Trucept, Inc. - FORM 10-K - October 13, 2009

Attached files

file	filename
EX-21.1 - SUBSIDIARIES - Trucept, Inc.	exhibit21-1.htm
EX-31.1 - CERTIFICATION - Trucept, Inc.	exhibit31-1.htm
EX-32.1 - CERTIFICATION - Trucept, Inc.	exhibit32-1.htm
EX-10.12 - STRATEGIC MARKETING PARTNER AGREEMENT - Trucept, Inc.	exhibit10-12.htm
EX-10.13 - FORM OF DEBT SETTLEMENT AND SUBSCRIPTION AGREEMENT - Trucept, Inc.	exhibit10-13.htm
EX-10.11 - AMENDMENT TO EMPLOYMENT AGREEMENT - Trucept, Inc.	exhibit10-11.htm
EX-10.10 - SETTLEMENT AGREEMENT AND GENERAL RELEASE - Trucept, Inc.	exhibit10-10.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

[ x ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2009

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to________________

Commission file number 000-29895

SMART-TEK SOLUTIONS INC.
(Name of small business issuer in its charter)

Nevada	98-0206542
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3702 South Virginia Street, Suite G12-401
Reno, NV	89502
(Address of principal executive offices)	(Zip Code)

Issuer’s telephone number 604.270.2084

Securities registered under Section 12(b) of the Exchange Act:

None	N/A
Title of each class	Name of each exchange on which registered

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.001 par value
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes[ ] No[ x ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes[ ] No [ x ]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes[ x ] No[ ]

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 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes[ ] No[ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[ ]

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 “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ]	Smaller reporting company [ x ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes[ ] No[ x ]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $24,632 based on a price of $0.0025 per share, being the average of the bid and ask prices of the issuer on the Over-the-Counter Bulletin Board on December 31, 2008.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes[ ] No[ ] N/A

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date. 69,314,124 shares of common stock as of October 9, 2009.

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 (“Securities Act”). The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1990). N/A

Transitional Small Business Disclosure Format (Check one): Yes[ ] No[ x ]

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ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2009

TABLE OF CONTENTS

		Page
PART I

ITEM 1.	BUSINESS	1
ITEM 1A.	RISK FACTORS	5
ITEM 1B.	UNRESOLVED STAFF COMMENTS	8
ITEM 2.	PROPERTIES	8
ITEM 3.	LEGAL PROCEEDINGS	8
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.	8

PART II

ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	9
ITEM 6.	SELECTED FINANCIAL DATA	10
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	10
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	15
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.	16
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.	17
ITEM 9B.	OTHER INFORMATION	18

PART III

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	19
ITEM 11.	EXECUTIVE COMPENSATION	21
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.	25
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	26
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	27

PART IV

SIGNATURES		30

PART I

Forward Looking Statements.

This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” and the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation:

risks related to the potential of delays in customer orders or the failure to retain customers;
the uncertainty of profitability based upon our history of losses;
risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned exploration and development projects;
risks related to competition;
risks related to tax attributes; and
other risks and uncertainties related to our business strategy.

This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.

Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to the common shares in our capital stock.

As used in this annual report, the terms “we”, “us”, “our”, the “Company” and “Smart-Tek” mean Smart-Tek Solutions Inc. and its subsidiaries, unless the context clearly requires otherwise.

ITEM 1. BUSINESS

Background

Through our wholly owned subsidiary Smart-Tek Communications Inc. we operate in the business of design, sale, installation and service of security technology with electronic hardware and software products. Our projects range from residential and commercial developments to system upgrades and monitoring contracts. Customers include major developers, general and electrical contractors, hospitals, Crown Corporations, law enforcement agencies and retail facilities. Currently, 100% of the Company’s operations are in Canada. We have a sales and technical installation team with over 50 years of experience specializing in the design, sales, installation and service of CCTV, access control, intercom, security, structured cabling and wireless communication systems. While the operations of

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our wholly-owned subsidiary are profitable, we still do not operate profitably as a consolidated entity. Management’s plans to improve our financial condition are as follows:

Continued growth of Smart-tek Communications Inc.’ business activities in the security technology industry in the Greater Vancouver Area;
We will continue to look for opportunities to grow organically where feasible as well as evaluate potential acquisition opportunities that may present themselves in the next 12 months.
On June 17, 2009, we determined to add a new line of business providing integrated and cost-effective management solutions in the area of human resources for public and private companies. In connection with the expansion of business operations, we incorporated a subsidiary, Smart-Tek Automated Services, Inc. (“Smart-Tek Automated”), a private Nevada corporation through which we operate our new line of business. We intend to continue to expand our new business in the next twelve months.

There can be no assurance that our planned activities will be successful or that we will ultimately attain profitability. Our long term viability depends on our ability to grow our subsidiary’s business to fund the continuation of our consolidated business operations. We intend to use our common stock as payment for services of various consultants in order to help advance our business plan.

Recent Corporate Developments

Since the commencement of our fourth quarter ended June 30, 2009, we experienced the following significant corporate developments:

	1.	On May 29, 2009, Brian Bonar was appointed to our board of directors. Mr. Bonar has over 18 years of experience with IBM in Europe, Asia and the USA and an additional 20 years in high growth companies both private and public in various locations in the USA and the United Kingdom. From 2003 until 2006, Mr. Bonar was the Chairman and CEO of The Solvis Group, which provides staffing, PEO and ASO services to mainly the medical and call centre market segments. From September 2007 until 2009, Mr. Bonar was the President and a member of the board of directors of Allegiant Professional, a publicly traded company. Also from September 2007 until 2009, Mr. Bonar founded AMS Outsourcing, a PEO focusing mainly in the transport market place and also established an international presence in the Czech Republic and Mexico. From 2004 to 2009, he was a member of the board of directors of the following companies and organizations: The Solvis Group, Warning Management Corporation, Dalrada Financial Corporation, American Marine LLC, Alliance National Insurance Company and The Boys and Girls Club of Greater San Diego. Mr. Bonar holds a BSC in Mechanical Engineering from the Strathclyde University, Glasgow Scotland and a MBA and a PHD in the field of International Business Development Studies from the Stafford University, England UK.

	2.	On June 17, 2009, the board of Smart-Tek determined to add a new line of business providing integrated and cost-effective management solutions in the area of human resources for public and private companies. In connection with the expansion of business operations, Smart-Tek incorporated a subsidiary, Smart-Tek Automated Services, Inc., a private Nevada corporation, and entered into a marketing partner agreement dated June 17, 2009 with Smart-Tek Automated and Brian Bonar, a director of Smart-Tek. Pursuant to the terms of the marketing agreement, Brian Bonar agreed to provide certain services to Smart-Tek Automated to promote and market the new business of Smart-Tek to prospective clients, in consideration of which Smart-Tek agreed to pay Mr. Bonar a commission consisting of the following: (i) for every US$1,000,000 in annualized gross sales of Smart-Tek up to the first US$25,000,000 in annualized sales introduced by Mr. Bonar, Mr. Bonar will receive 1,800,000 shares of common stock of Smart-Tek up to a maximum of 45,000,000 shares of Smart-Tek’s common stock; and (ii) after an aggregated US$25,000,000 in annualized gross sales by Smart-Tek resulting from sales introduced by Mr. Bonar, Mr. Bonar will receive one percent of annualized gross revenues of Smart-Tek for the amounts in excess of US$5,000,000 of annualized gross sales in any given fiscal year payable in cash. The agreement is

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		for an indefinite term and may be terminated by either party without cause on 30 days written notice.

	3.	On July 10, 2009 Smart-Tek entered into a settlement agreement with Richardson Patel pursuant to which it agreed to pay Richardson Patel $200,000 in full and final settlement of all claims that the firm had or may have had against Smart-Tek with respect to certain outstanding accounts owed by Smart-Tek to the firm. Pursuant to the terms of the settlement agreement, Smart-Tek has the right to reduce the settlement amount to $150,000 if it pays such amount to Richardson Patel on or before November 1, 2009.

	4.	On August 1, 2009 Smart-Tek Automated entered into a strategic marketing partner agreement with a private company, pursuant to which we agreed to provide the company with payroll processing services, and certain marketing and business promotion services.

	5.	On September 14, 2009, Perry Law resigned as President of Smart-Tek and appointed Brian Bonar as President to fill the vacancy.

	6.	On September 14, 2009 Smart-Tek issued 45,000,000 restricted shares of its common stock to Brian Bonar, a director of the Company. Mr. Bonar was issued the shares based on Mr. Bonar achieving certain milestone targets for annualized sales as set out in the Marketing Partner Agreement dated June 17, 2009 between the Company and Mr. Bonar.

	7.	On September 29, 2009 Smart-Tek appointed Owen Naccarato to its board of directors. Mr. Naccarato has for the last twelve years been a practicing attorney specializing in corporate and securities law. Prior to practicing law, Mr. Naccarato held various high level financial and operating positions with fortune 500 firms. Mr. Naccarato is a member of the California State Bar Association, the Orange County and the Los Angeles County Bar Associations and their respective corporate law sections. Mr. Naccarato has a J.D. from Western State University, an MBA from DePaul University and an undergraduate degree in accounting from Northern Illinois University.

	8.	On September 30, 2009 Smart-Tek entered into debt settlement agreements with seven subscribers pursuant to which it agreed to settle $310,265 of debt in consideration of the issuance of 23,866,535 shares of its common stock. Each of the subscribers represented to Smart-Tek that they were an “accredited investor” as such term is defined in Canadian National Instrument 45- 106 and not a “US person” as such term is defined in Regulation S of the Securities Act of 1933.

Corporate History

Smart-Tek was incorporated in the State of Nevada on March 22, 1995 under the name “Royce Biomedical Inc.”. In July, 2005, we changed our name from “Royce Biomedical Inc.” to “Smart-Tek Solutions Inc.” The address of our principal executive office is 3702 South Virginia Street, Suite G12-401, Reno, NV 89502. On March 31, 2009 we effected a 250 to 1 reverse stock split of our issued and outstanding common stock. Effective March 31, 2009, our stock symbol changed to “STTN” on the Financial Industry Regulatory Authority’s Over-the-Counter Bulletin Board.

Products and Services

Through our wholly-owned subsidiary, Smart-tek Communication Inc. (“SCI”), we specialize in the design, sale, installation and service of the latest and most sophisticated security technology available. SCI is a market leader in the provision and installation of security technology in the Greater Vancouver Area. Valued customers for SCI’s products and services include major land developers, general and electrical contractors, hospitals, Crown Corporations, law enforcement agencies and retail facilities.

Our integrated systems project is typically done in the following stages:

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1.	Initial consultation to gain an understanding of the project needs and the general scope of work;

2.	The design of the integrated system is the second phase of our process. During this stage, the appropriate hardware and software is selected;

3.	Once the equipment has been selected and the contractors are ready to accommodate our installations experts, our highly qualified team installs the security systems;

4.	Once the integrated system is installed, our team of experts trains our customers on the systems and how to use it effectively; and

5.	Before we walk away from a job site, a vigorous quality assurance process is undertaken to make sure the systems are functioning as designed.

We provide a wide variety of systems: access control, alarm systems, closed circuit TV systems (CCTV), intercom and data communication systems. Our sales and installation team have over 50 years of experience in dealing with security system design and installation.

Smart-Tek Automated Systems Inc.

