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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-KT

(Mark One)

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

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

For the transition period from July 1, 2010 to December 31, 2010

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.)
|                                                                     |                                     
|                                                                     |                                     
|1100 Quail Street, Suite 100, Newport Beach,
      California        | 92660                               
|(Address of principal executive offices)                             | (Zip Code)                          

Issuers telephone number (858) 798-1644

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[ ]

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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 [x] 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.[ x
]

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: $1,288,648 based on a price of $0..53 per
share, being the average of the bid and ask prices of the issuer on the
Over-the-Counter Bulletin Board on December 31, 2010.

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date. As of March 31,
2011, there were 24,314,124 shares of common stock, par value $0.001,
outstanding

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, 1980). N/A

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

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PART I

Forward Looking Statements.

This annual report Form 10-KT 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.

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ITEM 1. BUSINESS

Present Business

Smart-tek Solutions Inc. has one business line. Through our
wholly owned subsidiary Smart-Tek Automated Services Inc. (STASI) we provide
professional employer organization (PEO) services. In a PEO co-employment
contract, the Company becomes the employer of record for client company
employees for tax and insurance purposes. The client company continues to
direct the employees day-to-day activities, and Allegiant charges a service fee
for providing services.

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. 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.

The Company incorporated Smart-Tek Automated Services Inc. on
February 11, 2009 in the anticipation of starting a to-be determined new
business line.

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. The
Companys new business line officially started with the signing of the June 17,
2009 marketing agreement with Brian Bonar.

Products and Services

From July 2005 through June 30, 2010, Smart-tek Solutions Inc.
(STTN) through its subsidiary Smart-tek Communication Inc. (SCI) specialized
in the design, sale, installation and service of sophisticated security
technology in the Greater Vancouver Area. Customers for SCIs products and
services included land developers, general and electrical contractors,
hospitals, corporations, law enforcement agencies and retail facilities.
Affected by the slow-down of the economy, SCIs shrinking revenue and continuing
loses management felt it was in the best interest of STTN to discontinue its
operations. Mr. Law, SCIs founder expressed a desire to acquire SCI in exchange
for certain debt owed to him by the Company. On July 1, 2010, the Company
completed the disposition of the Companys wholly owned subsidiary Smart-Tek
Communications Inc. to its president and founder Perry Law.

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

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management, and income tax consultation. These services also
relieve existing and potential customers of the burdens associated with
personnel management and control.

Product Liability Insurance

Smart-Tek Automated Services, Inc. does not carry product
liability insurance.

Competition

The financial and human resources services business is highly
competitive, with over 800 firms operating in the U.S. There are several
staffing services firms that operate on a nationwide basis with revenues and
resources far greater than ours, such as Manpower, Inc and Kelly Services, Inc;
in addition, we compete with local and regional staffing firms for customers and
employees. The competitive factors that dominate the industry include price and
quality placements of employees in a timely manner. We price our services
competitively, provide premier customer service and manage the placement
process.

Some large PEO companies are owned by insurance carriers and
some are public companies whose shares trade on Nasdaq, including Administaff,
Inc., Team Staff, Inc., Barrett Business Services, Gevity HR, Inc. and Staff
Leasing, Inc. Competition includes staffing firms, payroll processors and
financial services firms.

Patents, Licenses and Trademarks

Not Applicable.

Royalty Agreements

Not Applicable.

Government
  Regulations

We are licensed to do business in every state that we had
clients.

Research and Development Plan

Not Applicable.

Employees

Smart-Tek Automated Services, Inc has 10 full time
employees.

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ITEM 1A. RISK FACTORS

Not applicable.

ITEM 1B. UNRESOLVED STAFF COMMENTS

n April 8, 2011 Company received comments from the Securities
and Exchange Commission. We are in the process of responding to such
comments.

ITEM 2. PROPERTIES.

Executive Offices

Smart-Tek Automates Services Inc. maintains an executive office
of approximately 1,200 square feet at 11838 Bernardo Plaza Ct Suite 240 San
Diego, CA 92128. The Company does not have a lease and pays $2,500 a month on a
month to month basis.

ITEM 3. LEGAL PROCEEDINGS.

