The Zurich program originally covered the period from March 22, 2002 through March 31, 2003, inclusive. On March 28, 2003, TeamStaff renewed its workers' compensation program with Zurich for the period from April 1, 2003, through March 31, 2004, inclusive. (See Note 3 to the consolidated financial statements) The renewal program contained a large deductible feature of $0.5 million for each claim, with a maximum liability cap of the greater of 104.41% of manual premium or $15.6 million. The premium for the program was paid monthly based upon estimated payroll for the year and is subject to a policy year-end audit. The renewal program was collateralized by a letter of credit inuring to the benefit of Zurich, and cash held in a trust account with a third party. A letter of credit for $3.5 million was secured through Fleet, as part of TeamStaff's line of credit. However, effective March 31, 2004, Zurich agreed to a reduction in the amount of the letter of credit to $1.8 million. As a result, on March 31, 2004, TeamStaff secured a new letter of credit in the amount of $1.8 million with SunTrust Bank. Payments were made to the trust monthly based on projected claims for the year. Interest on all assets held in the trust is credited to TeamStaff. Payments for claims and claims expenses are made from the trust. Assets in the trust may be adjusted from time to time based on program experience. Claims handling services for the program are provided by GAB Robins, a third party administrator. On May 12, 2004, TeamStaff received $1.0 million in return premiums from Zurich. At June 30, 2004, TeamStaff has a prepaid current asset of $4.3 million for the premiums and the prepayments made to the trust for both years of the Zurich plan.

In conjunction with the sale of its PEO assets to GevityHR, Inc., TeamStaff requested a pro rata cancellation of this policy effective as of November 17, 2003. TeamStaff entered into a new workers' compensation program with Zurich covering TeamStaff's temporary employees and, as of January 1, 2004, its corporate employees. The program is managed by Cedar Hill and claims handling services for the program are provided by GAB Robins. This program is a fully-insured, guaranteed cost program that contains no deductible or retention feature. This policy terminated April 1, 2004. Effective April 1, 2004, TeamStaff entered into a new workers' compensation program with Zurich, covering the period from April 1, 2004 through March 31, 2005, with the same terms as the previous policy.

As of June 30, 2004, the adequacy of the workers' compensation reserves was determined, in management's opinion, to be reasonable. In determining our reserves we rely in part upon information regarding loss data received from our workers' compensation insurance carriers which may include loss data for claims incurred during prior policy periods. As disclosed in our Form 10-K for the fiscal year ended September 30, 2003, TeamStaff has encountered difficulties in receiving timely reporting of claims from CNA for the workers' compensation programs covering January 22, 2001, through March 22, 2001. As previously disclosed, TeamStaff is disputing certain amounts that CNA claims is due as part those programs and filed a complaint with the New Jersey Division of Insurance, which referred the matter to the New Jersey Compensation Rating and Inspection Bureau. Although the New Jersey Compensation Rating and Inspection Bureau investigated the complaint and proposed a fine against CNA as well as a refund of $0.2 million in policy issuance costs to TeamStaff, the matter remains unresolved between the parties. In the future, similar problems from our insurance carriers may result in adjustments to our reserves. In addition, these reserves are for claims that have not been sufficiently developed due to their relatively young age, and such variables as timing of payments and investment returns thereon are uncertain or unknown, actual results may vary from current estimates. TeamStaff will continue to monitor the development of these reserves, the actual payments made against the claims incurred, the timing of these payments, the interest accumulated in TeamStaff's prepayments and adjust the reserves as deemed appropriate.

Deferred Taxes

TeamStaff accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under SFAS No. 109, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized.

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Results of Continuing Operations

TeamStaff's revenues for the three months ended June 30, 2004 and 2003 were $9.6 million and $14.7 million respectively, which represents a decrease of $5.1 million or 34% from third fiscal quarter 2003 to third fiscal quarter 2004. The decline is attributable, in part, to the decrease in demand for temporary medical staffing workers. We believe hospitals continue to focus on cost efficiencies by placing greater reliance on existing full time staff. This, in turn, has led to less demand for temporary health care professionals. Longer term, we believe the demand for temporary medical personnel will increase, driven, in part, by an aging population and an improving economy. We also believe demand will increase as more states introduce legislation for mandatory minimum nurse to patient ratios and overtime limitations. Additionally, we continue to substantially expand our sales and marketing efforts in order to increase our contact with current and prospective clients. TeamStaff's revenues for the nine months ended June 30, 2004 and 2003 were $28.2 million and $49.5 million respectively, which represents a decrease of $21.3 million or 43% from 2003 to 2004. The decline is attributable to the same reasons as stated above for the third quarter.