In connection with the expansion of business operations, we incorporated a subsidiary, Smart-Tek Automated Services, Inc. through which we operate our new line of business. Through Smart-Tek Automated we provide staffing and business processing services to small and medium sized businesses principally located in major business centers in the Unites States. We also provide a variety of financial services including: benefits and payroll administration, health and workers' compensation insurance programs, personnel records management, employer liability management, and full time and temporary staffing services. The services feature advising in coaching in recruitment, training and discipline and payment of employee wages, payroll taxes, state and federal unemployment insurance, claims, and workers compensation premiums. As part of our staffing services, Smart-Tek Automated can also provide recruitment, reference checks, initial interviews, pre-employment and random drug testing, and criminal background investigations

Our services allow our customers to outsource many human resource tasks, including payroll processing, workers' compensation insurance, health insurance, employee benefits, 401k investment services, personal financial management, and income tax consultation. These services also relieve existing and potential customers of the burdens associated with personnel management and control.

Marketing Strategy

The Company relies on current relationships as their primary means of marketing their security technology products and services in the Greater Vancouver Area. Since 1997, the Company has been successful in developing its security business in this market and nurturing its relationships with Real Estate Developers and contractors. We hope to leverage our relationships as well as our reputation to be able to provide some of the security solutions that are required to make the project a safe one for all.

Market

The commercial and residential industry in the Greater Vancouver Area has enjoyed tremendous growth over the past decade. Along with this construction growth, is the need for sophisticated security systems to keep occupants safe. With the tremendous security requirements as a host of the 2010 Winter Olympics, the growth of the local security industry is expected to remain strong as the city prepares to be host to delegates, athletes volunteers and visitors from around the world.

We expect to be able to leverage our reputations and relationships to enable us to continue to grow our security business. We currently supply a substantial portion of the security technology needs of new residential and commercial real estate developments in the Greater Vancouver Area and anticipate this trend to continue.

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Backlog

The following schedule shows a reconciliation of backlog representing the amount of revenue the Company expects to realize from work to be performed on uncompleted contracts in progress at June 30, 2009 and from contractual agreements on which work has not yet begun.

Balance at June 30, 2008	$7,683,937
New Contracts	$2,348,520
Less: Contract revenue earned from July 1, 2008 to June 30, 2009	$4,060,213
Balance at June 30, 2009	$5,972,244

We face significant competition from four or five competitors in our target market in the security and surveillance technology industry. In general, we believe that our current primary competitive advantages include product and service quality at competitive pricing and our long-standing relationships with our customers as evidenced by its stellar customer retention.

Personnel

We currently have over 30 employees to carry out our security technology business. We presently have two employees for our staffing and business processing services business through Smart-Tek Automated.

ITEM 1A. RISK FACTORS

Risks and Uncertainties

We have a general history of losses and may not operate profitability in the future.

We have incurred losses for the last four fiscal years. Our net losses and negative cash flow may continue for the foreseeable future. As of June 30, 2009, our accumulated deficit was $802,101. We believe that our planned growth and profitability will depend in large part on our ability to market our businesses and gain clients and to expand our relationships with existing clients. Accordingly, we intend to invest heavily in marketing, strategic partnerships and development of our client base. If we are not successful in expanding our client base, it will have a material adverse effect on our financial condition and our ability to continue to operate our business. Furthermore, we intend to continue to expand our payroll and human resources consulting business. We believe that through the continual expansion of our new business we will be able to successfully obtain customers for our payroll systems. However, there is no guarantee that our new business will be successful.

We may make acquisitions, which if proven unsuccessful, could negatively affect our future profitability and growth.

We believe the security landscape and the animal agricultural tracking and monitoring market has created opportunities for us to invest in, or acquire boutique businesses in this industry. We may not be able to identify, acquire or profitably manage additional businesses that we may invest in or acquire without substantial costs, delays or other problems. In addition, acquisitions may involve a number of special risks, including:

Diversion of management’s attention;
Failure to retain key acquired personnel; and
Risks associated with unanticipated events, circumstances or legal liabilities.

In addition, if the acquired businesses have operating losses or negative operating cash flow, our ability to achieve positive cash flow and profitability, as well as our liquidity, could be adversely affected. Some or all of these risks could adversely affect our operations and financial performance. For example, client satisfaction or performance problems at a single acquired business could adversely affect our reputation and financial results. Further, any businesses acquired in the future may not achieve anticipated revenues and earnings and therefore negatively impact our consolidated financial position, results of operations and cash flows.

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If we are unsuccessful in raising additional capital in the future, we may be unable to continue to operate.

The Company does not have any significant available credit, bank financing or other external sources of liquidity. Due to historical operating losses and other issues as described in the Company’s going concern footnote included in its audited condensed consolidated financial statements as at and for the period ended June 30, 2009, the Company's operations have not been a source of liquidity and the Company had satisfied its cash requirements through shareholder loans and deferral of salary payments to its officers. In order to obtain necessary capital, the Company may need to sell additional shares of its common stock or borrow funds from private lenders. Any equity financing may be dilutive to shareholders, and debt financing, if available, will increase expenses and may involve restrictive covenants. We may be required to raise additional capital, at times and amounts which are uncertain, especially under the current capital market conditions. Under these circumstances, if we are unable to obtain capital or are required to raise it on undesirable terms, it may have a material adverse effect on our financial condition, which could require us to:

Curtail our operations significantly;
Sell significant assets;
Seek arrangements with strategic partners or other parties that may require us to relinquish rights to products, technologies or market; or
Explore other strategic alternatives, including a merger or sale.

Our operating results are subject to fluctuations caused by many factors that could cause us to fail to achieve our revenue or profitably expectations, which in turn could cause our stock price to decline.

Our operating results can vary significantly depending upon a number of factors, many of which are outside our control. Factors that may affect our operating results include:

Market acceptance of and changes in demand for our products and services;
Gain or loss of clients or strategic relationships;
Announcement or introduction of new services and products by us or by our customers;
Our ability to build brand recognition;
Timing of customer sales;
Price competition;
Our ability to upgrade and develop systems and infrastructure to accommodate growth;
Our ability to attract and integrate new personnel in a timely and effective manner;
General economic conditions, including economic conditions specific to the construction security services industries; and
Real estate development market in the Greater Vancouver Area

Most of our operating expenses are relatively fixed in the short-term. We may be unable to adjust spending rapidly to compensate for any unexpected sales shortfalls, which could harm our operating results. Because we only compete in the Greater Vancouver Area, we do not have the ability to predict future backlog with any certainty. Because of the above factors, you should not rely on period to period comparisons of results of operation as an indication of future performances.

Because our security and surveillance technology business only operates in the Greater Vancouver Area, those customers who have historically accounted for and may in future periods account for substantial portions of our revenue, our revenue could decline because of delays of customer orders or the failure to retain customers.

We have a limited geographic area where our customers account for a significant portion of our revenue. Our revenue could decline because of a delay in signing agreements with a single customer or the failure to retain an

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existing customer. We may not obtain additional customers. The failure to obtain additional customers and the failure to retain existing customers will harm our operating results. If general economic and business conditions do not continue to expand, we may experience decreased revenue or lower growth rates.

We may face intense competition that could adversely affect our ability to generate revenues and profitability.

The demand for our services is expected to reflect dynamic growth over the next several years. We expect the demand will result in intense competition to provide these services. If we are not able to successfully execute our strategy, our business may be materially and adversely affected.

We may have difficulty managing growth.

Our development has required and is expected to continue to require, the full utilization of our management, financial and other resources, which to date has had limited working capital. Managing our growth will depend upon our ability to improve and expand our operations, including our financial and management information systems, and to recruit, train and manage executive staff and employees. We may not be able to efficiently scale our operations, and this failure to effectively manage growth may have a materially adverse effect on our operating results and financial condition.

We may not be able to attract, retain or integrate key personnel which may prevent us from successfully operating our business.

We may not be able to retain our key personnel or attract other qualified personnel in the future. Our success will depend upon the continued service of key management personnel. The loss of services of any of the key members of our management team or our failure to attract and retain other key personnel could disrupt operations and have a negative effect on employee productivity and morale and harm our financial results. We operate in a market that is intensely and increasingly competitive, and if we are unable to compete successfully, our revenue could decline and we may be unable to gain market share.

We may lose certain tax attributes as a result of our acquisition program.

At June 30, 2009, we had available federal net operating loss (NOL) carry-forwards of approximately $6,992,146. Under Section 382 of the Internal Revenue Code of 1986, as amended, the use of prior losses, including NOL’s is limited if a corporation undergoes an “ownership change”. Future issuances of equity interests by us for acquisitions or the exercise of outstanding options to purchase our capital stock may result in an ownership change that is large enough for this limitation to apply. If the limitation applies, the Company may be unable to use a material portion of its available NOL carry-forwards to reduce future taxable income.

Our stock is a penny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations and the FINRA’s sales practice requirements, which may limit a stockholder’s ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In

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addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in, and limit the marketability of, our common stock.

In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the Financial Industry Regulatory Authority believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The National Association of Securities Dealers’ requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES.

Executive Offices

We do not maintain an executive office but rather utilize the facilities, when required, of our operating subsidiary located at #10-11720 Voyageur Way, Richmond, BC, Canada, V6X 3G9. The office leased by our subsidiary is approximately 2,000 square feet and is on a two year term with a payment of approximately $1,800 per month. We utilize a mail service for our corporate correspondence at 3702 South Virginia Street, Unit G12-401, Reno, Nevada, 89502.

ITEM 3. LEGAL PROCEEDINGS.

On July 10, 2009 Smart-Tek entered into a settlement agreement with Richardson Patel pursuant to which it agreed to pay Richardson Patel $200,000 in full and final settlement of all claims that the firm had or may have had against Smart-Tek with respect to certain outstanding accounts owed by Smart-Tek to the firm. Pursuant to the terms of the settlement agreement, Smart-Tek has the right to reduce the settlement amount to $150,000 if it pays such amount to Richardson Patel on or before November 1, 2009. In connection with our entry into the settlement agreement with Richardson Patel, we entered into a stock pledge agreement among Richardson Patel, Perry Law, and four of our stockholders pursuant to which the stockholders pledged an aggregate of 29,152,127 shares of our common stock as security for repayment of the amounts owed to Richardson Patel.

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

Our board of directors approved a 250-for-1 reverse split on February 16, 2009. Following board approval of the proposed reverse split, we filed a consent solicitation on Schedule 14A seeking written consent of stockholders representing a majority of the voting power of our outstanding common stock as at February 26, 2009. On March 31, 2009 we effected the 250-for-1 reverse split of shares of our outstanding common stock following receipt of written consent of a majority of our stockholders.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market for Securities

Our common shares are quoted on the Over-The-Counter Bulletin Board under the trading symbol “STTN.OB”. On March 31, 2009 our trading symbol was changed from “STTK.OB” to “STTN.OB” on the Over-The-Counter Bulletin Board following the effectiveness of our 250-1 reverse stock split. Our shares have been quoted on the Over-The-Counter Bulletin Board since May 15, 1998. The following quotations obtained from the Over-The-Counter Bulletin Board reflect the high and low bids for our common stock based on inter-dealer prices, without retail mark-up, mark-down or commission an may not represent actual transactions.

The high and low bid prices of our common stock for the periods indicated below are as follows:

OTC Bulletin Board⁽¹⁾
Fiscal Quarter Ended	High	Low
2009
4th Quarter April 1, 2009 – June 30, 2009	$0.02	$0.002
3rd Quarter January 1, 2009 – March 31, 2009	$0.11	$0.001
2nd Quarter October 1, 2008 – December 31, 2008	$0.013	$0.001
1st Quarter July 1, 2008– September 30, 2009	$0.02	$0.004
2008
4th Quarter April 1, 2008 – June 30, 2008	$0.095	$0.016
3rd Quarter January 1, 2008 – March 31, 2008	$0.1	$0.015
2nd Quarter October 1, 2007 – December 31, 2007	$0.19	$0.07
1st Quarter July 1, 2007 – September 30, 2007	$0.195	$0.15

⁽¹⁾Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions.

