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 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. The Company is providing a 100% valuation allowance that it is more likely than not that it will not be able to realize the full benefit of the deferred tax asset. The establishment of the deferred tax asset allowance does not preclude the Company from reversing any or all of the allowance in future periods if the Company believes the positive evidence is sufficient enough to utilize the deferred tax asset, nor does it limit the ability to utilize losses for tax purposes, subject to loss carry forward limitations and periods permitted by law.

Results of Continuing Operations

TeamStaff’s revenues for the three months ended December 31, 2006 and 2005 were $17.5 million and $19.4 million, respectively, which represents a decrease of $1.9 million, or 9.7%, from first fiscal quarter 2006 to first fiscal quarter 2007. All revenues are related to the staffing services divisions. Revenues for the first fiscal quarter 2007 and 2006 include $11.1 million and $11.0 million, respectively, related to the RS Staffing Services subsidiary, a Monroe, Georgia-based provider of medical and office administration/technical professionals. This acquisition, effective as of June 2005, helped offset a decrease of $2.1 million in the revenues of the travel allied and nursing portion (‘‘travel’’) of our staffing services division from first fiscal quarter 2006 to first fiscal quarter 2007.

The Company’s travel allied and nursing divisions continued to underperform the market during the first fiscal quarter of 2007. In response to this and in an effort to reduce expenses and restructure its operations to accelerate revenue growth and contribute to a return to profitability, in January 2007, subsequent to the balance sheet date, the Company restructured its senior management and its Board of Directors. In connection with the restructuring, the Company’s President and Chief Executive Officer, T. Kent Smith, resigned effective January 8, 2007. Mr. Smith also resigned from the Board of Directors. Rick J. Filippelli, the Company’s Chief Financial Officer, was appointed President and Chief Executive Officer and also retained his position as Chief Financial Officer. Mr. Filippelli was also elected to the Board of Directors. James D. Houston, the Company’s General Counsel, Vice President of Business and Legal Affairs and Corporate Secretary, was also appointed to the position of Chief Operating Officer. Additional members of the senior management team that resigned were James Donahue, Vice President of Sales and Marketing and President of TeamStaff Rx, Inc., Peter Rosen, Vice President of Human Resources and Robert Traficanti, Vice President of Nursing Innovations.

The Company is leading several initiatives to position the staffing services divisions for growth in fiscal 2007. These initiatives include assessing and restructuring its sales force and recruiting efforts in the allied segment into more active modalities in high demand geographical locations, restructuring sales force compensation to better reflect pay for performance, hiring a Director of Sales to oversee the allied and nursing sales efforts, and continued elimination of overhead costs deemed to be non-essential to growth or infrastructure. In November 2006, the Company consolidated the Nursing Innovations travel platform into TeamStaff Rx’s Clearwater, Florida location.

Longer term, we continue to believe the demand for temporary medical personnel will increase. Key drivers in our business segment include an aging population and growth in hospital admissions. We believe demand will also increase as more states introduce legislation for mandatory minimum nurse to patient ratios and overtime limitations. The introduction of such legislation should favorably impact our temporary nurse staffing business. Our acquisition of RS Staffing completed in early June 2005 gives us a strong presence in the government sector and provides us with an opportunity to bid on awards for large multi-year contracts with solid operating margins. We continue to focus on our sales and marketing efforts throughout the divisions in order to increase our contact with current and prospective clients.

Direct expenses for the three months ended December 31, 2006 and 2005 were $14.8 million and $16.2 million, respectively, which represents a decrease of $1.4 million, or 8.3%, from first fiscal quarter

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2006 to first fiscal quarter 2007. This decrease is a direct result of decreased revenues. As a percentage of revenue, direct expenses for the three months ended December 31, 2006 and 2005 were 84.5% and 83.3%, respectively.

Gross profit for the three months ended December 31, 2006 and 2005 was $2.7 million and $3.3 million, respectively, which represents a decrease of $0.6 million, or 16.6 %, from first fiscal quarter 2006 to first fiscal quarter 2007. This decrease is attributable to the decline in revenues. Gross profits, as a percentage of revenue, decreased to 15.5% from 16.7%, for the three months ended December 31, 2006 and 2005, respectively. This decrease is primarily due to RS Staffing comprising a larger percentage of total revenue in the first fiscal quarter of 2007 compared to the first fiscal quarter of 2006. The gross profit calculation includes costs paid to RS Staffing teaming partners (subcontractors) that are included as a direct expense. Teaming partners (subcontractors) is a business practice expected by government entities who prefer their suppliers to provide more of a master vendor service where the supplier looks to outside sources when needed to fill open staffing positions.