Direct expenses were $7.3 million for the three months ended June 30, 2004 and $11.8 million for the comparable quarter last year, representing a decrease of $4.5 million or 38%. For the nine months ended June 30 2004 and 2003, direct expenses were $21.7 million and $39.9 million, respectively, representing a decrease of $18.2 million or 46%. These decreases are a direct result of the lower revenues.

Gross profits were $2.3 million and $2.9 million for the quarters ended June 30, 2004 and 2003, respectively, representing a decrease of $0.6 million or 20%. This decrease is attributed to the reduction in our Medical Staffing business as discussed above. Gross profits, as a percentage of revenue, were 24% and 20% for the quarters ended June 30, 2004 and 2003, respectively due to improved margins in the medical staffing division. For the nine months ended June 30, 2004 and 2003, gross profits were $6.5 million and $9.6 million respectively, representing a decrease of $3.1 million or 33%. Gross profits as a percent of revenue were 23% and 19% for the nine months ended June 30, 2004 and 2003, respectively, again due to improved margins in the medical staffing division and the higher gross margin Payroll Services division, which represented 33% of total gross profit for the first nine months of fiscal 2004 vs. 24% in the first nine months of fiscal 2003, increasing TeamStaff's total gross margin percentage.

Operating expenses for the quarters ended June 30, 2004 and 2003 were $3.0 million and $4.4 million, respectively, representing a decrease of $1.4 million or 32%. Operating expenses as a percentage of revenue were 31% and 30% for the three months ended June 30, 2004 and 2003, respectively, as revenue declined at a higher rate than operating expenses. This decrease resulted from lower SERP expenses and the absence of severance costs related to TeamStaff's former Chief Executive Officer and Chief Financial Officer and lower corporate expenses. For the nine months ended June 30, 2004 and 2003, operating expenses were $8.9 million and $11.7 million, respectively, representing a decrease of $2.8 million or 24%, as a result of lower SERP expenses and the absence of severance costs related to TeamStaff's former Chief Executive Officer and Chief Financial Officer, lower corporate expenses, as well as reduced expenses in the Medical Staffing business. Operating expenses as a percentage of revenue were 32% and 24% for the nine months ended June 30, 2004 and 2003, respectively, as revenue declined at a higher rate than operating expenses. Operating expenses for the first nine months of 2004 were lower in each reporting segment than the first nine months of 2003. Additionally, while our Medical Staffing division has reduced overall operating expenses, we are increasing our product development, sales and marketing efforts in that division, which has partially offset reductions in general expenses.

Depreciation and amortization for the quarters ended June 30, 2004 and 2003 were $0.1 million. Depreciation and amortization for the nine months ended June 30, 2004 and 2003 were $0.3 and $0.2 million, respectively.

Income tax benefit for the quarter ended June 30, 2004 and 2003 were $0.3 million and $0.6 million, respectively. These tax benefits are a result of losses from operations. Income tax benefit for the nine

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months ended June 30, 2004 was $1.0 million versus $0.7 million for the nine months ended June 30, 2003. Again, these tax benefits are a result of losses from operations.

Loss from continuing operations for the quarter ended June 30, 2004 was $0.4 million or $(0.03) per fully diluted share, as compared to $0.9 million or $(0.05) per fully diluted share for the same period last year. This decreased loss is due to the lower SERP expenses, the absence of severance cost related to TeamStaff's former Chief Executive Officer and Chief Financial Officer, lower corporate expenses partially offset by the lower revenues in TeamStaff's Medical Staffing division. Loss from continuing operations for the nine months ended June 30, 2004 was $1.6 million or $(0.10) per fully diluted share, as compared to $1.3 million or $(0.09) per fully diluted share for the same period last year. This increased loss is due to lower revenues in our Medical Staffing division, offset partially by decreased cost related to TeamStaff's former Chief Executive Officer and Chief Financial Officer