Our transfer agent is Corporate Stock Transfer Inc., 3200 Cherry Creek Drive South, Suite 4300, Denver, CO 80209 US.

Holders of our Common Stock

As of October 9, 2009, there were 391 total registered shareholders holding 69,314,124 shares of our issued and outstanding common stock.

Dividend Policy

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

We would not be able to pay our debts as they become due in the usual course of business; or

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Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.

Recent Sales of Unregistered Securities

Other than as described below and as reported in our quarterly reports on Form 10-QSB and current reports on Form 8-K, we have not sold any equity securities that were not registered under the Securities Act during the fiscal year ended June 30, 2008.

	1.	On September 14, 2009 Smart-Tek issued 45,000,000 restricted shares of its common stock to Brian Bonar, a director of the Company. Mr. Bonar was issued the shares based on Mr. Bonar achieving certain milestone targets for annualized sales as set out in the Marketing Partner Agreement dated June 17, 2009 between the Company and Mr. Bonar.

	2.	On September 30, 2009 Smart-Tek entered into debt settlement agreements with seven subscribers pursuant to which it agreed to settle $310,265 of debt in consideration of the issuance of 23,866,535 shares of its common stock. Each of the subscribers represented to Smart-Tek that they were an “accredited investor” as such term is defined in Canadian National Instrument 45- 106 and not a “US person” as such term is defined in Regulation S of the Securities Act of 1933.

ITEM 6. SELECTED FINANCIAL DATA.

Not Applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this annual report.

Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Year Ended June 30, 2009 Summary

The following summary of our results of operations should be read in conjunction with our audited financial statements for the year ended June 30, 2009 which are included herein. The results of operations reflected in this discussion include the operations of Smart-Tek Communications, Inc., our wholly owned subsidiary.

		June 30, 2009		June 30, 2008		Percentage
						Increase/
						(Decrease)
Revenue	$	3,274,139	$	3,765,247		(13%	)
Expenses		807,250		3,833,493		(78.9%	)
Interest Expense		44,549		62,272		(28.4%	)
Net Loss	$	20,891	$	(3,059,628	)	(100.7%	)

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Revenue

As at June 30, 2009, we generated $3,274,139 in revenue. The decrease in revenues for the year ended June 30, 2009 is primarily attributable to a decrease in our subsidiaries’ security and technology business. For the year ended June 30, 2009, two significant customers accounted for 26% of revenue and the customers individually accounted for more than 10% of revenue, also 100% of the Company’s sales and accounts receivable arose from sales to Canadian customers during the year. For the year ended June 30, 2009, two significant suppliers accounted for 29% of purchases.

Expenses

Our expenses for the years ended June 30, 2009 and June 30, 2008 are outlined in the table below:

		Year Ended		Year Ended	Percentage
		June 30,		June 30,	Increase/
		2009		2008	(Decrease)
Selling, general and administrative expenses	$	807,250	$	3,833,493	(78.9%	)
Cost of revenues and service delivery		2,558,706		2,929,110	(12.6%	)
Interest expense		44,549		62,272	(28.4%	)
Total expenses	$	3,410,505	$	6,824,875	(50.0%	)

General and Administrative Expenses

The decrease in our general and administrative expenses for the year ended June 30, 2009 from the comparative period in 2008 was primarily due to: (i) decreased software development expenses and associated consulting costs relating to the development of RFID software; (ii) decreased professional fees associated with preparing and filing our periodic reports under the Securities Exchange Act of 1934 and litigation costs; and (iii) decreased consulting expenses associated with the development of our business.

Line of Credit

At June 30, 2009, bank overdrafts covered by a revolving line of credit were $Nil. The revolving line of credit agreement is between the Company’s wholly owned subsidiary, and HSBC Bank of Canada. The revolving line of credit facility bears interest at the rate of prime plus 4.50% per annum, allows authorized bank overdrafts of up to $107,475 (CDN$125,000) and is secured by a shareholder guarantee and $45,350 (CDN$52,475) in the form of a term deposit. As of June 30, 2009, the Company had written checks of $Nil in excess of the operating line of credit.

Liquidity and Financial Condition

Working Capital

		At June 30,			At June 30,		Percentage
		2009			2008		Increase/
							(Decrease)
Current assets	$	986,225		$	928,662		6.2%
Current liabilities		2,137,669			2,174,968		1.7%
Working capital (deficiency)	$	(1,151,444	)	$	(1,246,306	)	(7.6%	)

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Cash Flows

		Year Ended
		June 30,			June 30,		Percentage
		2009			2008		Increase/
							(Decrease)
Cash flows used in operating activities	$	(3,092	)	$	(173,564	)	98.2%
Cash flows used in investing activities		(14,633	)		-		(100%	)
Cash flows provided by financing activities		(14,094	)		195,649		(107.2%	)
Increase (decrease) in cash during period	$	22,027		$	4,226		421.2%

We had cash on hand of $73,272 and a working capital deficit of $1,151,444 as of June 30, 2009 compared to cash on hand of $51,245 and working capital deficit of $1,246,306 for the year ended June 30, 2008. We anticipate that we will incur approximately $300,000 for operating expenses, including professional, legal and accounting expenses associated with our reporting requirements under the Exchange Act during the next twelve months.

Cash Used In Operating Activities

We used cash in operating activities in the amount of $3,092 during the year ended June 30, 2009. Cash used in operating activities was funded by cash from financing activities.

Cash From Investing Activities

We used cash in investing activities in the amount of $14,633 during the year ended June 30, 2009. Cash used in investing activities was funded by cash from financing activities.

Cash from Financing Activities

We generated cash of $14,094 from financing activities during the year ended June 30, 2009.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred net income of $20,891 and cash flow from operations of ($3,092) during the year ended June 30, 2009, and had a working capital deficiency of $1,151,444 and a shareholders’ deficiency of $685,011. These matters raise substantial doubt about its ability to continue as a going concern. Management believes that actions are presently being taken to revise the Company’s operating results. Management believes that the Company will have adequate cash to fund anticipated needs through June 30, 2010 and beyond primarily as a result of our contract backlog. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

There are no assurances that we will be able to obtain further funds required for our continued operations. We are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be forced to scale down or perhaps even cease the operation of our business.

Future Financings

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shareholder loans and deferral of salary payments to its officers. In order to obtain necessary capital, the Company may need to sell additional shares of its common stock or borrow funds from private lenders. There is no assurance that the Company will be able to secure additional financing or that it can be secured at rates acceptable to the Company. In addition, should the Company be required to either issue stock for services or to secure equity funding, due to the lack of liquidity in the market for the Company’s stock such financing would result in significant dilution to its existing shareholders.

The Company’s short term plan is to continue to ask its officers to defer payment of salaries, utilize its common stock where possible to pay for services and to seek further shareholder loans. In the longer term, the Company is actively seeking additional merger, acquisition or venture relationships with operating enterprises in order to generate long-term growth opportunities for the Company, permit the Company to meet its financial obligations and to provide increased value to the Company’s shareholders. We have obtained our required cash resources principally through loans from shareholders and our sole executive officer. While the operations of our wholly-owned subsidiary are profitable, we still do not operate profitably as a consolidated entity.

Management’s plans to improve our financial condition are as follows:

Continued growth of Smart-tek Communications’ business activities in the security technology industry in the Greater Vancouver Area;
We believe the beta test for the software and hardware will be successful on a start-up cattle farm in New Mexico; and
We will continue to look for opportunities to grow organically where feasible as well as evaluate potential acquisition opportunities that may present themselves in the next 12 months.

There can be no assurance that our planned activities will be successful or that we will ultimately attain profitability. Our long term viability depends on our ability to grow the SCI business to fund the continuation of our consolidated business operations. We intend to use our common stock as payment for services of various consultants in order to help advance our business plan.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.

We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations.

Revenue Recognition

The Company accounts for its construction projects using the percentage of completion method, measured using the cost-to-cost method. This method of accounting requires a calculation of job profit to be recognized in each reporting period for each contract abased upon estimates of future outcomes, which include:

Estimates of total cost to complete the contract;

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Estimates of contract schedule and completion date;
Estimates of the percentage the contract is complete; and
Amounts of any probable unapproved claims and change orders included in revenue.

At the outset of each contract, a detailed analysis of estimated cost to complete the contract is prepared. Periodically, evaluation of the estimated cost, claims, change orders and percentage of completion at the project level will be performed. The recording of profits and losses on long-term contracts requires an estimate of the total profit and loss over the life of each contract. This estimate requires consideration of contract revenues, change orders and claims, less cost incurred and estimated costs to complete. Anticipated losses on contracts are recorded in full in the period in which they become evident. Profits are recorded based upon the total estimated contract profit times the current percentage of completion for the contract.

When calculating the amount of total profit or loss on a long-term contract, unapproved claims are recorded as revenue when collection is deemed probable based upon the four criteria for recognizing unapproved claims under the AICPA Statement of Position 81-1 (“SOP 81-1”) Accounting for Performance of Construction Type and Certain Production Type Contracts. The Company is actively engaged in claims negotiations with customers and the success of the claims negotiations have a direct impact on the profit or loss recorded for any long-term contract. On a quarterly basis, significant contracts are reviewed. However, there are many factors that impact future costs, including but not limited to, weather, inflation, labor and community disruptions, timely availability of materials, productivity and other factors. These factors can affect the accuracy of our estimates and materially impact our future earnings. The Company also provides various other services to customers not covered under construction contracts such as equipment repairs. The revenue from the provision of these types of services is recorded once the specific job is complete.

Goodwill and Intangible Assets

The Company accounts for goodwill and intangible assets pursuant to SFAS No. 142, “Goodwill and Other Intangible Assets”. Under SFAS 142, intangibles with definite lives continue to be amortized on a straight-line basis over the lesser of their estimated useful lives or contractual terms. Goodwill and intangibles with indefinite lives are evaluated at least annually for impairment by comparing the asset’s estimated fair values with its carrying value, based on cash flow methodology.

Stock-based Compensation

Through December 31, 2005, the Company accounted for stock-based employee compensation in accordance with the provisions of Accounting Principles Board (“APB”) Opinion No. 25 and FASB Interpretation No. 44 “Accounting for Certain Transactions Involving Stock Compensation” and complied with the disclosure requirements of SFAS No. 123 (as modified by SFAS No.48), “Accounting for Stock-Based Compensation”, Under APB No.25 compensation expense was recorded based on difference, if any, between the fair value of the Company’s stock and the exercise price on the measurement date. The Company accounted for stock issued to non-employees in accordance with SFAS No.123, which required entities to recognize as expense over the service period the fair value of all stock based awards on the date of grant and EITF No. 96-18 “Accounting for Equity Investments that are issued to Other Than Employees for Acquiring, or in conjunction with Selling, Goods or Services”, which addressed the measurement date and recognition approach for such transactions.

On January 1, 2006, the Company adopted SFAS No. 123 (revised 2004), “Share-based Payment (“SFAS No.123R”) a revision of SFAS No. 123, “Accounting for Stock Based Compensation”, SFAS No.123R superseded APB Opinion No.25 “Accounting for Stock Issued to Employees” and amended SFAS 95 “Statement of Cash Flows” SFAS No 123R requires that the Company measure the cost of employee services received in exchange for equity awards based on the grant date fair-value of the awards. The cost will be recognized as compensation expense over the vesting period of the awards.

Under this method, the Company began recognizing compensation cost for equity-based compensation for all new or modified grants after the date of adoption. The pro-forma disclosures previously permitted under SFAS No. 123

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are no longer an alternative to financial statement recognition. In addition, the Company now recognizes the unvested portion of the grant date fair value of awards issued prior to adoption based on the fair values previously calculated for disclosure purposes over the remaining vesting period of the outstanding options and warrants. Accordingly, the Company recognizes compensation cost for equity-based compensation for all new or modified grants issued after December 31, 2005.