Selling, general and administrative (‘‘SG&A’’) expenses for the three months ended December 31, 2006 and 2005 were $3.3 million and $3.7 million, respectively, which represents a decrease of $0.4 million, or 10.4% from first fiscal quarter 2006 to first fiscal quarter 2007. SG&A expenses, as a percentage of revenue, were 18.8% and 19.0%, for the three months ended December 31, 2006 and 2005, respectively.

Depreciation and amortization for each of the three months ended December 31, 2006 and 2005 was approximately $91,000.

Other income, which primarily consists of late fee income, for the three months ended December 31, 2006 and 2005 was approximately $51,000 and $39,000, respectively, which represents an increase of $12,000. Late fee income is earned only in the allied healthcare division.

Interest expense for the three months ended December 31, 2006 and 2005 was approximately $57,000 and $175,000, respectively, representing a decrease of $118,000. This decrease is primarily due to the pay off of the revolving credit facility with the proceeds from the sale of DSI Payroll Services on May 31, 2006. Interest income for the three months ended December 31, 2006 and 2005 was approximately $23,000 and $3,000, respectively, representing an increase of $20,000. This increase is a result of interest earned on the cash proceeds of the sale of the DSI Payroll Services division.

Income tax benefit from continuing operations for the three months ended December 31, 2006 and 2005 was $0.1 million and $0.3 million, respectively. As a component of this net tax benefit, the Company provided a deferred tax valuation allowance for the quarter ended December 31, 2006 of $0.16 million. The Company has provided a 100% valuation allowance that it is more likely than not that it will not be able to realize the full benefit of the deferred tax asset. These tax benefits are a result of losses from operations.

Loss from continuing operations for the three months ended December 31, 2006 was $0.6 million, or $(0.03) per fully diluted share, as compared to loss from continuing operations for the three months ended December 31, 2005 of $0.4 million, or $(0.02) per fully diluted share.

Income from discontinued operations, net of tax, for the three months ended December 31, 2006 was $0.05 million, or $0.00 per fully diluted share. Income from discontinued operations, net of tax, for the three months ended December 31, 2005 was $0.4 million, or $0.02 per fully diluted share. This is primarily a result of a reclassification of the profitable operations of the DSI Payroll Services division to discontinued operations for fiscal 2006.

Net loss for the three months ended December 31, 2006 was $0.5 million, or $(0.03) per fully diluted share, as compared to a net loss of $0.02 million, or $0.00 per fully diluted share, for the three months ended December 31, 2005.

Liquidity and Capital Resources

Net cash used in operating activities for the three months ended December 31, 2006 was $1.0 million compared to cash used in operating activities of $2.3 million for the three months ended

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December 31, 2005. Losses from continuing operations as well as increased accounts receivable and decreased current liabilities contributed to the use of cash during the three months ended December 31, 2006.

Cash used in investing activities for the three months ended December 31, 2006 was $0.03 million compared to $0.02 million for the three months ended December 31, 2005. This cash is primarily for the purchase of telephone and technology equipment.

Cash provided by financing activities for the three months ended December 31, 2006 approximated zero. Cash provided by financing activities was $1.3 million for the three months ended December 31, 2005, primarily as a result of borrowings on the revolving line of credit.

Effective June 8, 2005, TeamStaff entered into a $7.0 million revolving credit facility provided by PNC Bank to (i) provide for the acquisition of RS Staffing; (ii) refinance an outstanding senior loan facility; and (iii) provide ongoing working capital. Effective February 13, 2006, TeamStaff entered into an amendment to the revolving credit note, increasing the revolving credit facility to $8.0 million. Revolving credit advances bear interest at either the Prime Rate plus 25 basis points or LIBOR plus 275 basis points, whichever is higher. The facility has a three-year life and contains term and line of credit borrowing options. The facility is subject to certain restrictive covenants including a fixed charge coverage ratio if the Company fails to maintain invested cash and line availability minimum requirements. For the quarter ended December 31, 2006, TeamStaff was in compliance with all loan covenants. The facility is subject to acceleration upon non-payment or various other standard default clauses. In addition, the Company granted PNC Bank a lien and security interest on all of its assets. As of December 31, 2006, there was no debt outstanding under the credit facility and $6.1 million of unused availability under the line of credit, based on billed accounts receivable.

