, or (ii)&nbsp;violate, conflict with, or constitute a default or breach (or an event that
with notice or lapse of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice, lapse of time or
both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or
otherwise) or other understanding to which the Company is a party or by which any property or asset
of the Company is bound or affected, or (iii)&nbsp;result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or governmental authority to
which the Company is subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company is bound or affected; except in the case of each of
clauses (ii)&nbsp;and (iii), such as could not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(F)&nbsp;The Common Shares have been duly authorized and, when issued and paid for in accordance
with this Agreement, will be duly and validly issued, fully paid and nonassessable and will be
issued free and clear of all liens and encumbrances, other than restrictions on transfer under
applicable securities laws.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(G)&nbsp;Except as disclosed in the SEC Reports, there is no pending or, to the best knowledge of
the Company, threatened action, suit, proceeding or investigation before any court, governmental
agency or body, or arbitrator having jurisdiction over the Company, or any of its affiliates that
would affect the execution by the Company or the performance by the Company of its obligations
under this Agreement, and all other agreements entered into by the Company relating hereto. Except
as disclosed in the SEC Reports, there is no pending or, to the best knowledge of the Company,
threatened action, suit, proceeding or investigation before any court, governmental agency or body,
or arbitrator having jurisdiction over the Company, or any of its affiliates which litigation if
adversely determined could have a material adverse effect on the Company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(H)&nbsp;The Company has no liabilities or obligations which are material, individually or in the
aggregate, which are not disclosed in the SEC Reports, other than those incurred in the ordinary
course of the Company&#146;s businesses and which, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the Company&#146;s financial condition.
</DIV>
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<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Article&nbsp;III</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><U><B>REPRESENTATIONS AND WARRANTIES OF PURCHASERS</B></U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">By signing this Agreement, each undersigned Purchaser hereby represents and warrants to the
Company as follows as an inducement to the Company to accept the subscription of the Purchaser:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(A)&nbsp;The Purchaser acknowledges and agrees that (i)&nbsp;the offering and sale of the Securities are
intended to be exempt from registration under the Securities Act by virtue of Section&nbsp;4(2) of the
Securities Act and/or Regulation&nbsp;D promulgated thereunder, (ii)&nbsp;the Securities have not been
registered under the Securities Act and (iii)&nbsp;that the Company has represented to the Purchaser
(assuming the veracity of the representations of the Purchaser made herein that the Securities have
been offered and sold by the Company in reliance upon an exemption from registration provided in
Section&nbsp;4(2) of the Securities Act and Regulation&nbsp;D thereunder. In accordance therewith and in
furtherance thereof, the Purchaser represents and warrants to and agrees with the Company that it
is an accredited investor (as defined in Rule&nbsp;501 promulgated under the Securities Act) for the
reason indicated in Article&nbsp;I of this Subscription Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(B)&nbsp;The Purchaser hereby represents and warrants that the Purchaser is acquiring the
Securities hereunder for its own account for investment and not with a view to distribution, and
with no present intention of distributing the Securities or selling the Securities for
distribution. The Purchaser understands that the Securities are being sold to the Purchaser in a
transaction which is exempt from the registration requirements of the Securities Act. Accordingly,
the Purchaser acknowledges that it has been advised that the Securities have not been registered
under the Securities Act and are being sold by the Company in reliance upon the veracity of the
Purchaser&#146;s representations contained herein and upon the exemption from the registration
requirements provided by the Securities Act and the securities laws of all applicable states. The
Purchaser&#146;s acquisition of the Securities shall constitute a confirmation of the foregoing
representation and warranty and understanding thereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(C)&nbsp;The Purchaser (or its &#147;<U>Purchaser Representative</U>&#148;, if any) has such knowledge and
experience in financial and business matters as is required for evaluating the merits and risks of