NONE

ITEM 4. (REMOVED AND RESERVED)

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 currently quoted on the Pink Sheets under
the trading symbol STTN. The following quotations obtained from the NASDAQ
quotation system 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 BoardFiscal Quarter Ended
    High
    Low20104th Quarter October 1, 2010 
      December 31, 2010
    $0.16
    $0.043rd Quarter July 1, 2010
      September 30, 2010
    $0.73
    $0.1254th Quarter April 1, 2010 
      June 30, 2010
    $1.24
    $0.263rd Quarter January 1, 2010 
      March 31, 2010
    $0.685
    $0.35520094th Quarter October 1, 2009 
      December 31, 2009
    $0.04
    $0.013rd Quarter July 1, 2009
      September 30, 2009
    $0.01
    $0.012ndQuarter April
      1, 2009  June 30, 2009
    $0.02
    $0.0021st Quarter January 1, 2009 
      March 31, 2009
    $0.11
    $0.001


-6-

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

Holders of our Common Stock

As of December 31, 2010, there were approximately 384 total
registered shareholders holding 34,314,124 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:

| | 1. | We would not be able to pay our debts as they become due
      in the usual course of business; or                                                                                                                                          
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                             
| | 2. | 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

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

Certain statements in this annual report on Form 10-K that are
not historical in fact constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA). The
PSLRA provides certain safe harbor provisions for forward-looking statements.
All forward-looking statements made in this annual report on Form 10-K are made
pursuant to the PSLRA. Words such as, but not limited to, believe, expect,
anticipate, estimate, intend, plan, and similar expressions are intended
to identify forward-looking statements. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors based on the Companys
estimates and expectations concerning future events that may cause the actual
results of the Company to be materially different from historical results or
from any results expressed or implied by such forward-looking statements. These
risks and uncertainties, as well as the Companys critical accounting policies,
are discussed in more detail under Managements Discussion and
AnalysisCritical Accounting Policies and in periodic filings with the
Securities and Exchange Commission. The Company undertakes no obligation to
publicly update any forward-looking statements, whether as a result of new
information, future events or otherwise.

-7-

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You should read the following discussion of our financial
condition and results of operations together with the audited financial
statements and the notes to the audited financial statements included in this
annual report. This discussion contains forward-looking statements that reflect
our plans, estimates and beliefs. Our actual results may differ materially from
those anticipated in these forward-looking statements.

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

Overview

Through our wholly owned subsidiary Smart-Tek Automated
Services, Inc. (Smart-Tek Automated), we provide integrated and cost-effective
management solutions in the area of human resources services to small and
medium-size businesses, relieving our clients from many of the day-to-day tasks
that negatively impact their core business operations, such as payroll
processing, human resources support, workers' compensation insurance, safety
programs, employee benefits, and other administrative and aftermarket services
predominantly related to staffing - staff leasing, temporary staffing and
co-employment.

Plan of Operation

Short Term

Smart-Tek Automated Services Inc.: Continue to concentrate of
signing up new brokers who have a large book of business that we can
service.

Long Term

Smart-Tek Automated Services Inc.: Our current strategy is to
expand our service business, including staff leasing, PEO services, and value
added products and services to small and medium-size businesses.

PEO Business Environment

We provide professional employer organization outsourcing (PEO)
and human resources services to small and medium-size businesses. These services
allow our customers to outsource many human resources tasks, including payroll
processing, workers' compensation insurance, employee benefits administration,
risk management and human resource administration. These services relieve
existing and potential customers of the burdens associated with personnel
management and control.

As a human resource department and strategic business partner
for our clients, our service offerings allow our clients to:

- comply with ever evolving complex employment related regulatory and tax
  issues;
- increase productivity by improving employee satisfaction and retention;
- reduce payroll expenses with lower workers' compensation costs; and
- focus on core business activities instead of human resource matters.

Our main business, a co-employment or PEO contract arrangement,
we become a co-employer of the client's existing workforce and assume some or
all of the client's human resource management responsibilities.

Our business continues to experience some liquidity problems.
Accordingly, year-to-year comparisons may be of limited usefulness as our
business continues to seek growth.

Our current strategy is to expand our service business,
including staff leasing, PEO services, and value added products and services to
small and medium-size businesses.

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PEO Market Overview

The burdens placed on small and medium-sized employers by the
complex legal and regulatory issues related to human resources management caused
our industry segment to grow beginning in the 1980's. While various service
providers have been available to assist these businesses with specific tasks,
companies like ours emerged as providers of a more comprehensive range of
services relating to the employer/employee relationship. We assume broad aspects
of the employer/employee relationship for our clients. Because we provide
employee-related services to a large number of employees, we provide economies
of scale that provide our clients employment-related functions more efficiently,
provide a greater variety of employee benefits, and devote more attention to
human resources management.

We believe that the demand for our services is driven by (1)
the trend by small and medium-sized businesses toward outsourcing management
tasks outside of core competencies; (2) the difficulty of providing competitive
health care and related benefits to attract and retain employees; (3) the
increasing costs of health and workers' compensation insurance coverage and
workplace safety programs; and (4) complex regulation of labor and employment
issues and the related costs of compliance.