Availability under the PNC Bank line of credit is directly related to the successful assignment of certain accounts receivable. Certain government accounts of RS Staffing Services are required to execute ‘‘Acknowledgements of Assignment.’’ There can be no assurance that every RS Staffing government account will execute the documentation to effectuate the assignment and secure availability. The failure of government third parties to sign the required documentation could result in a decrease in availability under the line of credit.

As of December 31, 2006, TeamStaff had unrestricted cash and cash equivalents of $1.1 million and net accounts receivable of $8.8 million. TeamStaff also had $6.1 million of unused availability under the revolving credit facility provided by PNC Bank. As of December 31, 2006, TeamStaff had working capital of $3.7 million. The Company believes it has enough sources of liquidity to meet demand over the next twelve months.

Obligations (Amounts in thousands)															Payments Due By Period
			Total						Less than 1 year						1-3 years						4-5 years
Long-term debt(1)				$	1,793					$	1,562					$	197					$	34
Operating leases(2)					1,799						480						1,223						96
Pension liability(3)					479						210						269
Total Obligations				$	4,071					$	2,252					$	1,689					$	130

(1)	Represents notes payable related to acquisition of RS Staffing, and capital lease obligations.

(2)	Represents lease payments net of sublease income.

(3)	Represents pension liabilities for the former CEO and former CFO.

Contractual Obligations

There have been no significant changes outside the ordinary course of business in the Company’s contractual obligations during the first quarter ended December 31, 2006.

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Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are, in the opinion of management, likely to have a current or future material effect on the Company’s financial condition or results of operations.

Effects of Inflation

Inflation and changing prices have not had a material effect on TeamStaff’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.

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 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’ compensation programs. In connection with TeamStaff’s prior workers’ 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’ compensation expense. If interest rates in these periods decrease, TeamStaff’s workers’ 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. has an $8.0 million revolving credit facility by PNC Bank. Revolving credit advances bear interest at either the Prime Rate plus 25 basis points or LIBOR plus 275 basis points, whichever is higher. The facility has a three-year life and contains term and line of credit borrowing options. The facility is subject to certain restrictive covenants, including minimum combined cash and line availability. The facility is subject to acceleration upon non-payment or various other standard default clauses. Material increases in the Prime or LIBOR rate could have a material adverse effect on our results of operations, the status of the revolving credit facility as well as interest costs.

ITEM 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of ‘‘disclosure controls and procedures’’ in Rule 13a-15(e). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in designing and evaluating the controls and procedures.

Based on their evaluation, as of December 31, 2006, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

Changes in Internal Controls

There have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the Company’s fiscal quarter ended December 31, 2006, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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As discussed in detail in Item 2 above, effective January 8, 2006, T. Kent Smith, the Company’s Chief Executive Officer resigned. Rick J. Filippelli, the Company’s Chief Financial Officer, was appointed President and Chief Executive Officer and retained his position as Chief Financial Officer.

Part II — OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

In July 2000, TeamStaff made claims for indemnification against the selling shareholders of the TeamStaff Companies (the Sellers), which were acquired by TeamStaff in January 1999. The claims consisted of various potential liabilities and expenses incurred based on breaches of representations and warranties contained in the acquisition agreement. The Sellers disputed these claims and attempted to assert claims of their own. On January 12, 2001, TeamStaff entered into a settlement agreement with the Sellers. Under the settlement agreement, the Sellers agreed to be liable and responsible for certain potential liabilities estimated at approximately $0.5 million and agreed that 55,000 shares of TeamStaff common stock, which had been held in escrow since the acquisition, were to be cancelled. TeamStaff also agreed to release 29,915 escrow shares to the Sellers. TeamStaff retains 75,000 shares in escrow to provide security for the Seller’s obligations. Each party agreed to release each other from all other claims under the acquisition agreements. No third parties have contacted TeamStaff seeking payment in the last fiscal year for these potential liabilities. In the event that TeamStaff incurs liability to third parties with respect to the claims, TeamStaff would declare an event of default under the settlement agreement and seek collection from the Sellers.