making this investment, and the Purchaser or its Purchaser Representative(s) has received such
information requested by the Purchaser concerning the business, management and financial affairs of
the Company in order to evaluate the merits and risks of making this investment. Further, the
Purchaser acknowledges that the Purchaser has had the opportunity to ask questions of, and receive
answers from, the officers of the Company concerning the terms and conditions of this investment
and to obtain information relating to the organization, operation and business of the Company and
of the Company&#146;s contracts, agreements and obligations or needed to verify the accuracy of any
information contained herein or any other information about the Company. Except as set forth in
this Agreement, no representation or warranty is made by the Company to induce the Purchaser to
make this investment, and any representation or warranty not made herein or therein is specifically
disclaimed and no information furnished to the Purchaser or the Purchaser&#146;s advisor(s) in
connection with the sale were in any way inconsistent with the information stated herein. The
Purchaser further understands and acknowledges that no person has been authorized by the Company to
make any representations or warranties concerning the Company, including as to the accuracy or
completeness of the information contained in this Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(D)&nbsp;The Purchaser is making the foregoing representations and warranties with the intent that
they may be relied upon by the Company in determining the suitability of the sale of the Securities
to the Purchaser for purposes of federal and state securities laws. Accordingly, each Purchaser
represents and warrants that the information stated herein is true, accurate and complete, and
agrees to notify and supply corrective information promptly to the Company as provided above if any
of such information becomes inaccurate or incomplete. The Purchaser has completed this Agreement
and Questionnaire, has delivered it herewith and represents and warrants that it is accurate and
true in all respects and that it accurately and completely sets forth the financial condition of
the Purchaser on the date hereof. The Purchaser has no reason to expect there will be any material
adverse change in its financial condition and will advise the Company of any such changes occurring
prior to the closing or termination of the Offering.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(E)&nbsp;The Purchaser is not subscribing for any of the Securities as a result of or subsequent to
any advertisement, article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, any seminar or meeting, or any solicitation of
a
subscription by a person not previously known to the Purchaser in connection with investments
in Securities generally.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(F)&nbsp;The Purchaser has received or obtained access to certain information regarding the
Company, including this Agreement, the SEC Reports and other accompanying documents of the Company
receipt of which is hereby acknowledged. The Purchaser has carefully reviewed all information
provided to it and has carefully evaluated and understands the risks described therein related to
the Company and an investment in the Company, and understands and has relied only on the
information provided to it in writing by the Company relating to this investment. No agent prepared
any of the information to be delivered to prospective investors in connection with this
transaction. Prospective investors are advised to conduct their own review of the business,
properties and affairs of the Company before subscribing to purchase the Securities.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(G)&nbsp;The Purchaser also understands and agrees that, although the Company will use its best
efforts to keep the information provided in this Agreement strictly confidential, the Company or
its counsel may present this Agreement and the information provided in answer to it to such parties
as they may deem advisable if called upon to establish the availability under any federal or state
securities laws of an exemption from registration of the private placement or if the contents
thereof are relevant to any issue in any action, suit or proceeding to which the Company or its
affiliates is a party, or by which they are or may be bound or as otherwise required by law or
regulatory authority.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(H)&nbsp;The individual signing below on behalf of any entity hereby warrants and represents that
he/she is authorized to execute this Agreement on behalf of such entity. If an individual, the
Purchaser has reached the age of majority in the state in which the Purchaser resides. The
execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all requisite action, if any, in respect thereof on the part of
Purchasers and no other proceedings on the part of Purchasers are necessary to consummate the
transactions contemplated hereby. This Agreement has been duly and validly executed and delivered