The Company had two partially vested stock options outstanding at December 31, 2005 pursuant to employment agreements entered into between the Company and its president and vice-president. Under these agreements, the Company issued options to purchase up to 650,000 shares of its common stock at a purchase price of $0.15 per share that vest in equal quarterly installments over a three (3) year period. The Company calculated the fair value of the options to be 195,000 using our option pricing model, of which $65,000 was recognized as expense during the year ended June 30, 2008. In addition, commencing January 1, 2006, the Company is required to recognize the unvested portion of the grant date fair value of awards issued prior to the adoption of SFAS No. 123R based on the fair values previously calculated for disclosure purposes over the remaining vesting period of the outstanding stock options and warrants. At June 30, 2008, the value of the unvested options was $32,500 which will be amortized in future periods as the options vest.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

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FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To:	The Board of Directors and Shareholders
	Smart-tek Solutions, Inc. (formerly Royce Biomedical Inc.)

I have audited the accompanying consolidated balance sheet of Smart-tek Solutions, Inc. and subsidiaries (the Company) as of June 30, 2009 and 2008 and the related consolidated statements of operations and changes in stockholders’ deficiency and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these consolidated financial statements based on my audit.

I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor was I engaged to perform, an audit of its internal control over financial reporting. My audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but do not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, I express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.

In my opinion the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Smart-tek Solutions, Inc. and its subsidiaries as of June 30, 2009 and 2008, and the results of their operations and cash flows for years then ended, in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses until the latest fiscal year. As discussed in Note 1 to the financial statements, the Company generated a net income of $20,891 and a negative cash flow from operations of $3,092 during the year ended June 30, 2009, and a working capital deficiency of $1,151,444 and a stockholders’ deficiency of $685,011 at June 30, 2009. This raises substantive doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ John Kinross-Kennedy
John Kinross-Kennedy
Certified Public Accountant
Irvine, California
October 10, 2009

F-1

Smart-tek Solutions Inc.
Consolidated Balance Sheets
As of June 30, 2009 and 2008

		2009			2008

Assets
Current assets
Cash and cash equivalents	$	73,272		$	51,245
Accounts receivable		639,284			597,539
Contract retention receivable		235,196			226,722
Cost of uncompleted contracts in excess of billings		37,097			51,587
Prepaid expenses and deposits		1,376			1,569
Total current assets		986,225			928,662

Equipment, net of accumulated depreciation		15,122			2,747

Goodwill		451,311			451,311

	$	1,452,658		$	1,382,720



Liabilities
Current liabilities
Bank overdraft	$	-		$	87,984
Accounts payable and accrued liabilities		408,365			979,694
Bonus payable		240,744			253,021
Billings on uncompleted contracts
in excess of costs and estimated revenues		297,600			254,254
Deferred revenue		12,389			13,667
Loans payable		310,265			-
Shareholder loans		468,134			81,477
Amounts due to officers and directors		400,172			504,871

Total current liabilities		2,137,669			2,174,968


Stockholders’ Deficiency
Preferred stock, $0.001 par value, 5,000,000 shares
authorized, one (1) shares of Class A preferred
issued and outstanding at June 30, 2009 and June 30, 2008		-			-
Common stock: $0.001 par value, 500,000,000, shares
authorized,
447,589 issued and outstanding at June 30, 2009 and
447,589 issued and outstanding at June 30, 2008 respectively		448			448
Additional paid in capital		6,566,464			6,533,964
Accumulated other comprehensive loss		(67,722	)		(121,568	)
Accumulated deficit		(7,184,201	)		(7,205,092	)
Total stockholders’ deficiency		(685,011	)		(792,248	)

	$	1,452,658		$	1,382,720

See accompanying notes to the consolidated financial statements.
F-2

Smart-tek Solutions Inc.
Consolidated Statements of Operations and Comprehensive Loss
For the years ended June 30, 2009 and 2008

		2009			2008

Revenue
Contract revenue	$	3,184,401		$	3,610,980
Services revenue		88,310			147,624
Other revenue		1,428			6,643
Total revenue		3,274,139			3,765,247

Cost of revenue and service delivery		2,558,706			2,929,110

Gross profit		715,433			836,137

Selling, general and administrative expenses		807,250			3,833,493

Operating loss		(91,817	)		(2,997,356	)

Other expense
Interest		(44,549	)		(62,272	)
Settlement of debt		157,257			-

Net income (loss)		20,891			(3,059,628	)

Currency translation adjustment		53,846			(17,859	)

Comprehensive income (loss)	$	74,737		$	(3,077,487	)

Loss per share, basic and diluted	$	0.17		$	(8.80	)

Weighted average shares outstanding,
basic and diluted		447,589			349,671

See accompanying notes to the consolidated financial statements.
F-3

Smart-tek Solutions Inc.

Consolidated Statement of Changes in Stockholders’ Deficiency

For the years ended June 30, 2009 and 2008

	Common Stock
							Accumulated
					Additional		Other
					Paid in		Comprehensive			Accumulated
	Shares		Amount		Capital		Income			Deficit			Total

Balance – June 30, 2007	293,349	$	294	$	2,934,520	$	(103,709	)	$	(4,145,464	)	$	(1,314,359	)

Fair Value Options issued to employees	-		-		65,000		-			-			65,000

Shares issued for consulting	76,000		76		2,849,924		-			-			2,850,000

Shares issued for settlement of debt	78,240		78		684,520		-			-			684,598

Net Loss	-		-		-		-			(3,059,628	)		(3,059,628	)

Currency translation adjustment	-		-		-		(17,859	)		-			(17,859	)

Balance – June 30, 2008	447,589	$	448	$	6,533,964	$	(121,568	)	$	(7,205,092	)	$	(792,248	)

Fair Value Options issued to employees	-		-		32,500		-			-			32,500

Net Loss	-		-		-		-			20,891			20,891

Currency translation adjustment	-		-		-		53,846			-			53,846

Balance – June 30, 2009	447,589	$	448	$	6,566,464	$	(67,722	)	$	(7,184,201	)	$	(685,011	)

See accompanying notes to the consolidated financial statements.
F-4

Smart-tek Solutions Inc.
Consolidated Statements of Cash Flows
For the years ended June 30, 2009 and 2008

		2009			2008


Operating activities

Net loss	$	20,891		$	(3,059,628	)
Adjustments to reconcile net loss to net cash used in
operating activities

Depreciation and amortization		2,258			5,058
Amortization of deferred compensation		32,500			65,000
Common stock issued for consulting fees		-			2,850,000
Settlement of debt		(157,257	)		-

Changes in operating assets and liabilities
Accounts receivable		(41,745	)		119,314
Contract retention receivable		(8,474	)		(40,626	)
Costs of uncompleted contracts in excess of billings		14,490			(1,667	)
Prepaid expenses and deposits		193			383
Accounts payable and accrued liabilities		104,261			35,020
Bonus payable		(12,277	)		83,753
Billings on uncompleted contracts in excess of costs
and estimated revenues		43,346			(230,835	)
Deferred revenue		(1,278	)		664
Net cash used in operating activities		(3,092	)		(173,564	)

Investing activities
Purchase of equipment		(14,633	)		-
Net cash used in investing activities		(14,633	)		-

Financing activities
(Decrease) Increase in bank overdraft, net		(87,984	)		(60,191	)
Proceeds from shareholders loan		79,288			140,722
Proceeds from officer and directors		(5,398	)		121,353
Proceeds from (repayment) of related party debt		-			(6,235	)
Net cash provided by financing activities		(14,094	)		195,649


Effects of exchange rates on cash		53,846			(17,859	)


Net increase (decrease) in cash		22,027			4,226

Cash, beginning of period		51,245			47,019

Cash, end of period	$	73,272		$	51,245


Supplemental cash flow information

Interest paid	$	4,382		$	62,272

See accompanying notes to the consolidated financial statements.
F-5

Smart-tek Solutions Inc.

Notes to the Consolidated Financial Statements

June 30, 2009

1. Summary of significant accounting policies

Nature of operations, basis of financial statement presentation

In August 2005, the Company changed its name from Royce Biomedical Inc. to Smart-tek Solutions Inc. (“STS” or the “Company”) to better reflect its new business activities. STS was incorporated in Nevada on March 22, 1995.

Between August 1995 and June 1998, the Company manufactured and sold diagnostic test kits used to detect pregnancy, thyroid disorders and other medical conditions. The Company assembled its diagnostic testing kits at its laboratory in Irvine, California. The Company closed this facility in April 1998. In order to penetrate the Chinese Immunodiagnostic market quickly, the Company signed an agreement in April 1999 with Xili Pharmaceutical Group, Inc. (“Xili”) of the People’s Republic of China, to market and distribute H. Pylori Diagnostic test kits supplied by the Company. In addition to supplying H. Pylori diagnostic test kits supplied by the Company. In addition to supplying H. Pylori test kits to Xili, the Company had provided clinical data and training to Xili personnel.

Xili Pharmaceutical Group, Inc. through its subsidiary, Xili USA, Inc. owned approximately 44% of the outstanding common shares of the Company through December 5, 2004 and is controlled by Dr. Yan Xiao Wen, who is also the former Chairman of the Company’s Board of Directors. At December 31, 2007, Xili USA, Inc., owns approximately 2.1% of the outstanding common shares of the Company.

In March 2005, the Company entered into a Letter of Intent to acquire Smart-tek Communications, Inc. (“SCI”) a British Columbia based security design and installation contractor. Pursuant to a Share Exchange Agreement executed in April 2005. SCI became a wholly-owned subsidiary of the Company. As a result of this acquisition, the Company has ceased all ongoing business relationships with Xili and will direct its efforts to effectively operate and expand in the security sector.

Pursuant to the share exchange agreement, the Company issued 1,000 shares of its common stock and 1 share of Class A preferred stock in return for all outstanding shares of SCI. The acquisition has been accounted for as a purchase (see Note 2).

Smart-tek Communications Inc. (“SCI”) was incorporated on October 29, 1996 in the Province of British Columbia, Canada. The Company specializes in the design, sale, installation and service of security technology with electronic hardware and software products. Projects range from residential and commercial developments to system upgrades and monitoring contracts. Customers include major developers, general and electrical contractors, hospitals, Crown Corporations, law enforcement agencies and retail facilities. Currently, 100% of the Company’s operations are in Canada.

On February 11, 2009, Smart-tek Automated Services Inc., a wholly owned subsidiary of the Company was incorporated in the State of Nevada. Smart-tek Automated Services Inc. will provide integrated and cost-effective management solutions in the area of human resources for public and private companies.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the following significant accounting policies:

Principles of consolidation

The consolidated financial statements include the accounts of Smart-tek Solutions Inc., and its wholly-owned subsidiaries Smart-tek Communications Inc. and Smart-tek Automated Services Inc. Significant inter-company transactions have been eliminated in consolidation.

Accounts Receivable

The Company reports accounts receivable at net realizable value. The Company’s term of sale provide the basis for when accounts become delinquent or past due. The Company provides an allowance for doubtful accounts, when necessary, equal to the estimated uncollectible amounts. There is an allowance for doubtful accounts as of June 30, 2009 of $3,871 (2008 – $8,890).

F-6

Smart-tek Solutions Inc.

Notes to the Consolidated Financial Statements

June 30, 2009

Equipment

Equipment, including computer equipment under capital lease agreements, is recorded at cost and depreciated using accelerated methods over the estimated useful lives of the related assets ranging from 3 to 5 years. The Company reviews the carrying value of long-term assets to be held and used when events and circumstances warrant such a review. If the carrying value of a long-lived asset is considered impaired, a loss is recognized based on the amount by which the carrying value exceeds the fair market value. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. The cost of normal maintenance and repairs is charged to operations as incurred. Major overhaul that extends the useful life of existing assets is capitalized. When equipment is retired or disposed, the costs and related accumulated depreciation are eliminated and the resulting profit or loss is recognized in income.