Losses from discontinued operations, net of tax, for the quarters ended June 30, 2004 and 2003 were $0.4 million and $1.4 million, respectively. The loss in 2003 resulted primarily from the write-down of intangible assets from the PEO business. Losses from discontinued operations, net of tax, for the nine months ended June 30, 2004 and 2003 were $2.1 million and $26.8 million, respectively. The loss in 2003 resulted primarily from the write-down of goodwill and intangible assets from the PEO business. Loss from operations from the discontinued business unit, net of tax, for the nine months ended June 30, 2004 and 2003 were $1.1 million and $26.8 million respectively. TeamStaff generated revenue from the PEO business for only six weeks in the first nine months of 2004 while certain costs associated with the operation of that business unit continued for the full nine months. The loss in 2003 resulted primarily from the write-down of goodwill and intangible assets from the PEO business. Losses on disposal, net of tax, are $0.9 million for the nine months ended June 30, 2004. The loss is based on the selling price of $9.25 million, offset by expenses including the writedown of goodwill and fixed assets, salary, severance and stay bonus payouts to affected employees, accruals for losses from lease obligations in offices no longer used by TeamStaff's continuing operations offset by estimated sublease of unoccupied office space, investment banking fees and other expenses required to dispose of the PEO business.

Net loss for the quarter ended June 30, 2004 was $0.9 million or $(0.05) per fully diluted share, as compared to $2.3 million or $(0.14) per fully diluted share for the same period last year. Net loss for the nine months ended June 30, 2004 was $3.7 million or $(0.23) per fully diluted share, as compared to $28.1 million or $(1.79) per fully diluted share for the same period last year. The losses for fiscal year 2004 are the result of the decline in Medical Staffing revenues described above and the loss from discontinued operations. For fiscal year 2003, the losses are primarily from the writedowns of goodwill and intangible assets from our discontinued PEO business and SERP and severance costs related to TeamStaff's former Chief Executive Officer and Chief Financial Officer.

Liquidity and Capital Resources

Net cash used in operating activities in the first nine months of fiscal 2004 were $0.8 million compared to $5.2 million used in the same period of fiscal 2003. As part of the sale of the PEO business, TeamStaff received $9.25 million in cash. Use of cash during the first nine months of 2004 included increased other current assets related to workers' compensation payments, increased other assets related to increases in TeamStaff's deferred tax asset, additional cash classified as restricted cash related to our letter of credit provided by SunTrust in connection with our Zurich workers' compensation program, reduction in severance obligations to TeamStaff's former CEO and CFO, and losses from continuing and discontinued operations.

Cash used in investing activities was virtually unchanged during the first nine months of fiscal year 2004 as opposed to $0.5 million in the first nine months of fiscal year 2003.

Cash used in financing activities was virtually unchanged during the first nine months of fiscal year 2004 as opposed to $1.0 million in the first nine months of fiscal year 2003. Last year's spending was primarily for the repurchase of 251,214 shares of TeamStaff stock.

As of June 30, 2004, TeamStaff had unrestricted cash and cash equivalents of $3.5 million and net accounts receivable of $3.6 million.

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As of June 30, 2004, TeamStaff had working capital of $9.5 million.

Management of TeamStaff believes that its existing cash and funds generated by operations will be sufficient to support cash needs for at least the next twelve months.

Effects of Inflation

Inflation and changing prices have not had a material effect on TeamStaff's net revenues and results of operations in the last three fiscal years, as TeamStaff has been able to modify its prices and cost structure to respond to inflation and changing prices.

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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 has no material interest rate risk, except with respect to our workers' compensation programs, and is not materially subject to fluctuations in foreign exchange rates, commodity prices or other market rates or prices from market sensitive instruments. In connection with TeamStaff's workers' compensation programs, prepayments of future claims are 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' compensation expense. If interest rates in these periods' decreases, TeamStaff's workers' compensation expense would increase because TeamStaff would be entitled to less interest income on the deposited funds.

ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures:

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c)) as of the end of the quarterly period (Evaluation Date) covered by this report on Form 10-Q. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of the date of their evaluation, our disclosure controls and procedures are effective to ensure that all material information required to be filed in this Quarterly Report on Form 10-Q has been made known to them.

Changes in Internal Controls:

There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the Evaluation Date set forth above.