by Purchasers and constitutes a valid and binding obligation of Purchasers, enforceable against
Purchasers in accordance with its terms (subject to applicable bankruptcy, insolvency and similar
laws affecting creditors&#146; rights generally and subject, as to enforceability, to general principles
of equity (whether applied in a proceeding in equity or at law)).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(I)&nbsp;The Purchaser is aware that the offering of the Securities involves securities for which
only a limited trading market exists, thereby requiring any investment to be maintained for an
indefinite period of time. The purchase of the Securities involves risks which the Purchaser has
evaluated, and the Purchaser is able to bear the economic risk of the purchase of such Securities
and the loss of its entire investment. The undersigned is able to bear the substantial economic
risk of the investment for an indefinite period of time, has no need for liquidity in such
investment and can afford a complete loss of such investment. The Purchaser&#146;s overall commitment to
investments that are not readily marketable is not, and his acquisition of the Securities will not
cause such overall commitment to become, disproportionate to his net worth and the Purchaser has
adequate means of providing for its current needs and contingencies.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(J)&nbsp;The Purchaser acknowledges and agrees that there is no &#147;minimum&#148; offering amount for the
Securities offered hereby. The Purchaser acknowledges and agrees that funds may be immediately
released to the Company.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(K)&nbsp;In entering into this Agreement and in purchasing the Securities, the Purchaser further
acknowledges that:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(i)&nbsp;The Company has informed the Purchaser that the Securities have not been offered for sale
by means of general advertising or solicitation and the Purchaser acknowledges that it has either a
pre-existing personal or business relationship with either the Company or any of its officers,
directors or controlling person, of a nature and duration such as would enable a reasonable prudent
investor to be
aware of the character, business acumen, and general business and financial circumstances of the
Company and an investment in the Securities.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(ii)&nbsp;Neither the Securities nor any interest therein may be resold by the Purchaser in the
absence of a registration under the Securities Act or an exemption from registration. In
particular, the Purchaser is aware that all of the foregoing described Securities will be
&#147;restricted securities&#148;, as such term is defined in Rule&nbsp;144 promulgated under the Securities Act
(&#147;<U>Rule&nbsp;144</U>&#148;), and they may not be sold pursuant to Rule&nbsp;144, unless the conditions thereof
are met. Other than set forth in this Agreement, the Company has no obligation to register any
securities purchased or issuable hereunder.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(iii)&nbsp;The following legends (or similar language) shall be placed on the certificate(s) or
other instruments evidencing the Securities:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE &#147;ACT&#148;), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH
NOTES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1)&nbsp;A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2)&nbsp;THE COMPANY RECEIVES
AN OPINION OF COUNSEL TO THE HOLDER OF SUCH NOTES, WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH NOTES MAY BE OFFERED, SOLD,
PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(iv)&nbsp;The Company may at any time place a stop transfer order on its transfer books against
the Securities. Such stop order will be removed, and further transfer of the Securities will be
permitted, upon an effective registration of the respective Securities, or the receipt by the
Company of an opinion of counsel satisfactory to the Company that such further transfer may be
effected pursuant to an applicable exemption from registration.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(L)&nbsp;The Company has employed its own legal counsel in connection with the Offering. The
Purchasers have not been represented by independent counsel in connection with the preparation of
this Agreement or the terms of this Offering and no investigation of the merits or fairness of the
Offering has been conducted on behalf of the Purchasers. Prospective Purchasers should consult
with their own legal, tax and financial advisors with respect to the Offering made pursuant to this
Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(M)&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> (insert name of Purchaser Representative: <U>if none leave
blank</U><I>) </I>has acted as the Purchaser&#146;s Purchaser Representative for purposes of the private
placement exemption under the Act. If the Purchaser has appointed a Purchaser Representative