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, 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, 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 $5,000,000 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.

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

ITEM 1A.    RISK FACTORS

Refer to the September 30, 2006 Form 10-K. The Company believes that there have not been any material changes from risk factors as previously disclosed in the registrant’s Form 10-K in response to Item 1A to Part 1 of Form 10-K, other than the addition of the following two risk factors:

We are dependent upon certain of our management personnel.

Our performance to date has resulted in part from the contributions of the Company’s executive officers. Our present executive officers are expected to make important contributions towards improved future performance. The loss of our key personnel could materially affect our operations. Competition for qualified management personnel is intense, and in the event that we experience further turnover in senior management positions, we cannot assure you that we will be able to recruit suitable replacements on a timely basis. We must also successfully integrate all new management and other key positions within our organization to achieve our operating objectives. Even if we are successful, further turnover in key management positions could temporarily harm our financial performance and results of operations until any new management becomes familiar with our business.

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As discussed in detail in Item 2 above, effective January 8, 2006, T. Kent Smith, the Company’s Chief Executive Officer resigned. Rick J. Filippelli, the Company’s Chief Financial Officer, was appointed President and Chief Executive Officer and retained his position as Chief Financial Officer. James D. Houston, the Company’s General Counsel, Vice President of Business and Legal Affairs and Corporate Secretary, was also appointed to the position of Chief Operating Officer. The Company is dependent on Messrs. Filippelli and Houston as our sole executive officers presently, and the loss of either individual could temporarily or permanently harm our financial performance and results of operations until we are able to recruit suitable replacements, if ever, and such new management becomes familiar with our business, if ever. Other than with our CEO and CFO, we generally do not have long-term employment contracts with our key personnel, nor do we maintain ‘‘key person’’ life insurance policies on any of our key personnel.

We are dependent on the proper functioning of our information systems.

We are dependent on the proper functioning of our information systems in operating our business. Critical information systems used in daily operations identify and match staffing resources and client assignments and perform billing and accounts receivable functions. Additionally, we rely on our information systems in managing our accounting and financial reporting. Although we have risk mitigation measures in place, our information systems and our access to these systems are not impervious to flood, fire, storm, power loss, telecommunications failures or similar events. If our information systems fail or are otherwise unavailable, our business and financial results could be materially adversely affected.

ITEM 2.    UNREGISTERED SALES OF 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    

None.

ITEM 6.    EXHIBITS

(a)    Exhibits

	10	.1				Form of Amendment to Revolving Credit and Security Agreement dated December 13, 2006 between TeamStaff, Inc. and PNC Bank, N.A.
	10	.2				Lease, dated as of December 4, 2006, for our business premises located at 6555 Quince Road, Suite 303, Memphis, Tennessee.
	10	.3				Form of Separation Agreement with T. Kent Smith dated as of January 17, 2007 (filed as Exhibit 99.1 to the Form 8-K filed on January 29, 2007)*.
	31	.1				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

*	In accordance with Rule 12b-23 and Rule 12b-32 under the Securities Exchange Act of 1934, as amended, reference is made to the documents previously filed with the Securities and Exchange Commission, which documents are hereby incorporated by reference.

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SIGNATURES

Pursuant to the requirements of Section 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.

TEAMSTAFF, INC.

/s/ Rick J. Filippelli                                 Rick J. Filippelli Chief Executive Officer (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer)

Dated:   February 13, 2007

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FOURTH AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT

THIS FOURTH AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT, dated as of December         , 2006 (this ‘‘Amendment’’), relating to the Credit Agreement referenced below, is by and among TEAMSTAFF RX, INC., a Texas corporation, TEAMSTAFF, INC., a New Jersey corporation, and RS STAFFING SERVICES, INC., a Georgia corporation (collectively, the ‘‘Borrowers’’), the lenders identified on the signature pages thereto (the ‘‘Lenders’’), and PNC Bank, National Association, a national banking association, as agent for the Lenders (in such capacity, the ‘‘Agent’’). Terms used herein but not otherwise defined herein shall have the meanings provided to such terms in the Credit Agreement.