Part II – OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

TeamStaff's subsidiary, BrightLane, is party to a suit brought by one of its former shareholders (Atomic Fusion, Inc. v. BrightLane.com, Inc. Civil Action No ONS02246OE, Fulton County State Court, Georgia). The plaintiff seeks damages for alleged unpaid contractual services provided to BrightLane, alleging that the shares (both in number and value) of BrightLane stock provided to the plaintiff in payment of services were inadequate to pay for the alleged agreed upon value of services. TeamStaff and BrightLane intend to defend themselves vigorously in this matter and believes that they have meritorious and valid defenses to plaintiff's claims. In addition, the former shareholders of BrightLane have placed approximately 158,000 shares in escrow to provide indemnification for any claims made by TeamStaff under the acquisition agreement, subject to a $0.3 million threshold. Some or all of these shares may be canceled in an amount equal to the amount of any claim or expense in excess of the threshold. Under the terms of the agreements between TeamStaff and BrightLane, the

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value of the shares held in escrow is $8.10/share. It is possible that an award in favor of Atomic Fusion would result in monetary damages against TeamStaff, which could not be recovered under the indemnification provisions because cancellation of the shares in escrow is the sole method of satisfying these indemnification obligations. On November 20, 2003, the Fulton County Superior Court (to which the action was transferred) awarded summary judgment in BrightLane's favor on all counts of Atomic Fusion's complaint except for a beach of contract claim. Atomic Fusion has since amended its complaint in the matter to seek, among other things, punitive damages and attorneys' fees. A trial on this matter was scheduled to commence on May 10, 2004, however it was rescheduled to August 16, 2004.

As a commercial enterprise and employer and with respect to its employment-related businesses in particular, TeamStaff is engaged in litigation from time to time during the ordinary course of business in connection with employment-relations issues, medical professional liability, workers' compensation and other matters. Generally, TeamStaff is entitled to indemnification or repayment from its former PEO clients for claims brought by worksite employees related to their employment. However, there can be no assurance that the client employer will have funds or insurance in amounts to cover any damages or awards, and as co-employer, TeamStaff may be subject to liability. Additionally, although TeamStaff maintains policies of liability insurance that it believes are adequate considering the risks of its business, there can be no assurance that all claims against TeamStaff will be covered under those policies or the limits of coverage under those policies will adequately protect TeamStaff in the event of an adverse judgment.

TeamStaff is engaged in no other litigation, the effect of which would be anticipated to have a material adverse impact on TeamStaff's financial conditions or results of operations.

ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.    OTHER INFORMATION

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

	(a)	Exhibits

	31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	(b)	Reports on Form 8-K

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The following reports were filed during the quarter ended June 30, 2004.

Date of Report				Item Reported
April 26, 2004				Item 5 Other Events/ Item 7 Financial Statements and Exhibits (in connection with TeamStaff's final settlement with Gevity HR, Inc and a reduction in workers' compensation letter of credit.)
May 5, 2004				Item 7 Financial Statements and Exhibits/ Item 12 Results of Operations and Financial Condition (in connection with TeamStaff's earnings release for the fiscal quarter ended March 30, 2003)
May 14, 2004				Item 5 Other Events/ Item 7 Financial Statements and Exhibits (in connection with TeamStaff's strategic alliance with Professional Placement Resources d/b/a PPR Travel.)
May 28, 2004				Item 7 Financial Statements and Exhibits/ Item 9 Regulation FD Disclosure.
June 9, 2004				Item 7 Financial Statements and Exhibits/ Item 9 Regulation FD Disclosure.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

TEAMSTAFF, INC. (Registrant)

/s/ T. Kent Smith

T. Kent Smith President and Chief Executive Officer

/s/ Rick Filippelli

Rick Filippelli Vice President, Finance and Chief Financial Officer

Date: August 3, 2004

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EXHIBIT 31.1

CERTIFICATIONS

I, T. Kent Smith, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of TeamStaff, Inc.;

2.	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;

3.	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;

4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting for the registrant and have:

a)	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;

b)	[RESERVED]

c)	evaluated the effectiveness of the registrant'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

d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 3, 2004

/s/ T. Kent Smith T. Kent Smith President and Chief Executive Officer

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EXHIBIT 31.2

CERTIFICATIONS

I, Rick J. Filippelli, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of TeamStaff, Inc.;

2.	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;

3.	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;

4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting for the registrant and have:

a)	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;

b)	[RESERVED]

c)	evaluated the effectiveness of the registrant'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

d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 3, 2004

/s/ Rick J. Filippelli Rick J. Filippelli Vice President, Finance and Chief Financial Officer

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Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of TeamStaff, Inc (the Company) on Form 10-Q for the period ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, being, T. Kent Smith, Chief Executive Officer of the Company, and Rick J. Filippelli, Chief Financial Officer of the Company, respectfully, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: August 3, 2004

/s/ T. Kent Smith				/s/ Rick J. Filippelli
Chief Executive Officer				Chief Financial Officer

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