(which term is used herein with the same meaning as given in Rule 501(h) of Regulation&nbsp;D), the
Purchaser has been advised by his Purchaser Representative as to the merits and risks of an
investment in the Company in general and the suitability of an investment in the Securities for the
Purchaser in particular.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(N)&nbsp;The undersigned hereby acknowledges that officers, affiliates, employees and directors of
the Company and/or the Selling Agents may purchase Securities in the Offering.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(O)&nbsp;It never has been represented, guaranteed or warranted by the Company, any of the
officers, directors, stockholders, partners, employees or agents of the Company, or any other
persons, whether expressly or by implication, that: (i)&nbsp;the Company or the Purchasers will realize
any given percentage of profits and/or amount or type of consideration, profit or loss as a result
of the Company&#146;s activities or the Purchaser&#146;s investment in the Company; or (ii)&nbsp;the past
performance or experience of the
management of the Company, or of any other person, will in any way indicate the predictable
results of the ownership of the Securities or of the Company&#146;s activities.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(P)&nbsp;The Purchaser acknowledges that any delivery to it of this Agreement relating to the
Securities prior to the determination by the Company of its suitability as a Purchaser shall not
constitute an offer of the Securities until such determination of suitability shall be made, and
the Purchaser hereby agrees that it shall promptly return this Agreement and the other Offering
documents to the Company upon request. The Purchaser understands that the Company shall have the
right to accept or reject this subscription in whole or in part. Unless this subscription is
accepted in whole or in part by the Company this subscription shall be deemed rejected in whole.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Article&nbsp;IV</B><BR>
<U><B>INDEMNIFICATION</B></U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>4.1 Indemnification by the Company</B>. The Company agrees to defend, indemnify and hold harmless
the Purchasers and shall reimburse Purchasers for, from and against each claim, loss, liability,
cost and expense (including without limitation, interest, penalties, costs of preparation and
investigation, and the reasonable fees, disbursements and expenses of attorneys, accountants and
other professional advisors) (collectively, &#147;<U>Losses</U>&#148;) directly or indirectly relating to,
resulting from or arising out of any untrue representation, misrepresentation, breach of warranty
or non-fulfillment of any covenant, agreement or other obligation by or of the Company contained
herein or in any certificate, document, or instrument delivered to Purchasers pursuant hereto.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>4.2 Indemnification by Purchasers</B>. Purchasers agrees to defend, indemnify and hold harmless
the Company and shall reimburse the Company for, from and against all Losses directly or indirectly
relating to, resulting from or arising out of any untrue representation, misrepresentation, breach
of warranty or non-fulfillment of any covenant, agreement or other obligation of the Purchasers
contained herein or in any certificate, document or instrument delivered to the Company pursuant
hereto.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>4.3 Procedure</B>. The indemnified party shall promptly notify the indemnifying party of any
claim, demand, action or proceeding for which indemnification may be sought under Sections&nbsp;4.1 or
4.2 of this Agreement, and, if such claim, demand, action or proceeding is a third party claim,
demand, action or proceeding (collectively, a &#147;<U>Claim</U>&#148;), the indemnifying party will have
the right at its expense to assume the defense thereof using counsel reasonably acceptable to the
indemnified party. The indemnified party shall have the right to participate, at its own expense,
with respect to any such third party Claim. In connection with any such third party Claim,
Purchasers and the Company shall cooperate with each other and provide each other with access to
relevant books and records in their possession. No such third party Claim shall be settled without
the prior written consent of the indemnified party, which shall not be unreasonably withheld. If a
firm written offer is made to settle any such third party Claim and the indemnifying party proposes
to accept such settlement and the indemnified party refuses to consent to such settlement, then:
(i)&nbsp;the indemnifying party shall be excused from, and the indemnified party shall be solely
responsible for, all further defense of such third party Claim; and (ii)&nbsp;the maximum liability of
the indemnifying party relating to such third party Claim shall be the amount of the proposed
settlement if the amount thereafter recovered from the indemnified party on such third party Claim
is greater than the amount of the proposed settlement.
</DIV>