W I T N E S S E T H

WHEREAS, a $8,000,000 credit facility has been extended to the Borrowers pursuant to the terms of that certain Revolving Credit and Security Agreement dated as of June 8, 2005, as amended as of October 10, 2005, February 13, 2006 and by letter dated August 14, 2006 (as amended and modified from time to time, the ‘‘Credit Agreement’’) among the Borrowers, the Lenders identified therein, and PNC Bank, National Association, as agent for the Lenders;

WHEREAS, the Borrowers have requested certain modifications to the Credit Agreement;

WHEREAS, the Lenders have agreed to the requested modifications on the terms and conditions set forth herein;

NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.    Amendments. The Credit Agreement is amended as set forth below:

(a)    A new definition of ‘‘P-Cards’’ is added to Section 1.2 in correct alphabetical order to read as follows:

‘‘P-Cards’’ shall mean the VISA credit card program established by Agent in favor of the Borrowers.’’

(b)    Section 2.1 is amended to read as follows:

‘‘(a)    Revolving Advances.

Subject to the terms and conditions set forth in this Agreement including Section 2.1(b), each Lender, severally and not jointly, will make Revolving Advances to Borrowers in aggregate amounts such that such Lender’s Commitment Percentage of all outstanding Revolving Advances plus such Lender’s Commitment Percentage of all outstanding Letters of Credit shall not exceed its Commitment Percentage of the lesser of (x) the Maximum Revolving Advance Amount less the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit or (y) an amount equal to the sum of:

(i)    up to 85%, subject to the provisions of Section 2.1(b) hereof (‘‘Receivables Advance Rate’’), of Eligible Receivables, minus

(ii)    a reserve in the amount of $180,000 for the P-Cards, minus

(iii)    such reserves as Agent may reasonably deem proper and necessary from time to time.

The amount derived from the sum of (w) Section 2.1(a)(y)(i) minus (z) Section 2.1 (a)(y)(ii) and (iii) at any time and from time to time shall be referred to as the ‘‘Formula Amount’’. The Revolving Advances shall be evidenced by one or more secured promissory notes (collectively, the ‘‘Revolving Credit Note’’) substantially in the form attached hereto as Exhibit 2.1(a).’’

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(c)    Section 6.5 is amended to read as follows:

‘‘(a)    Fixed Charge Coverage Ratio.

For any quarter, at the end of any business day, in which Undrawn Availability plus the amount of Borrowers’ invested cash on hand is less than $5,000,000, cause to be maintained a Fixed Charge Coverage Ratio of not less than 1.05 to 1.0 for the twelve month period ending as of the end of the fiscal quarter being tested.’’

2.    Representations and Warranties.    The Borrowers hereby represent and warrant in connection herewith that as of the date hereof (after giving effect hereto) (i) the representations and warranties set forth in Article V of the Credit Agreement are true and correct in all material respects (except those which expressly relate to an earlier date), and (ii) no Default or Event of Default has occurred and is continuing under the Credit Agreement.

3.    Acknowledgments, Affirmations and Agreements.    The Borrowers (i) acknowledge and consent to all of the terms and conditions of this Amendment and (ii) affirm all of their obligations under the Credit Agreement and the Other Documents.

4.    Credit Agreement.    Except as expressly modified hereby, all of the terms and provisions of the Credit Agreement remain in full force and effect.

5.    Expenses.    The Borrowers agree to pay all reasonable costs and expenses in connection with the preparation, execution and delivery of this Amendment, including the reasonable fees and expenses of the Agent’s legal counsel.

6.    Counterparts.    This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original. It shall not be necessary in making proof of this Amendment to produce or account for more than one such counterpart.

7.    Governing Law.    This Amendment shall be deemed to be a contract under, and shall for all purposes be construed in accordance with, the laws of the State of North Carolina.

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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written.