RESULTS OF OPERATIONS

The Six Month Period Ended December 31, 2010 Compared to
the Six Month Period Ended December 31,2009

Six Month Summary

|                                             |   |                  |   |   |            |   |  | Percentage | 
|-------------------------------------------- | - | ---------------- | - | - | ---------- | - |  | ---------- | 
|                                             |   | Six Months Ended |   |   | Increase/  |  
|                                             |   | December 31,     |   |   | (Decrease) |  
|                                             |   | 2010             |   |   | 2009       |   |  |            | 
|Revenue                                      | $ | 9,776,421        |   | $ | 1,971,770  |   |  | 396%       | 
|Selling, General and Administrative Expenses |   | 1,391,582        |   |   | 304,225    |   |  | 357%       | 
|Interest Expense                             |   | (16,561          | ) |   | (935       | ) |  | 1,671%     | 
|Net Income from Operations                   | $ | 377,339          |   | $ | 110,082    |   |  | 87.8%      | 

Revenue

Our principal source of revenue is from professional employer
organization fees. Additionally, the Company charges fees for benefits and
payroll administration, workers compensation insurance programs, and personnel
records management. Management will continue to pursue new opportunities for
providing services under these programs.

The 395.8% increase in revenues of $7,804,826 to $9,776,421for
the six months ended December 31, 2010 as compared to the comparative period in
2009 of $1,971,770, is attributable to an increase in our payroll and staffing
business through Smart-Tek Automated Services. The increase in our payroll and
staffing revenue through Smart-Tek Automated is a result of the continued
integration of our current contracts.

Gross Profit

During the six month period ended December 31, 2010 we had a
gross profit of $1,768,921 as compared to a gross profit of $414,307 during the
comparative period in 2009 for an increase of $1,354,614 or 327.0% . The
increase in gross profit was directly as result of increased revenue.

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Expenses

The major components of our expenses for the quarter are
outlined in the table below:

|                                             |   |                  |  |   |            |  |  | Percentage | 
|-------------------------------------------- | - | ---------------- |  | - | ---------- |  |  | ---------- | 
|                                             |   | Six Months Ended |  |   | Increase/  | 
|                                             |   | December 31,     |  |   | (Decrease) | 
|                                             |   | 2010             |  |   | 2009       |  |  |            | 
|Cost of Revenue                              | $ | 8,008,675        |  | $ | 1,557,463  |  |  | 414%       | 
|Selling, General and Administrative expenses |   | 1,391,582        |  |   | 304,225    |  |  | 357%       | 
|Interest Expense                             |   | 16,561           |  |   | 935        |  |  | 1,671%     | 
|Total Expenses                               | $ | 9,416,818        |  | $ | 1,862,623  |  |  | 405.6%     | 

Cost of revenue

Cost of revenue of $8,008,675 for the six month period ended
December 31, 2010 increased by $6,451,212 or 414.2% over the same six month
period prior year amount of $1,557,463. The $6,451,212 increase was directly
attributable to the increase in the payroll business.

Selling, General and Administrative

Selling, general and administrative expenses of $1,391,582 for
the six month period ended December 31, 2010 increased by $1,087,357 or 357%
over the same six month period prior year. The increase was mainly attributable
to the increase in the payroll business resulting in broker commissions of
$436,398 (3,081%), 2) increase in wages of $455,311 (604%), and 3) increase in
consulting fees of $242,617 (1,413 %) offset by a decrease in miscellaneous
items amounting to $46,969 (76.1%) . All of these increases are also a result of
the Companys business commencing operations during the prior six months and not
staffing its internal operations or building its business base as was the case
in the six months ended December 31, 2010.

Other Income (Expenses):

Interest expense of $16,561for the six month period ended
December 2010 was $16,561 as compared to $935 for the six month period ended
December 31, 2009. The expense represents bank charges and the increase is due
to the increased volume of transactions.

Net Income

Net Income from continuing operations for the six months ending
December 31, 2010 is $360,778 compared to a net income of $109,147 or an
increase of $918,104 (856.9%) for the same period prior year. The increase in
net is a result of an increase in our payroll business from the new Smart-Tek
Automated Services subsidiary.

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Year Ended June 30, 2010 Compared to Year Ended June 30,
2009

Year Ended June 30, 2010 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, 2010 which are included herein.

|                           |   | June 30, 2010 |  |   | June 30, 2009 |   |  | Percentage |  
|-------------------------- | - | ------------- |  | - | ------------- | - |  | ---------- | -
|                           |   |               |  |   |               |   |  | Increase/  |  
|                           |   |               |  |   |               |   |  | (Decrease) |  
|Revenue                    | $ | 7,448,820     |  | $ | -             |   |  | - %        |  
|Expenses                   |   | 1,770,296     |  |   | 134,490       |   |  | 1,216.0%   |  
|Interest Expense           |   | 5,353         |  |   | 40,272        |   |  | (652.3%    | )
|Net Income from Operations | $ | 360,309       |  | $ | (174,762      | ) |  | 306.2%     |  

Revenue

Revenue for the twelve month period ended June 30, 2010 was
$7,448,820 compared to $nil for the same period prior year for an increase of
$7,448,820. The increase was attributable the first full year of business from
our new business line of our payroll and staffing business through Smart-Tek
Automated Services, Inc.