Financial instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivables, contract retention receivable, bank overdraft, accounts payable and accrued liabilities, amounts due to officers and directors, shareholder loans and related party loans. The fair value of these financial instruments approximate their carrying value due to the short maturities of these instruments, unless otherwise noted.

Interest rate risk arises on the various rates at which the Company has obtained certain long-term debt and related party loans. However, the Company expects to repay these obligations in full either at maturity or at terms set out in the specific agreements. Consequently, risk related to fluctuations on the bank prime is minimal. The remaining balance of long-term debt, obligations under capital lease and amount due to related parties are based on fixed terms of interest. The Company expects to repay these amounts in full, thereby minimizing interest rate risk.

Cash and equivalents

Cash and equivalents include investments with initial maturities of three months or less.

Income taxes

In accordance with SFAS No. 109, “Accounting for Income Taxes”, the Company uses the asset and liability method to account for income taxes, including recognition of deferred tax assets for the anticipated future tax consequences attributable to differences between financial statement amounts and their respective tax bases. The Company reviews its deferred tax asset for recovery and a valuation allowance is established when the Company believes that it is more likely than not that some portion of its deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in the Company’s tax provision in the period of change.

Goodwill and intangible assets

Use of estimates

The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and related disclosures. Specific areas, among others, requiring the application of management’s estimates and judgment includes assumptions pertaining to credit. Worthiness of customers, percentage of completion and related costs for contracts in progress, interest rates, useful lives of assets, future cost trends, tax strategies, and other external market and economic conditions. Actual results could differ from estimates and assumptions made.

F-7

Smart-tek Solutions Inc.

Notes to the Consolidated Financial Statements

June 30, 2009

Revenue recognition

Estimates of total cost to complete the contract;
Estimates of contract schedule and completion date;
Estimates of the percentage the contract is complete; and
Amounts of any probable unapproved claims and change orders included in revenue.

The company also provides various other services to customers not covered under construction contracts such as equipment repairs. The revenue from the provision of these types of services is recorded once the specific job is complete.

Concentration of credit risk

Credit risk arises from the potential that a counterpart will fail to perform its obligations. The Company is exposed to credit risk related to its account receivable and contract retention receivable. The Company’s receivables are comprised of a number of debtors which minimizes the concentration of credit risk. It is management’s opinion that the Company is not exposed to significant credit risk associated with its accounts receivable and contract retention receivable.

Foreign currency translation

The functional currency of the Company is the United States dollar. The Company’s Canadian subsidiary’s financial statements are translated into United States dollars at the exchange rates in effect at the balance sheet date for assets and liabilities and at average rates for the period for revenues and expenses. Resulting exchange differences are accumulated as a component of accumulated other comprehensive loss.

Comprehensive (loss) income

Comprehensive income or loss encompasses net income or loss and “other comprehensive income or loss”, which includes all other non-owner transactions and events that change shareholder’s deficiency. The Company’s other comprehensive loss reflects the effect of foreign currency translation adjustments on the translation of the financial statements from the functional currency of Canadian dollars into the reporting currency of U.S. dollars.

F-8

Smart-tek Solutions Inc.

Notes to the Consolidated Financial Statements

June 30, 2009

Stock-based compensation

In addition, the Company now recognizes the unvested portion of the grant date fair value of awards issued prior to adoption based on the fair values previously calculated for disclosure purposes over the remaining vesting period of the outstanding options and warrants. Accordingly, the Company recognizes compensation cost for equity-based compensation for all new or modified grants issued after December 31, 2005.

The Company had two partially vested stock options outstanding at December 31, 2005 pursuant to employment agreements entered into between the Company’s and its president and vice-president. Under these agreements, the Company issued options to purchase up to 650,000 shares of its common stock at a purchase price of $0.15 per share that vest in equal quarterly installments over a three (3) year period. The Company calculated the fair value of the options to be 195,000 using our option pricing model, of which $32,500 was recognized as expense during the year ended June 30, 2009.

In addition, commencing January 1, 2006, the Company is required to recognize the unvested portion of the grant date fair value of awards issued prior to the adoption of SFAS No. 123R based on the fair values previously calculated for disclosure purposes over the remaining vesting period of the outstanding stock options and warrants. At June 30, 2009, the value of the unvested options was $Nil.

Recovery of long-lived assets

The Company adopted SFAS Statement 144, “Accounting for the Impairment and Disposal of Long-Lived Assets (“SFAS 144”). SFAS 144 requires recognition of impairment losses on long-lived assets when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts.

Advertising expenses

The Company expenses advertising costs as incurred which was $1,110 for the year ended June 30, 2009.

F-9

Smart-tek Solutions Inc.

Notes to the Consolidated Financial Statements

June 30, 2009

Loss per share

The Company computes net earnings (loss) per common share in accordance with SFAS No. 128 “Earnings per Share” (“SFAS 128”) and SAB No. 98 (“SAB 98”). Under the provisions of SFAS 128 and SAB 98, the basic net earnings (loss) per common share is computed by dividing the net earnings (loss) available to common stock outstanding during the period. Net earnings (loss) per share on a diluted basis is computed by dividing the net earnings (loss) for the period by the weighted average number of common and dilutive common stock equivalent shares outstanding during the period.

Recent accounting pronouncements

In February 2008, the FASB issued FSP FAS 157-2, Effective Date of FASB Statement No. 157, which delays the effective date of SFAS No. 157 to July 1, 2009, for all nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The Company believes the adoption of the delayed items of SFAS No. 157 will not have a material impact on our financial statements.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events, which established general accounting standards and disclosure for subsequent events. In accordance with SFAS No. 165, the Company has evaluated subsequent events through the date the financial statements were filed.

In June 2009, the FASB issued SFAS No. 168 -- The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles-a replacement of FASB Statement No. 162. SFAS 168 establishes the FASB Accounting Standards Codification as the single source of authoritative US generally accepted accounting principles recognized by the FASB to be applied to nongovernmental entities. SFAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of SFAS 168 will not have an impact on the Company's financial position, results of operations or cash flows.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred net income of $20,891 and cash flow from operations of ($3,092) during the year ended June 30, 2009, and had a working capital deficiency of $1,151,444 and a stockholders’ deficiency of $685,011. These matters raise substantial doubt about its ability to continue as a going concern. Management believes that actions are presently being taken to revise the Company’s operating results. Management believes that the Company will have adequate cash to fund anticipated needs through June 30, 2010 and beyond primarily as a result of our contract backlog. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company does not have any significant available credit, bank financing or other external sources of liquidity. Due to historical operating losses, the Company’s operations have not been a source of liquidity and the Company has satisfied its cash requirements through shareholder loans and deferral of salary payments to its officers. In order to obtain necessary capital, the Company may need to sell additional shares of its common stock or borrow funds from private lenders. There is no assurance that the Company will be able to secure additional financing or that it can be secured at rates acceptable to the Company. In addition, should the Company be required to either issue stock for services or to secure equity funding, due to the lack of liquidity in the market for the Company’s stock such financing would result in significant dilution to its existing shareholders.

F-10

Smart-tek Solutions Inc.

Notes to the Consolidated Financial Statements

June 30, 2009

2. Acquisitions

On April 15, 2005, the Company entered into a Share Exchange Agreement with Smart-tek Communications, Inc. (“SCI”) and with the sole shareholder of SCI to acquire all of the outstanding shares of SCI.

In exchange for the SCI shares, the Company issued to SCI’s shareholder, 1,000 common shares and 1 Class A Preferred Share of the Company. The preferred share will enable the holder to exercise the voting control over 40% of the Company upon issuance. The remaining 60% voting control is to be assigned to the outstanding common shares of the Company. Such preferred shares shall not be convertible, exchangeable, transferable or otherwise purchased, conveyed or redeemed at any time while outstanding during a two-year period. In addition, the voting power of such preferred share shall decrease over a two year period so as to have 20% voting control 12 months after issuance, 10% voting control over 18 months after issuance and zero voting control 24 months after issuance at which time the preferred shares will be redeemed for no consideration.

The acquisition was accounted for as a purchase and the results of SCI’s operations beginning April 16, 2005 are included in the accompanying consolidated statement of operations. The acquisition of assets and liabilities has been recorded at their fair market value at the date of purchase. The Company determined that the historical cost of the assets and liabilities acquired approximated their fair market values given the nature of the assets and liabilities acquired. Purchase price allocation was as follows:

Valuation of shares of common stock and preferred stock	$	1

Assets acquired		276,012
Liabilities assumed		(727,324	)
		451,312

Goodwill	$	451,311

3. Contract Retention Receivable

Under the Builder’s Lien Act (British Columbia), under which the subsidiary SCI operates, for each contract or subcontract a holdback amount is retained by the customer equal to 10% of the greater of:

	(a)	The value of the work or materials as they are actually provided under contract or subcontract, and
	(b)	The amount of any payment made on account of the contract or subcontract price.

On the request of a contractor or subcontractor, the payment certifier must, within 10 days after the date of the request, determine whether the contract or subcontract has been completed and, if the payment certifier determines that it has been completed, the payment certifier must issue a certificate of completion.

If a certificate of completion is issued with respect to a contract or subcontract, the holdback period expires at the end of 55 days after the certificate of completion is issued.

As of June 30, 2009 and June 30 2008, contract retention receivables were $235,196 and $226,722 respectively.

F-11

Smart-tek Solutions Inc.

Notes to the Consolidated Financial Statements

June 30, 2009

4. Equipment

						June 30						June 30
				Accumulated		2009				Accumulated		2008
		Cost		Depreciation		Net Book		Cost		Depreciation		Net Book
						Value						Value

Computer equipment & software	$	899	$	762	$	137	$	899	$	706	$	193
Office furniture & equipment		13,202		3,885		9,317		4,727		2,657		2,070
Leasehold improvements		15,617		15,617		-		15,617		15,617		-
Computer equipment under
capital lease		2,140		1,791		349		2,140		1,656		484
Automobile		6,158		839		5,319		-		-		-

	$	38,016	$	22,894	$	15,122	$	23,383	$	20,636	$	2,747

5. Bank Overdraft

At June 30, 2009, bank overdrafts covered by a revolving line of credit were $Nil. The revolving line of credit agreement is between SCI, the Company’s wholly owned subsidiary, and HSBC Bank of Canada. The revolving line of credit facility bears interest at the rate of prime plus 4.50% per annum, allows authorized bank overdrafts of up to $107,475 ($125,000 CDN) and is secured by a shareholder guarantee and $45,350 ($52,745 CDN) in the form of a term deposit. As of June 30, 2009, the Company had written checks of $Nil in excess of the operating line of credit.

Pursuant to the banking facility, the Company’s wholly owned subsidiary is required to maintain minimum equity of $85,980 (CDN$100,000). The Company’s wholly owned subsidiary is not in compliance with this condition at June 30, 2009.

6. Shareholder loans

At June 30, 2009 the Company is indebted to a company controlled by the Company’s president in the amount of $468,134. The loan is unsecured, bears 7.5% interest and has no fixed terms of repayment.

7. Loans payable

At June 30, 2009, the Company has outstanding loans payable in the amount of $310,265. The loans are unsecured, bear no interest and have no fixed terms of repayment.

8. Income taxes

The Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Deferred income taxes are reported using the liabilities method.

Deferred tax assets are recognized for deductible temporary differences and for carry forwards. Deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

F-12

Smart-tek Solutions Inc.