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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.1 Survival</B>. The representations and warranties set forth in Articles II and III
hereof shall survive the Closing. No investigation made by or on behalf of either party shall
affect the representations and warranties made pursuant to this Agreement. No party makes any
additional or implied representations other than those set forth herein.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.2 Expenses</B>. Each party hereto shall bear and pay all costs and expenses incurred by it in
connection with the transactions contemplated hereby, including fees and expenses of its own
brokers, finders, financial consultants, accountants and counsel.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.3 Entire Agreement</B>. This Agreement, including the Exhibits, contains the entire agreement
and understanding of the parties with respect to its subject matter. This Agreement supersedes all
prior arrangements and understandings between the parties, either written or oral, with respect to
its subject matter.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.4 Binding Effect of Subscription</B>. The Purchaser hereby acknowledges and agrees, subject to
any applicable state securities laws that the subscription and application hereunder are
irrevocable, that the Purchaser is not entitled to cancel, terminate or revoke this Agreement and
that this Agreement shall survive the death or disability of the Purchaser and shall be binding
upon and inure to the benefit of the Purchaser and his heirs, executors, administrators,
successors, legal representatives, and assigns. If the Purchaser is more than one person, the
obligations of the Purchaser hereunder shall be joint and several, and the agreements,
representations, warranties, and acknowledgments herein contained shall be deemed to be made by and
be binding upon each such person and his heirs, executors, administrators, successors, legal
representatives, and assigns.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.5 Captions</B>. The table of contents and captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.6 Amendments; Waivers</B>. No provision of this Agreement may be waived or amended except in a
written instrument signed, in the case of an amendment, by the Company and the Purchasers holding a
majority of the Securities subscribed for in the Offering or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought (in the case of the Purchasers, such waiver
shall be in writing and approved by a majority of the Purchasers). No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such right.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.7 Notices</B>. Any notice, demand or other communication which any party hereto may be
required, or may elect, to give to anyone interested hereunder shall be sufficiently given if (a)
deposited, postage prepaid, in a United States mail box, stamped, registered or certified mail,
return receipt requested, addressed to such address as may be listed on the books of the Company,
or, if to the Company, the Company&#146;s executive office, or (b)&nbsp;delivered personally at such address.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.8 Execution</B>. This Agreement may be executed through the use of separate signature pages or
in any number of counterparts, and each of such counterparts shall, or all purposes, constitute one
agreement binding on all parties, notwithstanding that all parties are not signatories to the same
counterpart.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.9 Severability</B>. Each provision of this Agreement is intended to be severable from every
other provisions, and the invalidity or illegality of any portion hereof, shall not affect the
validity or legality of the remainder hereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.10 Non-Assignment</B>. This Agreement is not transferable or assignable by the Purchaser except
as may be provided herein.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.11 Governing Law</B>. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced in accordance with
the internal laws of the State of New Jersey, without regard to the principles of conflicts of law
thereof. Each party agrees that all proceedings concerning the interpretations, enforcement and
defense of the
transactions contemplated by this Agreement (whether brought against a party hereto or its
respective Affiliates, employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the State of New Jersey (the &#147;<U>New Jersey Courts</U>&#148;). Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New Jersey Courts for the
adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any proceeding, any claim that it is not personally subject to the jurisdiction of any New Jersey
Court, or that such proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to process being served
in any such proceeding by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury in any proceeding
arising out of or relating to this Agreement or the transactions contemplated hereby. If either
party shall commence a proceeding to enforce any provisions of this Agreement, then the prevailing
party in such proceeding shall be reimbursed by the other party for its reasonable attorney&#146;s fees
and other reasonable costs and expenses incurred with the investigation, preparation and
prosecution of such Proceeding.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>5.12 Successors and Assigns</B>. This Agreement shall be binding upon and inure to the benefit of
the Company, the Purchasers and their respective successors and permitted assigns.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Signature pages to Subscription Agreement Follows</B>
</DIV>