Expenses

Our expenses for the years ended June 30, 2010 and June 30,
2009 are outlined in the table below:

|                                                   |   | Year Ended    |  |   | Year Ended    |  |  | Percentage |  
|-------------------------------------------------- | - | ------------- |  | - | ------------- |  |  | ---------- | -
|                                                   |   | June 30, 2010 |  |   | June 30, 2009 |  |  | Increase/  |  
|                                                   |   |               |  |   |               |  |  | (Decrease) |  
|Selling, general and administrative
      expenses | $ | 1,770,296     |  | $ | 134,490       |  |  | 1,216.3%   |  
|Cost of revenues                                   |   | 5,312,862     |  |   | -             |  |  | - %        |  
|Interest expense                                   |   | 5,353         |  |   | 40,272        |  |  | (652.3%    | )
|Total expenses                                     | $ | 7,088,511     |  | $ | 174,762       |  |  | 3,956.1%   |  

Cost of revenue

The Cost of revenue for the twelve month period ended June 30,
2010 was $5,312,862 compared to $nil for the same period prior year for an
increase of $5,312,862 or 236.4% . The increase was due to the business of our
subsidiary Smart-tek Automated Services. This is a new line of business which
did not generate revenue until July 2009.

Selling, General and Administrative

The 1,216.3% increase in our selling, general and
administrative expenses of $1,635,806 for the twelve month period ended June 30,
2010 from the comparative period in 2009 was primarily due to: (i) increase of
$1,635,806 due to the business of our subsidiary Smart-tek Automated Services,
(ii) increase of $730 (100.0%) in consulting fees, (iii) increase of $423,000
(100.0%) in salaries, (iv) increase of $102,000 (100.0%) in management fees, and
miscellaneous items of $380,806 (100.0%) .

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Net Income

Net Income for the twelve months ending June 30, 2010 is
$360,309 compared to a net loss of ($174,762) or an increase of $535,071
(306.2%) for the same period prior year. The net income is a result of the
Companys new business line. The prior year loss consists of operating costs of
the parent company.

Liquidity and Financial Condition

Working Capital

The following table sets forth our working capital position for
the six month period ending December 31, 2010 and 2009.

|                             |   | December 31, |  |   | December 31, |   |  | Percentage | 
|---------------------------- | - | ------------ |  | - | ------------ | - |  | ---------- | 
|                             |   | 2010         |  |   | 2009         |   |  | Increase/  | 
|                             |   |              |  |   |              |   |  | (Decrease) | 
|Current assets               | $ | 4,886,677    |  | $ | 3,114,593    |   |  | 56.9%      | 
|Current liabilities          |   | 4,159,187    |  |   | 4,108,871    |   |  | 1.2%       | 
|Working capital (deficiency) | $ | 727,490      |  | $ | (994,278     | ) |  | 173.2%     | 

On December 31, 2010 the Company had total assets of $4,934,178
compared to $3,670,707 on December 31, 2009, an increase of $1,263,471 or 34.4%
.. The Company had total stockholders equity of $774,992 on December 31, 2010,
compared to stockholders equity of ($438,164) on December 31, 2009, an increase
of $1,213,156 or 276.9% . As of December 31, 2010 the Company's working capital
position increased by $1,772,084 or 173.2% from working capital deficit of
($994,278) at December 31, 2009 to working capital of $727,490 at December 31,
2010. The increase in working capital is mainly as result of an increase in cash
and cash equivalents of $512,278, an increase of accounts receivable of
$1,028,738 and an increase in prepaid and other assets of $890,474.

Cash Flows

The following table sets for a summary of our cash flows for
the six month period ending December 31, 2010 and 2009.

|                                                            |   | Six Months Ended December 31, |  
|----------------------------------------------------------- | - | ----------------------------- | -
|                                                            |   | 2010                          |  
|                                                            |   |                               |  
|                                                            |   |                               |  
|Cash flows provided by (used in) operating
      activities | $ | 1,084,061                     |  
|Cash flows used in investing activities                     |   | -                             |  
|Cash flows provided by financing activities                 |   | (4,733                        | )
|Increase (decrease) in cash during period                   | $ | 1,079,328                     |  

Cash Used In Operating Activities

Cash flow generated in operations for the six month period
ended December 31, 2010 amounted to $1,084,061, which mainly consisted the net
income of $1,258,156 and the following: 1) increase in accounts payable and
accrued

-12-

---

expenses of $1,780,712 and an increase in depreciation of
$9,405 offset by increases in 1) accounts receivable of $1,028,738, 2) prepaid
expenses and deposits of $890,474 and 3) shares cancelled amounting to
$45,000.

Cash Used In Investing Activities

Cash flow provided by investing activities was $nil for the six
month period ended December 31, 2010.