Notes to the Consolidated Financial Statements

June 30, 2009

8. Income taxes, continued

The Company generated a deferred tax credit through net operating loss carry forwards. As of June 30, 2009 the company had federal and state net operating loss carry forwards of approximately $6,981,146 that can be used to offset future federal income tax. The federal and state net operating losses are reduced by a valuation allowance, when, in the opinion of management, utilization is not reasonably assured. A valuation allowance of 100% has been established; based on it is more likely than not that some portion or all of the deferred tax credit will not be realized.

At June 30, 2009, STS had available federal net operating loss (NOL) carry forwards of approximately $6,992,146. Under Section 382 of the internal Revenue Code of 1986, as amended, the use of prior losses including NOLs is subject to rules if a corporation undergoes an “ownership change”. Future issuances of equity interests by us for acquisitions or the exercise of outstanding options to purchase our capital stock may result in an ownership change that is large enough for a limitation on the use of NOLs to apply. If the limitation applies, we may be unable to use a material portion of its available NOL carry forwards to reduce future taxable income. The income tax effect of temporary differences between financial and tax reporting gives rise to the deferred tax asset at June 30, 2009 and June 30, 2008 as follows:

		2009			2008

Deferred tax asset, beginning	$	2,409,732		$	1,338,862
Benefit (provision )of current year’s operating loss carry forward
(gain)		(7,312	)		1,070,870
Deferred tax asset, ending	$	2,402,420		$	2,409,732

Valuation allowance, beginning	$	(2409,732	)	$	(1,338,862	)
Current year’s loss carry forward (provision)		7,312			(1,070,870	)
Valuation allowance, ending	$	(2,402,420	)	$	(2,409,732	)

Deferred tax asset, net	$	-		$	-

Tax at blended U.S./Canadian statutory rates		(35%	)		(35%	)
Loss carryover		35%			35%

Tax expense	$	-		$	-

9. Common Stock

At June 30, 2009, the Company is authorized to issue:

1. 5,000,000 shares of preferred stock, par value $0.001 per share
2. 500,000,000 shares of common stock, par value $0.001 per share

At June 30, 2009, there are 447,589 shares of common stock outstanding.

During the period a 250 for 1 reverse split was approved for the outstanding shares of the Company. The result of the reverse split was a reduction of issued and outstanding shares from 111,812,971 to 447,589. The reverse split has been reflected in the prior year for comparative purposes.

F-13

Smart-tek Solutions Inc.

Notes to the Consolidated Financial Statements

June 30, 2009

9. Common Stock continued

Preferred Stock

Pursuant to the share exchange agreement dated April 15, 2005, the Company agreed to issue one share of Class A preferred stock to the sole shareholder of SCI, Perry Law. The preferred share will enable the holder to exercise the voting control of 40% of the Company upon issuance. The remaining 60% voting control is to be assigned to the outstanding common shares of the Company. Such preferred shares shall not be convertible, exchangeable, transferable or otherwise purchased, conveyed or redeemed at any time while outstanding during a two-year period. In addition, the voting power of such preferred share shall decrease over such two-year period so as to have 20% voting control 12 months after issuance, 10% voting control 18 months after issuance and zero voting control 24 months after issuance, at which time the preferred share will be redeemed by the Company for no consideration.

2005 Stock Incentive Plan

During fiscal 2005, pursuant to provisions under the plans, the Company’s Board of Directors cancelled all existing stock option and incentive plans.

The following description applies to the stock incentive plan that was subsequently adopted on May 27, 2005; 1,300,000 options have been granted under this plan as of the date of this filing.

We have reserved for issuance an aggregate of 25,000,000 shares of common stock under the 2005 Stock Incentive Plan. This plan is intended to encourage directors, officers, employees and consultants to acquire ownership of common stock. The opportunity so provided is intended to foster in participants a strong incentive to put forth maximum effort for our continued success and growth, to aid in retaining individuals who put forth such efforts, and to assist in attracting the best available individuals to the Company in the future.

Officers (including officers who are members of the board of directors), directors and other employees and consultants of STS and its subsidiaries will be eligible to receive options under the stock incentive plan. The committee will administer the stock incentive plan and will determine those persons to whom options will be granted, the number of options to be granted, the provisions applicable to each grant and the time periods during which the options may be exercised. No options may be granted more than ten years after the date of the adoption of the stock incentive plan.

Non-qualified stock options will be granted by the committee with an option price equal to the fair market value of the shares of common stock to which the non-qualified stock option relates on the date of grant. The committee may, in its discretion, determine to price the non-qualified option at a different price. In no event may the option price with respect to an incentive stock option granted under the stock option plan be less than the fair market value of such common stock to which the incentive stock option relates on the date the incentive stock option is granted.

Each option granted under the stock incentive plan will be exercisable for a term of not more than ten years after the date of grant. Certain other restrictions will apply in connection with this plan when some awards may be exercised. In the event of a change of control (as defined in the stock incentive plan); the date on which all options outstanding under the stock incentive plan may first be exercised will be accelerated. Generally, all options terminate 90 days after a change of control.

F-14

Smart-tek Solutions Inc.

Notes to the Consolidated Financial Statements

June 30, 2009

9. Common Stock, continued 2005 Stock Incentive Plan, continued

At June 30, 2008, options outstanding are as follows:

			Average
	Shares		Exercise Price
Balance at July 1, 2008	1,300,000	$	0.15
Granted	-		-
Exercised	-		-
Cancelled	-		-
Balance at June 30, 2009	1,300,000	$	0.15

Additional information regarding options outstanding as of June 30, 2009 is as follows:

		Options outstanding		Options exercisable
		Weighted average	Weighted		Weighted
		remaining	average		average
Exercise	Number	contractual life	exercise		exercise
price	outstanding	(years)	price	Number	price

$ 0.15	1,300,000	8.00	$ 0.15	1,300,000	$ 0.15

The Company had two partially vested stock options outstanding at December 31, 2005 pursuant to employment agreements entered into between the Company's and its president and vice-president. Under these agreements, the Company issued options to purchase up to 650,000 shares of its common stock at a purchase price of $0.15 per share that vest in equal quarterly installments over a three (3) year period. The Company calculated the fair value of the options to be $195,000 using an option pricing model, of which $32,500 was recognized as expense during the year ended June 30, 2009.

10. Costs and Estimated Earnings on Uncompleted Contracts

		2009			2008

Costs incurred on uncompleted contracts	$	1,225,215		$	1,520,914
Estimated earnings		746,096			1,013,756
		1,971,311			2,534,670

Less: Billings to Date		(2,231,814	)		( 2,737,337	)

	$	(260,503	)	$	(202,667	)

Included in accompanying balance sheets under the following captions:
Costs of uncompleted contracts in excess of billings		37,097			51,587
Billings on uncompleted contracts in excess of costs and	$	(297,600	)	$	(254,254	)
estimated revenues
	$	(260,503	)	$	(202,667	)

F-15

Smart-tek Solutions Inc.

Notes to the Consolidated Financial Statements

June 30, 2009

11. Related Party Transactions

During the year ended June 30, 2009, the Company’s wholly owned subsidiary paid $401,732 in management salaries to its President and Vice president which included bonuses of $240,072 and consulting fees of $70,303. Such costs have been reflected in the accompanying statement of operations.

Amounts due to officers and directors were $400,172 as of June 30, 2009.

12. Commitments

Operating leases

The Company’s wholly owned subsidiary Smart-tek Communications Inc. entered into a non-cancellable operating lease for office space on March 1, 2008. Furthermore, the Company’s wholly-owned subsidiary is committed to operating leases for four company vehicles up to April 2014. The minimum payments required under these operating leases for each of the five years subsequent to June 30, 2009 are approximately as follows:

	Year ending
	June 30
2010	37,008
2011	22,423
2012	17,659
2013	8,437
2014	6,679

Employment agreements

The Company’s wholly owned subsidiary Smart-tek Communications Inc. has annual employment agreements with the president and vice-president and is committed to pay each of them annual salaries of $128,970 (CDN$150,000) along with annual car allowances of $12,897 (CDN$15,000).

Marketing partner agreement

By agreement dated June 30, 2009, the Company entered into a Marketing Partner Agreement with its wholly owned subsidiary, Smart-tek Automated Services, Inc. (“SASI”), and Brian Bonar (“Bonar”), a director of the Company.

Pursuant to the terms of the marketing agreement, Bonar agreed to provide certain services to SASI to promote and market the business of SASI to prospective clients, in consideration of which SASI agreed to pay Bonar a commission consisting of the following: (i) for every US$1,000,000 in annualized gross sales of SASI up to the first US$25,000,000 in annualized sales introduced by Bonar, Bonar will receive 1,800,000 shares of common stock of the Company up to a maximum of 45,000,000 shares of Company’s common stock; and (ii) after an aggregated US$25,000,000 in annualized gross sales by SASI resulting from sales introduced by Bonar, Bonar will receive one percent of annualized gross revenues of SASI for the amounts in excess of US$5,000,000 of annualized gross sales in any given fiscal year payable in cash. The agreement is for an indefinite term and may be terminated by either party without cause on 30 days written notice.

F-16

Smart-tek Solutions Inc.

Notes to the Consolidated Financial Statements

June 30, 2009

12. Commitments, continued

Settlement agreement

During the year, the Company entered into a settlement agreement with Richardson & Patel LLP (“RP”) for unpaid legal fees. RP claimed the Company owed RP $307,257.22 as of May 31, 2009 for legal services rendered, costs advanced, and accrued interest, plus addition interest since that date and collection fees and costs. RP and the Company have agreed to a payment schedule in full settlement of the debt.

The Company shall make payments of $10,000 per month until payments in the aggregate of $200,000 have been paid to RP. The first payment shall be due and delivered to RP no later than August 1, 2009. Each subsequent payment shall be due and delivered to RP no later than the 1^st of each month thereafter.

The Company has the right, but not the obligation, to pay an aggregate of $150,000 in full satisfaction of the settlement payments set forth in the prior paragraph on the condition that the full $150,000 sum is paid in good funds and delivered to RP on or before November 1, 2009.

Subsequent to June 30, 2009 Perry Law, CEO, CFO and a director of the Company, agreed to make and deliver a guarantee on any amount due or owing by the Company to Richardson & Patel LLP.

13. Legal Proceedings

On April 28, 2006, the Company has filed a complaint in the Superior Court for the State of California, against RFID, Ltd., a publicly traded company on the Pink Sheets. The Complaint alleges causes of action against RFID, Ltd., for 1) Defamation Per Se; 2) Intentional Interference with Contractual Relations; 3) Intentional Interference with Prospective Economic Advantage and 4) Unfair Competition (Violation of the California Business & Professions Code section 17200). The Complaint alleges that RFID, Ltd., who described itself as a competitor of Smart-tek Solutions, Inc., made a series of false and misleading representations about Smart-tek Solutions, Inc. and its development of its RTAC-PM system. The Complaint filed by Smart-tek Solutions, Inc. seeks monetary damages in excess of $10 million and equitable relief as a result of RFID, Ltd.’s conduct.

On May 9, 2006, the Company filed a Complaint in the District Court of Clark County, Nevada against the owners and operators of Stocklemon.com (“Stocklemon”). The Complaint alleges causes of action for (1) Defamation; (2) Intentional Interference with Contractual Relations; (3) Intentional Interference with Prospective Economic Advantage and (4) Violation of State Securities Laws. The Complaint alleges that Stocklemon made a series of provably false assertions of fact and other misleading statements concerning Smart-tek Solutions, Inc.’s financial affairs and business activities. The Complaint further alleges that Stocklemon intentionally sought to damage Plaintiff’s value, contractual relationships and expectancies via the misrepresentations and misleading statements contained in a Stocklemon report issued on or about April 4, 2006. The Complaint further alleges that Stocklemon utilized the “Report” and the untrue statements of material fact contained therein to deliberately manipulate the market for personal gain.