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

<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /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: 7.50in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement to be executed
by their signature as natural persons or by individuals by their duly authorized officers as of the

&nbsp;_____&nbsp;
day of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2011.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>THE COMPANY:</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>TEAMSTAFF, INC.:</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="40%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV></B>
Zachary Parker,
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chief Executive Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

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

<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /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: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>EXECUTION BY AN INDIVIDUAL</B><BR>
(Not applicable to entities)
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">IF YOU ARE PURCHASING SECURITIES WITH YOUR SPOUSE, YOU MUST BOTH SIGN THIS SIGNATURE PAGE.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">PLEASE INDICATE DESIRED TYPE OF OWNERSHIP OF SECURITIES:
</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"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Individual</DIV></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"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Joint Tenants (rights of survivorship)</DIV></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"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Tenants in Common (no rights of survivorship)</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">I represent that the foregoing information is true and correct.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">IN WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement and agrees to the
terms hereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Dated: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> ___, 2011
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Subscription Amount: $<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Number of Shares of Common Stock to be purchased: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</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="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&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">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Name of Investor &#151; Please Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Signature)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Name of co-Investor &#151; Please Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Signature of Co-Investor)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</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="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="white-space: nowrap"><I>Exact name Shares are to be issued under</I>:</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>Address for Delivery of Certificates</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>(if not the same as in Questionnaire):</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

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

<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /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: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PARTNERSHIP SIGNATURE PAGE</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The undersigned PARTNERSHIP hereby represents and warrants that the person signing this
Subscription Agreement on behalf of the PARTNERSHIP is a general partner of the PARTNERSHIP, has
been duly authorized by the PARTNERSHIP to acquire the Securities and sign this Subscription
Agreement on behalf of the PARTNERSHIP and, further, that the undersigned PARTNERSHIP has all
requisite authority to purchase such Securities and enter into the Subscription Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">IN WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement and agrees to the
terms hereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Dated: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> _____, 2011
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Subscription Amount: $<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Number of Shares of Common Stock to be purchased: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</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="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" colspan="3">Name of Partnership<BR>
(Please Type or Print)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Signature)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Please Type or Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Please Type or Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</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="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="white-space: nowrap"><I>Exact name Shares are to be issued under</I>:</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>Address for Delivery of Certificates</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>(if not the same as in Questionnaire):</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

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

<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /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: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CORPORATION/LIMITED LIABILITY COMPANY SIGNATURE PAGE</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The undersigned CORPORATION or LIMITED LIABILITY COMPANY hereby represents and warrants that the
person signing this Subscription Agreement on behalf of the CORPORATION or LIMITED LIABILITY
COMPANY has been duly authorized by all requisite action on the part of the CORPORATION or LIMITED
LIABILITY COMPANY to acquire the Securities and sign this Subscription Agreement on behalf of the
CORPORATION or LIMITED LIABILITY COMPANY and, further, that the undersigned CORPORATION or LIMITED
LIABILITY COMPANY has all requisite authority to purchase the Securities and enter into this
Subscription Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">IN WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement and agrees to the
terms hereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Dated: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> _____, 2011
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Subscription Amount: $<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Number of Shares of Common Stock to be purchased: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</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="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" colspan="3">Name of Corporation<br>
Or Limited Liability Company<br>
(Please Type or Print)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Signature
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Please Type or Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Please Type or Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</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="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="white-space: nowrap"><I>Exact name Shares are to be issued under</I>:</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>Address for Delivery of Certificates</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>(if not the same as in Questionnaire):</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</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">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>TRUST/RETIREMENT PLAN SIGNATURE PAGE</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The undersigned TRUST or RETIREMENT PLAN hereby represents and warrants that the persons signing
this Subscription Agreement on behalf of the TRUST or RETIREMENT PLAN are duly authorized to
acquire the Securities and sign this Subscription Agreement on behalf of the TRUST or RETIREMENT
PLAN and, further, that the undersigned TRUST or RETIREMENT PLAN has all requisite authority to
purchase such Securities and enter into the Subscription Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">IN WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement and agrees to the
terms hereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Dated: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> _____, 2011
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Subscription Amount: $<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Number of Shares of Common Stock to be purchased: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</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="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" colspan="3">Title of Trust or Retirement Plan<BR>
(Please Type or Print)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top" colspan="2"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Signature of Trustee or<BR>
Authorized Signatory
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap colspan="2">Name of
Trustee:</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Please Type or Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top" colspan="2"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Signature of Co-Trustee if
applicable
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap colspan="2">Name of
Co-Trustee:</TD>
   <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Please Type or Print)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</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="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="white-space: nowrap"><I>Exact name Shares are to be issued under</I>:</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>Address for Delivery of Certificates</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>(if not the same as in Questionnaire):</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