Cash from Financing Activities

We used cash of $4,733 from financing activities during the six
month period ended December 31, 2010.

Capital Resources

Over the next twelve months, management is of the opinion that
sufficient working capital will be obtained from operations. The Company does
not anticipate any need for significant capital expenditures in 2011.

Estimated future cash requirements

Over the next twelve months, management is of the opinion that
sufficient liquidity will be obtained from operations or from existing working
capital of $.7 million.

Off-Balance Sheet Arrangements

We have no 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.

Subsequent Event

On March 1, 2011 the companys stock was stopped being quoted
on the OTCBB and is currently quoted on the Pink Sheets OTC market. This event
was not due to any action taken by the Company. This event is a result of an
issue between certain market makers and the OTCBB whereby some market makers no
longer desire to quote stock on the OTCBB. If your stock has not been quoted by
your market maker on the OTCBB for a period for four days for a thirty day
period your stock can no longer be quoted on the OTCBB. The Company has secured
a new market maker and is in the process of filing a new Form 15C211.

In addition, on April 8, 2011 Company received comments from
the Securities and Exchange Commission. We are in the process of responding to
such comments.

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.

-13-

---

Revenue Recognition  contract business

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 based upon estimates of future outcomes,
which include:

- 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.

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.

Revenue Recognition  PEO business

Revenues are comprised of the Companys charges to clients for
workers compensation insurance, administrative, and service fees based on
periodic payrolls processed. The Company recognizes revenues when each periodic
payroll is delivered to the client. Revenues are reported in accordance with
authoritative guidance issued by the Financial Accounting Standards Board
(FASB) for reporting revenues gross when acting as a principal versus net as
an agent. The Company records revenue on a net basis and does not include the
gross payroll of its client company employees in its revenues.

Insurance Reserves

We maintain reserves for workers' compensation claims which are
made up of estimated claims and estimated expenses related to settle the claims.
These estimates are impacted by claims that have been reported but not settled
and claims that have been incurred but not reported. We evaluate the reserves
regularly throughout the year and make adjustments accordingly. If the actual
cost of such claims and related expenses exceeds the amounts estimated,
additional reserves may be required. Since there are many estimates and
assumptions involved in recording insurance reserves, differences between actual
future events and prior estimates and assumptions could result in adjustments to
these reserves.

Goodwill and Intangible Assets

-14-

---

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
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 presently has no outstanding stock options.

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

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

-15-

---

|Smart-tek Solutions Inc.                   
|-------------------------------------------
|Six Months Ended December 31, 2010 and 2009

|PART I -- FINANCIAL INFORMATION                                               |           
|----------------------------------------------------------------------------- | ----------
|CONTENTS                                                                      | PAGES     
|AUDITORS REPORT                                                              | F-1       
|FINANCIAL STATEMENTS                                                          |           
|Consolidated
      Balance Sheets                                             | F-2       
|Consolidated Statements of
      Operations and Comprehensive Income          | F-3       
|Consolidated
      Statements of Changes in Stockholders Equity (Deficiency) | F-4       
|Consolidated Statements of Cash
      Flows                                   | F-5       
|Notes to the
      Consolidated Financial Statements                          | F-6 - F-17

---

FINANCIAL STATEMENTSREPORT 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 subsidiary (the Company) as of December 31, 2010
  and the related consolidated statements of operations and cash flows for the six
  months ended December 31, 2010, and for the year ended June 30, 2010 and 2009.
  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 December 31, 2010, and the
  results of their operations and cash flows for the six months ended December 31,
  2010, and for the year ended June 30, 2010 and 2009.

/ s /

|John Kinross-Kennedy       
|---------------------------
|Certified Public Accountant
|Irvine, California         
|April 16, 2011             

F-1

---

|Smart-tek Solutions Inc.                 
|-----------------------------------------
|Consolidated Balance Sheets              
|As at December 31, 2010 and June 30, 2010

