785557--1/19/2010--TEAMSTAFF

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{system, service, information}

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Risks Relating to Our Business and Our Industry TeamStaff GS s revenue are derived from U.S. Government customers. We face risks relating to U.S. Government contracts because these contracts may be terminated at will. Our contract costs are subject to audits and investigations by U.S. Government agencies and unfavorable government audit results could force us to refund previously recognized revenues and could subject us to a variety of penalties and sanctions. The U.S. Government contract bid process is complex and sometimes lengthy, subject to protest and implementation delays. Our failure to comply with complex federal procurement laws and regulations could cause us to lose business, incur additional costs, and subject us to a variety of penalties. Our government services business is dependent upon maintaining our reputation, our relationships and our performance. Competition is intense in the government services business. Loss of our General Services Administration ( GSA ) schedule contracts or other contracting vehicles could impair our ability to win new business. Our failure to obtain and maintain necessary security clearances may limit our ability to perform classified work for government clients, which could cause us to lose business. Our employees may engage in misconduct or other improper activities, which could harm our business. Security breaches in sensitive government information systems could result in loss of our clients and cause negative publicity. The failure by Congress to approve budgets on a timely basis for the federal agencies we support or changes in the budget priorities of such agencies could delay or reduce spending and cause us to lose revenue. We are dependent upon certain of our management personnel. Our current President and Chief Executive Officer intends to resign from such positions at the end of January 2010. If we do not employ a new President and Chief Executive Officer by the time of his departure, we will not have an executive officer to perform important managerial and oversight functions. Demand for staffing services could be significantly affected by the general level of economic activity and unemployment or by factors beyond our control (i.e.; hurricanes, weather conditions, acts of war, etc.) in the United States. Our business may be adversely affected due to economic conditions in specific geographic markets. Our financial condition may be affected by increases in health insurance premiums, unemployment taxes and workers compensation rates. Our financial condition may be affected by risks associated with our health and workers compensation claims experience. If unfavorable government regulations regarding contract and permanent staffing are implemented, or if current regulations are changed, our business could be harmed. We may not be able to obtain all of the licenses and certifications that we need to operate. Health care reform could impose unexpected burdens on our ability to conduct our business. We may be held liable for the actions of our contract employees and therefore incur unforeseen liabilities. Our staffing of healthcare professionals exposes us to potential malpractice liability. We may not be fully covered by the insurance we procure. If we were not able to renew all of the insurance plans that cover contract healthcare employees, our business would be adversely impacted. We operate in a highly competitive market and our success depends on our ability to remain competitive in obtaining and retaining clients and demonstrating the value of our services. If we are unable to attract qualified nurses and allied health professionals for our healthcare staffing business, or other contract personnel for our staffing business, our business may be negatively affected. We are dependent on the proper functioning of our information systems. Potential tax liabilities may adversely affect our financial condition. We have a substantial amount of goodwill on our balance sheet. Future write-offs of goodwill may have the effect of decreasing our earnings or increasing our losses. Risks Relating To Our Revolving Credit Line Our credit facility is secured by a lien on substantially all of our assets and if we are unable to make the scheduled principal and interest payments on the facility or maintain compliance with other debt covenants, we may default on the facility. Risks Relating To Our Stock There is limited trading volume in our common stock and you may find it difficult to dispose of your shares of common stock; it is possible that our stock may be delisted from The Nasdaq Global Market. Changes in our business, the volatility of the market value of our comparable companies and the impact of litigation and disputes may increase the volatility of the stock price. Since we have not paid dividends on our common stock, you cannot expect dividend income from an investment in our common stock.

Full 10-K form ▸

785557--1/19/2010--TEAMSTAFF_INC