The Complaint filed by Smart-tek Solutions, Inc. seeks compensatory and punitive damages in excess of $100 million and equitable relief against Stocklemon. While the Company remains adamant that it was wronged and damaged by the Stocklemon report, the Company was not able to continue to afford the cost of legal actions and has temporarily suspended their legal efforts and its attorney’s have filed a petition to be removed as legal representatives of the Company in this complaint.

F-17

Smart-tek Solutions Inc.

Notes to the Consolidated Financial Statements

June 30, 2009

14. Concentrations of risk

At June 30, 2009, three customers accounted for 49% (2008 – two significant customers accounted for 30%) of trade accounts receivable.

For the year ended June 30, 2009, two significant customers accounted for 26% (2008 – two significant customers accounted for 32%) of revenue and the customers individually accounted for more than 10% (2008 – 10%) of revenue.

For the year ended June 30, 2009, two significant suppliers accounted for 29% (2008 – three significant suppliers accounted for 41%) of purchases.

For the year ended June 30, 2009, 100% of the Company’s sales and accounts receivable arose from sales to Canadian customers.

15. Subsequent events

Subsequent to June 30, 2009, the Company issued 45,000,000 common stock of the Company to Brian Bonar, a director of the Company based on the achievement certain milestone targets for annualized sales as set out in the Marketing Partner Agreement dated June 17, 2009.

Subsequent to June 30, 2009, the Company issued 23,866,535 shares of common stock of the Company in settlement of debt totaling $310,265.

F-18

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A(T). CONTROLS AND PROCEDURES

As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Securities Exchange Act of 1934, the Company’s principal executive officer and principal financial officer evaluated the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, these officers concluded that as of the end of the period covered by this Annual Report on Form 10-K, these disclosure controls and procedures were adequate to ensure that the information required to be disclosed by the Company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and include controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

B.	Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over our financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Our system of internal control over financial reporting is designed 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. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Based on our evaluation under the framework in Internal Control-Integrated Framework, our Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting were effective as of June 30, 2008.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Our internal control over financial reporting was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this Annual Report.

C.	Changes in Internal Control Over Financial Reporting.

There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION.

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers, Promoters and Control Persons

As at October 9, 2009, our directors and executive officers, their ages, positions held, and duration of such, are as follows:

Name	Position Held with our Company	Age	Date First Elected or Appointed
Perry Law	Secretary, Treasurer and a Director Chief Executive Officer and Chief Financial Officer	46	September 30, 2006
Brian Bonar	President and Director	62	May 29, 2009
Owen Naccarato	Director	60	September 29, 2009

Business Experience

The following is a brief account of the education and business experience of each director and executive officer during at least the past five years, indicating each person’s principal occupation during the period, and the name and principal business of the organization by which he was employed.

Perry Law is the founder of our subsidiary, Smart-Tek Communications Inc. and has been its Chief Executive officer since 1997. Mr. Law has over sixteen years experience in the security/surveillance systems industry and has played a central role in introducing and implementing technological changes in the local/regional security industry. Mr. Law has held numerous executive management positions in both private and public companies and is very active in charitable causes.

Brian Bonar has over 18 years of experience with IBM in Europe, Asia and the USA and an additional 20 years in high growth companies both private and public in various locations in the USA and the United Kingdom. From 2003 until 2006, Mr. Bonar was the Chairman and CEO of The Solvis Group, which provides staffing, PEO and ASO services to mainly the medical and call centre market segments. From 2004 until 2009, Mr. Bonar was the Chairman and CEO of Dalrada Financial Corporation, a California based financial service corporation providing workers compensation, health insurance and various other insurance products directly to the end consumer and marketed via various PEO and staffing companies. From September 2007 until 2009, Mr. Bonar was the President and a member of the board of directors of Allegiant Professional, a publicly traded company. Also from September 2007 until 2009, Mr. Bonar founded AMS Outsourcing, a PEO focusing mainly in the transport market place and also established an international presence in the Czech Republic and Mexico. From 2004 to 2009, he was a member of the board of directors of the following companies and organizations: The Solvis Group, Warning Management Corporation, Dalrada Financial Corporation, American Marine LLC, Alliance National Insurance Company and The Boys and Girls Club of Greater San Diego. Mr. Bonar holds the Honorary title, Lord Bonar of Wilcrick, Cardiff, Wales United Kingdom. He received a BSC in Mechanical Engineering from the Strathclyde University, Glasgow Scotland and a MBA and a PHD in the field of International Business Development Studies from the Stafford University, England UK.

Owen Naccarato has for the last twelve years been a practicing attorney specializing in corporate and securities law. Prior to practicing law, Mr. Naccarato held various high level financial and operating positions with fortune 500 firms. Mr. Naccarato is a member of the California State Bar Association, the Orange County and the Los Angeles County Bar Associations and their respective corporate law sections. Mr. Naccarato has a J.D. from Western State University, an MBA from DePaul University and an undergraduate degree in accounting from Northern Illinois University.

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Term of Office

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.

Committees of the Board Of Directors

At present, we do not have an audit committee, compensation committee, nominating committee, an executive committee of our board of directors, stock plan committee or any other committee.

Family Relationships

There are no family relationships among our directors or officers.

Involvement in Certain Legal Proceedings

Our directors, executive officers and control persons have not been involved in any of the following events during the past five years:

	1.	any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

	2.	any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

	3.	being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

	4.	being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Audit Committee and Audit Committee Financial Expert

We have no audit committee financial expert. We believe that the cost related to retaining a financial expert at this time is prohibitive. Further, because of our stage of development, we believe the services of a financial expert are not warranted.

Code Of Ethics

On October 14, 2008 we adopted an amended and restated code of ethics applicable to all of our directors, officers, employees and consultants, which is a “code of ethics” as defined by applicable rules of the SEC. Our Code of Ethics is attached as an exhibit to this annual report. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of our Code of Ethics to our chief executive officer, chief financial officer, or certain other finance executives, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies in a Current Report on Form 8-K filed with the SEC.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that they file.

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Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with the exception that Brian Bonar failed to file a Form 3.

ITEM 11. EXECUTIVE COMPENSATION.

The following table sets forth all compensation received during the two years ended June 30, 2009 by our Chief Executive Officer, Chief Financial Officer and each of the other most highly compensated executive officers whose total compensation exceeded $100,000 in such fiscal year. These officers are referred to as the Named Executive Officers in this Report.

SUMMARY COMPENSATION TABLE
Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensa- tion ($)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)	All Other Compensa -tion ($)	Total ($)
Perry Law⁽¹⁾ Secretary, Treasurer, Chief Executive Officer and Chief Financial Officer	2009 2008	78,880 147,000	132,040 136,378	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	210,920 283,378
Stephen Platt⁽²⁾ Vice President of Smart-Tek Communications Inc.	2009 2008	85,311 147,000	108,032 111,581	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	193,343 258,581

(1)	Perry Law has been the President and CEO of Smart-tek Communications Inc. since its inception. Smart-tek Communications is the wholly-owned subsidiary of Smart-tek Solutions. Mr. Law was appointed President and CEO of Smart-tek Solutions on September 14, 2006 effective September 30, 2006.

(2)	Stephen Platt is the Vice-President of Smart-tek Communications Inc., our wholly owned subsidiary.

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors from time to time. We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control.

Securities Authorized for Issuance Under Equity Compensation Plans

EQUITY COMPENSATION PLANS

The following table sets forth certain information concerning all equity compensation plans previously approved by stockholders and all previous equity compensation plans not previously approved by stockholders, as of the most recently completed fiscal year.

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Equity Compensation Plan Information

The following table sets forth certain information as to our equity compensation plan.

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in column (a)) (c)
Equity Compensation Plans Approved By Security Holders	None	Not Applicable	None
Equity Compensation Plans Not Approved By Security Holders	1,300,000	$0.15	23,700,000

2005 Stock Incentive Plan

The following description applies to the stock incentive plan that was adopted on May 27, 2005. 1,300,000 options have been granted under this plan as of the date of this Annual Report.

Officers (including officers who are members of the board of directors), directors and other employees and consultants of the Company and its subsidiaries will be eligible to receive options under the stock incentive plan. The committee will administer the stock incentive plan and will determine those persons to whom options will be granted, the number of options to be granted, the provisions applicable to each grant and the time periods during which the options may be exercised. No options may be granted more than ten years after the date of the adoption of the stock incentive plan.

Non-qualified stock options will be granted by the committee with an option price equal to the fair market value of the shares of common stock to which the non-qualified stock option relates on the date of the grant. The committee may, in its discretion, determine to price the non-qualified option at a different price. In no event may the option price with respect to an incentive stock option granted under the stock option plan be less than the fair market value of such common stock to which the incentive stock option relates on the date the incentive stock option is granted.

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table provides information concerning unexercised options for each our named executive officers, as that term is defined in Item 402(m)(2) of Regulation S-K as of our fiscal year end of June 30, 2009:

Name and Principal Position	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options	Option Exercise Price	Option Expiration Date
Perry Law Secretary, Treasurer, Chief Executive Officer and Chief Financial Officer	650,000	--	650,000	$0.15	April 30, 2010
Stephen Platt Vice President of Smart-Tek Communications Inc.	650,000	--	650,000	$0.15	April 30, 2010

Aggregated Options Exercised in the Year Ended June 30, 2009 and Year End Option Values

There were no stock options exercised during the year ended June 30, 2009.

Repricing of Options/SARS

We did not reprice any options previously granted during the year ended June 30, 2009.

Director Compensation

The following table summarizes the compensation paid to our directors for the fiscal year ended June 30, 2009:

	Fees
	Earned
	or			Non-Equity
	Paid in	Stock	Option	Incentive Plan	All Other
	Cash	Awards	Awards	Compensation	Compensation	Total
Name	($)	($)⁽¹⁾	($)⁽¹⁾	($)	($)	($)
Perry Law⁽²⁾	-	-	-	-	-	-
Brian Bonar⁽³⁾	-	-	-	-	-	-

Notes:
(1)	The dollar value of stock awards and options awards are calculated in accordance with Statement of Financial Accounts (“SFAS”) 123R, Share Based Payments.

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(2)	Perry Law, our President and CEO, did not receive compensation in his capacity as a member of the Board of Directors. His executive compensation is described in the Executive Compensation table above.

(3)	Brian Bonar became a director of the Company on May 29, 2009. Mr. Bonar did not receive compensation in his capacity as a member of the Board of Directors.

We do not pay our directors any fees or other compensation for acting as directors. We have not paid any fees or other compensation to any of our directors for acting as directors to date.

Employment Contracts

Other than as described below, we presently do not have any employment or compensation arrangements with our officers and directors.

On April 23, 2005, we entered into an employment agreement with Perry Law, pursuant to which Mr. Law agreed to serve as President of the Company’s wholly-owned subsidiary, Smart-Tek Communications, Inc, effective April 23, 2005. The Employment Agreement has an initial term of five (5) years but provides for automatic extensions for additional one (1) year terms. The agreement provides for a minimum base salary of CDN$150,000, plus such other amounts, if any, as the Board of Directors of the Company may from time to time determine. In addition, Mr. Law is eligible for an annual incentive bonus at the discretion of the board. Pursuant to the terms of the employment agreement, Mr. Law also received options to purchase 650,000 shares of the Company's common stock (vesting in equal quarterly amounts over a three year term) at an exercise price of $0.15 as well as certain severance benefits. On July 31, 2009 we entered into an amendment to the employment agreement with Mr. Law pursuant to which we agreed to amend the employment agreement of Mr. Law with SCI to provide that in the event of a change of control in SCI, Mr. Law would receive a lump sum payment of 2,000% of his current salary and 250% of any bonus he would be entitled to as of the end of the fiscal year in which the change of control occurs.