|                                                                                                                                                                                                   |   | December 31, |   |   | June 30,   |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------ | - | - | ---------- | -
|                                                                                                                                                                                                   |   | 2010         |   |   | 2010       |  
|                                                                                                                                                                                                   |   |              |   |   |            |  
|Assets                                                                                                                                                                                             |   |              |   |   |            |  
|                                                                                                                                                                                                   |   |              |   |   |            |  
|Current assets                                                                                                                                                                                     |   |              |   |   |            |  
|Cash and cash equivalents                                                                                                                                                                          | $ | 781,720      |   | $ | 269,422    |  
|Accounts receivable                                                                                                                                                                                |   | 1,689,986    |   |   | 661,248    |  
|Prepaid expenses and deposits                                                                                                                                                                      |   | 2,414,971    |   |   | 1,524,497  |  
|Current assets of
      discontinued operations                                                                                                                                                    |   | -            |   |   | 659,426    |  
|                                                                                                                                                                                                   |   |              |   |   |            |  
|Total current assets                                                                                                                                                                               |   | 4,886,677    |   |   | 3,114,593  |  
|                                                                                                                                                                                                   |   |              |   |   |            |  
|Equipment, net of accumulated depreciation                                                                                                                                                         |   | 47,501       |   |   | 56,906     |  
|                                                                                                                                                                                                   |   |              |   |   |            |  
|Goodwill                                                                                                                                                                                           |   | -            |   |   | 451,311    |  
|                                                                                                                                                                                                   |   |              |   |   |            |  
|Assets of discontinued operations                                                                                                                                                                  |   | -            |   |   | 47,897     |  
|                                                                                                                                                                                                   |   |              |   |   |            |  
|                                                                                                                                                                                                   | $ | 4,934,178    |   | $ | 3,670,707  |  
|                                                                                                                                                                                                   |   |              |   |   |            |  
|                                                                                                                                                                                                   |   |              |   |   |            |  
|Liabilities                                                                                                                                                                                        |   |              |   |   |            |  
|                                                                                                                                                                                                   |   |              |   |   |            |  
|Current liabilities                                                                                                                                                                                |   |              |   |   |            |  
|                                                                                                                                                                                                   |   |              |   |   |            |  
|Accounts payable and accrued
      liabilities                                                                                                                                                     | $ | 3,770,771    |   | $ | 1,990,060  |  
|Accounts payable to
      related parties                                                                                                                                                          |   | 388,415      |   |   | 388,415    |  
|Shareholder loans                                                                                                                                                                                  |   | -            |   |   | 500,024    |  
|Current liabilities of
      discontinued operations                                                                                                                                               |   | -            |   |   | 1,230,372  |  
|                                                                                                                                                                                                   |   |              |   |   |            |  
|Total current liabilities                                                                                                                                                                          |   | 4,159,186    |   |   | 4,108,871  |  
|                                                                                                                                                                                                   |   |              |   |   |            |  
|                                                                                                                                                                                                   |   |              |   |   |            |  
|Stockholders Equity                                                                                                                                                                               |   |              |   |   |            |  
|                                                                                                                                                                                                   |   |              |   |   |            |  
|Preferred stock: $0.001 par value, 5,000,000 shares 
           authorized, zero shares of Class A preferred 
           issued and outstanding at December 31, 2010
      and June 30, 2010       |   | -            |   |   | -          |  
|Common stock: $0.001 par value, 500,000,000
      shares 
           authorized, 
           24,314,124 issued and outstanding at December
      31, 2010 
           (June 30, 2010  69,314,124) |   | 24,315       |   |   | 69,315     |  
|Additional paid in capital                                                                                                                                                                         |   | 6,852,863    |   |   | 6,852,863  |  
|Accumulated other comprehensive loss                                                                                                                                                               |   | -            |   |   | (221,963   | )
|Accumulated deficit                                                                                                                                                                                |   | (6,102,186   | ) |   | (7,138,379 | )
|                                                                                                                                                                                                   |   |              |   |   |            |  
|Total stockholders equity                                                                                                                                                                         |   | 774,992      |   |   | (438,164   | )
|                                                                                                                                                                                                   |   |              |   |   |            |  
|                                                                                                                                                                                                   | $ | 4,934,178    |   | $ | 3,670,707  |  
|                                                                                                                                                                                                   |   |              |   |   |            |  

See accompanying notes to the consolidated financial
  statements.

F-2

---

|Smart-tek Solutions Inc.                                            
|--------------------------------------------------------------------
|Consolidated Statements of Operations and
      Comprehensive Income

|                                                       |       | Six Months    |   |   | Six
      Months   |   |   | Year       |   |   | Year     |  
|------------------------------------------------------ | ----- | ------------- | - | - | ------------------ | - | - | ---------- | - | - | -------- | -
|                                                       |       | Ended         |   |   | Ended              |   |   | Ended      |   |   | Ended    |  
|                                                       |       | December 31,  |   |   | December 31,       |   |   | June 30,   |   |   | June 30, |  
|                                                       |       | 2010          |   |   | *2009 (unaudited)* |   |   | ***2010*** |   |   | *2009*   |  
|Revenue                                                | $     | 9,777,596     |   | $ | 1,971,770          |   | $ | 7,448,820  |   | $ | -        |  
|Cost of revenue and service delivery                   |       | 8,008,675     |   |   | 1,557,463          |   |   | 5,312,862  |   |   | -        |  
|Gross profit                                           |       | 1,768,921     |   |   | 414,307            |   |   | 2,135,958  |   |   | -        |  
|Selling, general and administrative expenses           |       | 1,391,582     |   |   | 304,225            |   |   | 1,770,296  |   |   | 134,490  |  
|Operating income (loss)                                |       | 377,339       |   |   | 110,082            |   |   | 365,662    |   |   | (134,490 | )
|Other income (expense)                                 |       |               |   |   |                    |   |   |            |   |   |          |  
|Interest                                               |       | (16,561       | ) |   | (935               | ) |   | (5,354     | ) |   | (40,272  | )
|Net income (loss) from continuing operations           |       | 360,778       |   |   | 109,147            |   |   | 360,308    |   |   | (174,762 | )
|Net income (loss) from discontinued
      operations   |       | 897,378       |   |   | 246,265            |   |   | (157,228   | ) |   | 38,395   |  
|Comprehensive income (loss)                            | **$** | **1,258,156** |   | $ | 355,412            |   | $ | 203,080    |   | $ | (136,367 | )
|Earnings (loss) per share, basic and
      diluted     | $     | 0.02          |   | $ | 0.02               |   | $ | 0.01       |   | $ | 0.01     |  
|Weighted average shares outstanding, basic and diluted |       | 63,904,288    |   |   | 19,712,944         |   |   | 53,863,199 |   |   | 447,589  |  