BORROWERS:			TEAMSTAFF, INC.,
			a New Jersey corporation
			By:
			Name:
			Title:
			TEAMSTAFF RX, INC.,
			a Texas corporation
			By:
			Name:
			Title:
			RS STAFFING SERVICES, INC.,
			a Georgia corporation
			By:
			Name:
			Title:
AGENT AND LENDER:			PNC BANK, NATIONAL ASSOCIATION,
			in its capacity as Agent and as Lender
			By:
			Name:
			Title:

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FIFTH LEASE AMENDMENT

THIS LEASE AMENDMENT, dated December 4, 2006 by and between Germantown, L.P., Limited Partnership organized and existing under the laws of the State of Tennessee (‘‘Landlord’’), with its principal offices at c/o Investec Realty Services, LLC, 6555 Quince Road, Suite 111 Memphis, TN 38119, (Federal I.D. 13-4081758) and TeamStaff, Inc. (‘‘Tenant’’), with its principal office at 300 Atrium Drive, Somerset, New Jersey 08873. The Landlord and Nursing Innovations, Inc. executed a Lease Agreement dated March 28, 2001 and amended January 24, 2002, April 5, 2004, March 3, 2005, and September 23, 2005. The Lease Agreement was assigned to Tenant effective January 6, 2005. The space comprises 1894 Rentable Square Feet. The parties hereto desire to alter and modify said Lease Agreement, effective January 1, 2007 as follows:

	1.	LEASE TERM: Tenant will extend the term of its Lease for an additional thirty-seven (37) months effective January 1, 2007 and expiring January 31, 2010.

	2.	SQUARE FOOTAGE: Tenant’s square footage will decrease from 5,777 rentable square feet to 1894 rentable square feet. This includes a 12% common area factor.

	3.	TENANT IMPROVEMENTS: Landlord will provide Tenant with a Tenant Improvement Allowance of $5.00 per rentable square foot for construction of the premises. Should construction costs exceed the aforementioned amount, Tenant shall reimburse Landlord all costs in excess, within thirty (30) days after receipt of an invoice from Landlord to Tenant.

	4.	OPTIONS TO EXTEND: Tenant shall have one (1) Option to extend the lease for all or part of the premises for an additional two (2) years at fair market rate with one hundred and twenty (120) days prior written notice.

	5.	RENTAL RATE: Tenant’s monthly rent for the term of this Lease Amendment shall be as follows:

Period Rate/RSF			Monthly Rent
01/01/07 – 01/31/07 $0.00			$0.00
02/01/07 – 01/31/08 $18.00			$2,841.00
02/01/08 – 01/31/09 $18.36			$2,897.82
02/01/09 – 01/31/10 $18.73			$2,956.21

Except as specifically amended and modified by this Lease Amendment, all other terms of the Lease and the Exhibits attached thereto remain in full force and effect.

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IN WITNESS WHEREOF, the Landlord and the Tenant have executed or caused to be executed this Amendment on the dates shown below their signatures to be effective as of the date set forth above.

Tenant:			TeamStaff, Inc.			Landlord:			Germantown, L.P. a Tennessee Limited Partnership
						By:			Kirby PPC, Inc. a Delaware Corporation Its General Partner

By /s/ James D. Houston			(SEAL)			By /s/ Robert Neiffer			(SEAL)
(Print Name) James D. Houston						(Print Name) Robert Neiffer
Title VP, General Counsel						Title VP
Attest /s/ Teresa Ribble						Attest /s/ James J. Gillen
(Print Name) Teresa Ribble						(Print Name) James J. Gillen
Title						Title
(Corporate Seal)						(Corporate Seal)
Date December 13, 2006						Date December 19, 2006
Signed and sealed in the presence of:						Signed and sealed in the presence of:
(1) /s/ Christine H. Kruger						(1) /s/ Barbara Abrigo
(Print Name) Christine H. Kruger						(Print Name) Barbara Abrigo
(2)						(2)
(Print Name)						(Print Name)
As to Tenant						As to Landlord

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Exhibit 31.1

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.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

	b)	[Intentionally omitted];

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	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.	I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the 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:   February 13, 2007

/s/ Rick J. Filippelli                                 Rick J. Filippelli Chief Executive Officer Chief Financial Officer

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Exhibit 32.1

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

I, Rick J. Filippelli, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of TeamStaff, Inc. on Form 10-Q for the period ended December 31, 2006 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of TeamStaff, Inc.

In Witness Whereof, the undersigned has set his hand hereto as of the 13^th day of February 2007.

/s/ Rick J. Filippelli                                             Rick J. Filippelli Chief Executive Officer (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer)

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of TeamStaff, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 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.

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