On April 23, 2005, we entered into an employment agreement with Stephen Platt, pursuant to which Mr. Platt agreed to serve as Vice-President of the Company’s wholly-owned subsidiary, Smart-Tek Communications, Inc, effective April 23, 2005. The Employment Agreement has an initial term of five (5) years but provides for automatic extensions for additional one (1) year terms. The agreement provides for a minimum base salary of CDN$150,000, plus such other amounts, if any, as the Board of Directors of the Company may from time to time determine. In addition, Mr. Platt is eligible for an annual incentive bonus in the discretion of the board. Pursuant to the terms of the employment agreement, Mr. Platt also received options to purchase 650,000 shares of the Company's common stock (vesting in equal quarterly amounts over a three year term) an exercise price of $0.15 as well as certain severance benefits.

On June 17, 2009, our subsidiary, Smart-Tek Automated Services, Inc. (“Smart-Tek Automated”), a private Nevada corporation entered into a marketing partner agreement dated June 17, 2009 with Brian Bonar. Pursuant to the terms of the marketing agreement, Brian Bonar agreed to provide certain services to Smart-Tek Automated to promote and market the new business of Smart-Tek to prospective clients, in consideration of which Smart-Tek agreed to pay Mr. Bonar a commission consisting of the following: (i) for every US$1,000,000 in annualized gross sales of Smart-Tek up to the first US$25,000,000 in annualized sales introduced by Mr. Bonar, Mr. Bonar will receive 1,800,000 shares of common stock of Smart-Tek up to a maximum of 45,000,000 shares of Smart-Tek’s common stock; and (ii) after an aggregated US$25,000,000 in annualized gross sales by Smart-Tek resulting from sales introduced by Mr. Bonar, Mr. Bonar will receive one percent of annualized gross revenues of Smart-Tek for the amounts in excess of US$5,000,000 of annualized gross sales in any given fiscal year payable in cash. The agreement is for an indefinite term and may be terminated by either party without cause on 30 days written notice.

During the year ended June 30, 2009, the Company’s wholly owned subsidiary, Smart-Tek Communications paid $401,732 in management salaries to its President and Vice president which included bonuses of $240,072 and consulting fees of $70,303. Amounts due to officers and directors were $400,172 as of June 30, 2009.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

As of October 9, 2009, there were 69,314,124 shares of our common stock outstanding. The following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of that date by (i) each of our directors, (ii) each of our executive officers, and (iii) all of our directors and executive officers as a group. Except as set forth in the table below, there is no person known to us who beneficially owns more than 5% of our common stock.

	Name and Address	Number of Shares
Title of Class	of Beneficial Owner	Beneficially Owned ⁽¹⁾	Percentage of Class ⁽¹⁾
Directors and Officers:
Common Stock	Perry Law 3702 South Virginia Street, Suite G12-401 Reno, NV	32,817	*
Common Stock	Brian Bonar 3702 South Virginia Street, Suite G12-401 Reno, NV	45,000,000	64.9%
Common Stock	Owen Naccarato 3702 South Virginia Street, Suite G12-401 Reno, NV	-	-
Common Stock	Directors and Officers as a group ⁽¹⁾	45,032,817	64.9%
5% Stockholders
Common Stock	Brian Bonar 3702 South Virginia Street, Suite G12-401 Reno, NV	45,000,000	64.9%

Notes
*	Less than 1%
(1)	Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. The percentage of class is based on 69,314,124 shares of common stock issued and outstanding as of October 9, 2009.

(2)	On June 23, 2008, the Company entered into Debt Settlement Agreements with Perry Law and P5 Holdings Ltd. Perry Law holds all of the voting securities of P5 Holdings Ltd. Pursuant to the terms of the Debt Settlement Agreements, the Company issued an aggregate of 8,203,241 shares (32,817 Post-Reverse Split) to Mr. Law and P5 Holdings Ltd. The shares were issued as consideration of the settlement of unsecured loans in the amount of $287,113.45 owed to Mr. Law and P5 Holdings Ltd. by the Company.

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Changes in Control

We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change of control of our company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Except as set forth below, none of the following parties has, since commencement of our fiscal year ended June 30, 2009, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us, in which our company is a participant and the amount involved exceeds the lesser of $120,000 or 1% of the average of our company’s total assets for the last three completed financial years:

	(i)	Any of our directors or officers;
	(ii)	Any person proposed as a nominee for election as a director;
	(iii)	Any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock;
	(iv)	Any of our promoters; and
	(v)	Any member of the immediate family (including spouse, parents, children, siblings and in- laws) of any of the foregoing persons.

	1.	Smart-Tek entered into a marketing partner agreement dated June 17, 2009 with Smart-Tek Automated and Brian Bonar, a director of Smart-Tek. Pursuant to the terms of the marketing agreement, Brian Bonar agreed to provide certain services to Smart-Tek Automated to promote and market the new business of Smart-Tek to prospective clients, in consideration of which Smart- Tek agreed to pay Mr. Bonar a commission consisting of the following: (i) for every US$1,000,000 in annualized gross sales of Smart-Tek up to the first US$25,000,000 in annualized sales introduced by Mr. Bonar, Mr. Bonar will receive 1,800,000 shares of common stock of Smart-Tek up to a maximum of 45,000,000 shares of Smart-Tek’s common stock; and (ii) after an aggregated US$25,000,000 in annualized gross sales by Smart-Tek resulting from sales introduced by Mr. Bonar, Mr. Bonar will receive one percent of annualized gross revenues of Smart-Tek for the amounts in excess of US$5,000,000 of annualized gross sales in any given fiscal year payable in cash. The agreement is for an indefinite term and may be terminated by either party without cause on 30 days written notice.

	2.	On September 14, 2009 Smart-Tek issued 45,000,000 restricted shares of its common stock to Brian Bonar, a director of Smart-Tek. Mr. Bonar was issued the shares based on Mr. Bonar achieving certain milestone targets for annualized sales as set out in the Marketing Partner Agreement dated June 17, 2009 between Smart-Tek and Mr. Bonar.

	3.	During the year ended June 30, 2009, the Company’s wholly owned subsidiary, Smart-Tek Communications paid $401,732 in management salaries to its President and Vice president which included bonuses of $240,072 and consulting fees of $70,303. Amounts due to officers and directors were $400,172 as of June 30, 2009.

	4.	At June 30, 2009 Smart-Tek is indebted to a company controlled by Perry Law in the amount of $468,134. The loan is unsecured, bears 7.5% interest and has no fixed terms of repayment.

Corporate Governance

We do not have a standing audit committee at the present time. Our board of directors has determined that we do not have a board member that qualifies as an “audit committee financial expert” as defined in Item 401(e) of

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Regulation S-B. We have determined that Mr. Perry Law is not an independent director and that Brian Bonar is an independent director as defined in Nasdaq Marketplace Rule 4200(a)(15).

We believe that members of our board of directors are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The board of directors of our company does not believe that it is necessary to have an audit committee because we believe that the functions of an audit committee can be adequately performed by the board of directors. In addition, we believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any revenues from operations to date.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The aggregate fees billed for the most recently completed fiscal year ended June 30, 2009 and for fiscal year ended June 30, 2008 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:

	Year Ended
	June 30, 200	June 30, 2009
Audit Fees	$10,000	$8,800
Audit Related Fees	$-	$-
Tax Fees	$-	$-
All Other Fees	$-	$-
Total	$10,000	$8,800

Policy on Pre-Approval by Audit Committee of Services Performed by Independent Auditors

The board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.

The board of directors has considered the nature and amount of fees billed by John Kinross-Kennedy, CPA and believes that the provision of services for activities unrelated to the audit is compatible with maintaining John Kinross-Kennedy, CPA as our independent auditor.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Exhibit Number	Description
3.1	Articles of Incorporation as amended⁽¹⁾
3.2	Bylaws⁽¹⁾
3.3	Certificate of Amendment to Certificate of Incorporation ⁽²⁾
4.1	Incentive Stock Option Plan ⁽¹⁾
4.2	Non-Qualified Incentive Stock Option Plan ⁽¹⁾
4.3	Stock Bonus Plan ⁽¹⁾
4.4	2005 Incentive Stock Plan ⁽²⁾
10.1	Letter of Intent between Smart-Tek Communications and Smart-Tek Solutions Inc. dated March 8, 2005 (3)
10.2	Share Exchange Agreement between Registrant and Smart-Tek Communication, Inc dated April 15, 2005 ⁽⁴⁾
10.3	Employment Agreement with Perry Law dated April 23, 2005 ⁽⁵⁾
10.4	Employment Agreement with Stephen Platt dated April 23, 2005 ⁽⁵⁾
10.5	Stock Option Grant to Perry Law dated April 23, 2005 ⁽⁶⁾
10.6	Stock Option Grant to Stephen Platt dated April 23, 2005 ⁽⁶⁾
10.7	Form of Debt Settlement and Subscription Agreement dated June 23, 2008 among Smart-Tek Solutions Inc., Perry Law, P5 Holdings Ltd., Joe Law, Denis Gallant and Gev 2000 KFT⁽⁷⁾
10.8	Lease Agreement between Smart-Tek Communications, Inc. and Protec Installations Group dated March 1, 2008⁽⁸⁾
10.9	Marketing Partner Agreement dated June 17, 2009 among Smart-Tek Solutions Inc., Smart-Tek Automated Systems Inc. and Brian Bonar.⁽⁹⁾
10.10*	Settlement Agreement and General Release made as of July 10, 2009 between Smart-Tek Solutions Inc. and Richardson Patel LLP
10.11*	Amendment to Employment Agreement between Smart-Tek Communications Inc. and Perry Law dated July 31, 2009
10.12*	Strategic Marketing Partner Agreement between Smart-Tek Automated Services Inc. and ACEO Inc. dated August 1, 2009
10.13*	Form of Debt Settlement and Subscription Agreement dated September 30, 2009
14.1	Amended and Restated Code of Ethics⁽¹⁰⁾
21.1*	Subsidiaries
31.1*	CEO and CFO Section 302 Certification under Sarbanes-Oxley Act of 2002
32.1*	CEO and CFO Section 906 Certifications under Sarbanes-Oxley Act of 2002

*Filed herewith
(1)	Incorporated by reference to our Registration Statement on Form 10-SB, filed September 28, 1995.
(2)	Incorporated by reference to our Annual Report on Form 10-KSB, filed October 26, 1995.
(3)	Incorporated by reference to our Current Report on Form 8-K, filed March 8, 2005.

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(4)	Incorporated by reference to our Current Report on Form 8-K, filed April 19, 2005.
(5)	Incorporated by reference to our Current Report on Form8-K, filed April 27, 2005.
(6)	Incorporated by reference to our Current Report on Form 8-K, filed on August 22, 2005.
(7)	Incorporated by reference to our Current Report on Form 8-K, filed on June 27, 2008.
(8)	Incorporated by reference to our Form 10-Q for the period ended December 31, 2008, filed on February 23, 2009.
(9)	Incorporated by reference to our Current Report on Form 8-K, filed on June 24, 2009.
(10)	Incorporated by reference to our Annual Report on Form 10-KSB, filed October 15, 2008.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SMART-TEK SOLUTIONS INC.

By	/s/ Brian Bonar

	Brian Bonar
	President

Date:

October 13, 2009

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By	/s/ Perry Law
	Perry Law
	Chief Executive Officer, Chief Financial Officer
	and Director
	(Principal Executive Officer, Principal Accounting Officer
	and Principal Financial Officer)

Date:	October 13, 2009

	/s/ Brian Bonar
	Brian Bonar
	President and Director

Date:	October 13, 2009

	/s/ Owen Naccarato
	Owen Naccarato
	Director

Date:	October 13, 2009

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