See accompanying notes to the consolidated financial
  statements.

F-3

---

|Smart-tek Solutions Inc.                                                    
|----------------------------------------------------------------------------
|Consolidated Statement of Changes in Stockholders
      Equity (Deficiency)

|                                                               |  | Common Stock |   |   |         |   |   |            |  |   |               |   |   |             |  
|-------------------------------------------------------------- |  | ------------ | - | - | ------- | - | - | ---------- |  | - | ------------- | - | - | ----------- | -
|                                                               |  |              |   |   |         |   |   |            |  |   | Accumulated   |   |   |             |  
|                                                               |  |              |   |   |         |   |   | Additional |  |   | Other         |   |   |             |  
|                                                               |  |              |   |   |         |   |   | Paid in    |  |   | Comprehensive |   |   | Accumulated |  
|                                                               |  | Shares       |   |   | Amount  |   |   | Capital    |  |   | Income        |   |   | Deficit     |  
|                                                               |  |              |   |   |         |   |   |            |  |   |               |   |   |             |  
|Balance  June 30, 2009                                        |  | 447,589      |   | $ | 448     |   | $ | 6,566,465  |  | $ | (67,722       | ) | $ | (7,341,459  | )
|                                                               |  |              |   |   |         |   |   |            |  |   |               |   |   |             |  
|Shares issued for Marketing Partner
      Agreement            |  | 45,000,000   |   |   | 45,000  |   |   | -          |  |   | -             |   |   | -           |  
|                                                               |  |              |   |   |         |   |   |            |  |   |               |   |   |             |  
|Shares issued for settlement of debt                           |  | 23,866,535   |   |   | 23,867  |   |   | 286,398    |  |   | -             |   |   | -           |  
|                                                               |  |              |   |   |         |   |   |            |  |   |               |   |   |             |  
|Net Income                                                     |  | -            |   |   | -       |   |   | -          |  |   | -             |   |   | 203,080     |  
|                                                               |  |              |   |   |         |   |   |            |  |   |               |   |   |             |  
|Currency translation adjustment                                |  | -            |   |   | -       |   |   | -          |  |   | (154,241      | ) |   | -           |  
|                                                               |  |              |   |   |         |   |   |            |  |   |               |   |   |             |  
|Balance  June 30, 2010                                        |  | 69,314,124   |   |   | 69,315  |   |   | 6,852,863  |  |   | (221,963      | ) |   | (7,138,379  | )
|                                                               |  |              |   |   |         |   |   |            |  |   |               |   |   |             |  
|Shares cancelled for amended Marketing
      Partner Agreement |  | (45,000,000  | ) |   | (45,000 | ) |   | -          |  |   | -             |   |   | -           |  
|                                                               |  |              |   |   |         |   |   |            |  |   |               |   |   |             |  
|Net Income                                                     |  | -            |   |   | -       |   |   | -          |  |   | 221,963       |   |   | 1,036,193   |  
|                                                               |  |              |   |   |         |   |   |            |  |   |               |   |   |             |  
|Balance  December 31, 2010                                    |  | 24,314,124   |   | $ | 24,315  |   | $ | 6,852,863  |  | $ | -             |   | $ | (6,102,186  | )

See accompanying notes to the consolidated financial
  statements.