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

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



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>4
<FILENAME>c17252exv31w1.htm
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 31.1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">




<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>EXHIBIT 31.1</B>
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">I, Zachary C. Parker, certify 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="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">I have reviewed this quarterly report on Form 10-Q of TeamStaff, Inc.;</DIV></TD>
</TR>

</TABLE>
</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="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">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></TD>
</TR>

</TABLE>
</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="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">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></TD>
</TR>

</TABLE>
</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="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The registrant&#146;s other certifying officers 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></TD>
</TR>

</TABLE>
</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this
report is being prepared;</DIV></TD>
</TR>

</TABLE>
</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">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></TD>
</TR>

</TABLE>
</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures
and presented in this report our 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></TD>
</TR>

</TABLE>
</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">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></TD>
</TR>

</TABLE>
</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="3%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The registrant&#146;s other certifying officer(s) and I have disclosed, based on our 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></TD>
</TR>

</TABLE>
</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">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></TD>
</TR>

</TABLE>
</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">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></TD>
</TR>

</TABLE>
</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="1%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date: May&nbsp;16, 2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Zachary C. Parker
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Zachary C. Parker</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chief Executive Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(Principal Executive Officer)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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

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

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>5
<FILENAME>c17252exv31w2.htm
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 31.2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">




<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>EXHIBIT 31.2</B>
</DIV>


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


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">I, John Kahn, certify 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="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">I have reviewed this quarterly report on Form&nbsp;10Q of TeamStaff, Inc.;</DIV></TD>
</TR>

</TABLE>
</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="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">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></TD>
</TR>

</TABLE>
</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="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">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></TD>
</TR>

</TABLE>
</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="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The registrant&#146;s other certifying officers 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></TD>
</TR>

</TABLE>
</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this
report is being prepared;</DIV></TD>
</TR>

</TABLE>
</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">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></TD>
</TR>

</TABLE>
</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures
and presented in this report our 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></TD>
</TR>

</TABLE>
</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">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></TD>
</TR>

</TABLE>
</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="3%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The registrant&#146;s other certifying officer(s) and I have disclosed, based on our 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></TD>
</TR>

</TABLE>
</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">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></TD>
</TR>

</TABLE>
</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">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></TD>
</TR>

</TABLE>
</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="1%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date: May&nbsp;16, 2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD colspan="3">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ John Kahn
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
John Kahn
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chief Financial Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(Principal Accounting Officer)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

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

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

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>6
<FILENAME>c17252exv32w1.htm
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 32.1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>EXHIBIT 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>
Pursuant to 18 U.S.C Section&nbsp;1350,<BR>
As Adopted Pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002</B>
</DIV>


<DIV align="justify" 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 March&nbsp;31, 2011 as filed with the Securities and Exchange Commission on the date
hereof (the &#147;Report&#148;), the undersigned, being, Zachary C. Parker, Chief Executive Officer, and John
Kahn, Chief Financial Officer and Principal Accounting Officer, certify, pursuant to 18 U.S.C.
ss.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><DIV style="text-align: justify">The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and</DIV></TD>
</TR>

</TABLE>
</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">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The information contained in the Report fairly presents, in all material respects, the
financial condition and result of operations of the Company.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Dated: May&nbsp;16, 2011
</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="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Zachary C. Parker
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Zachary C. Parker
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ John Kahn
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
John Kahn
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chief Executive Officer
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(Principal Executive Officer)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(Principal Accounting Officer)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A signed original of this written statement required by Section&nbsp;906 has been provided to the
Company and will be retained by the Company 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 --><!-- /Folio -->
</DIV>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