F-4

---

|Smart-tek Solutions Inc.             
|-------------------------------------
|Consolidated Statements of Cash Flows

|                                                                               |   | Six Months   |   |   | Six
      Months |   |   | Year       |   |   | Year     |  
|------------------------------------------------------------------------------ | - | ------------ | - | - | ---------------- | - | - | ---------- | - | - | -------- | -
|                                                                               |   | Ended        |   |   | Ended            |   |   | Ended      |   |   | Ended    |  
|                                                                               |   | December 31, |   |   | December 31,     |   |   | June 30,   |   |   | June 30, |  
|                                                                               |   | 2010         |   |   | 2009 (unaudited) |   |   | 2010       |   |   | 2009     |  
|Operating Activities                                                           |   |              |   |   |                  |   |   |            |   |   |          |  
|Net income                                                                     | $ | 1,258,156    |   | $ | 109,147          |   | $ | 360,308    |   | $ | (174,762 | )
|Adjustments to reconcile net income to cash
      used in operating activities |   |              |   |   |                  |   |   |            |   |   |          |  
|Depreciation and amortization                                                  |   | 9,405        |   |   | 2,856            |   |   | 9,405      |   |   | -        |  
|Shares cancelled for amended
      Marketing Partner                           |   |              |   |   |                  |   |   |            |   |   |          |  
|Agreement                                                                      |   | (45,000      | ) |   | -                |   |   | -          |   |   | -        |  
|Changes in operating assets and liabilities                                    |   |              |   |   |                  |   |   |            |   |   |          |  
|Accounts receivable                                                            |   | (1,028,738   | ) |   | (233,233         | ) |   | (661,248   | ) |   | -        |  
|Prepaid expenses and deposits                                                  |   | (890,474     | ) |   | (1,629,643       | ) |   | (1,524,497 | ) |   | -        |  
|Accounts payable and accrued liabilities                                       |   | 1,780,712    |   |   | 1,638,789        |   |   | 1,659,254  |   |   | 322,104  |  
|Net cash provided by (used in) operating
      activities                      |   | 1,084,061    |   |   | (112,084         | ) |   | (156,778   | ) |   | 147,342  |  
|Investing activities                                                           |   |              |   |   |                  |   |   |            |   |   |          |  
|Purchase of equipment                                                          |   | -            |   |   | (34,189          | ) |   | (69,864    | ) |   | -        |  
|Net cash used in investing activities                                          |   | -            |   |   | (34,189          | ) |   | (69,864    | ) |   | -        |  
|Financing activities                                                           |   |              |   |   |                  |   |   |            |   |   |          |  
|Proceeds from shareholder loan                                                 |   | -            |   |   | 876,116          |   |   | 554,383    |   |   | (135,837 | )
|Proceeds from officers and directors                                           |   | (4,733       | ) |   | (310,265         | ) |   | 77,790     |   |   | (99,301  | )
|Net cash provided by financing activities                                      |   | (4,733       | ) |   | 565,851          |   |   | 632,173    |   |   | (235,138 | )
|Net increase in cash from continuing
      operations                          |   | 1,079,328    |   |   | 419,578          |   |   | 405,531    |   |   | (87,796  | )
|Net increase in cash from discontinued operations                              |   | (567,030     | ) |   | (185,026         | ) |   | (136,109   | ) |   | 87,796   |  
|Cash and cash equivalents, beginning of
      period                           |   | 269,422      |   |   | -                |   |   | -          |   |   | -        |  
|Cash and cash equivalents, end of period                                       | $ | 781,720      |   | $ | 234,552          |   | $ | 269,422    |   | $ | -        |  
|Supplemental cash flow information                                             |   |              |   |   |                  |   |   |            |   |   |          |  
|Interest paid                                                                  | $ | 16,561       |   | $ | 935              |   | $ | 5,353      |   | $ | 40,272   |  

See accompanying notes to the consolidated financial
  statements.

F-5

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|December 31, 2010                             
|                                              

|1. | Summary of significant accounting
      policies
|-- | ------------------------------------------------

Nature of operations, basis of financial statement
  presentation

Smart-tek Solutions Inc. (the Company) was incorporated in
  the State of Nevada on March 22, 1995.

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

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.

Smart-tek Communications Inc. (SCI) was incorporated on
  October 29, 1996 in the Province of British Columbia, Canada. The Company
  specialized 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 included major developers, general and electrical contractors,
  hospitals, Crown Corporations, law enforcement agencies and retail facilities.
  100% of the SCIs operations are in Canada.

On July 1, 2010, the Company completed the disposition of the
  Companys wholly owned subsidiary Smart-Tek Communications Inc. to its president
  and founder Perry Law.

On February 11, 2009, Smart-tek Automated Services Inc., a
  wholly owned subsidiary of the Company was incorporated in the State of Nevada
  for the purpose of adding a yet to be determined new business line. On June 17,
  2009, Brian Bonar was contracted to use his expertise and contacts in the PEO
  area for the benefit of Smart-tek Automated Services, Inc. Smart-tek Automated
  Services Inc. provides integrated and cost-effective management solutions in the
  area of human resources for public and private companies. Though Smart-tek
  Automated Services Inc., provides mainly professional employer organization
  (PEO) services, it is equipped to provide temporary staffing services as well.
  In a PEO co-employment contract, the Company becomes the employer of record for
  client company employees for tax and insurance purposes. The client company
  continues to direct the employees day-to-day activities, and Allegiant charges
  a service fee for providing services. 100% of Smart-tek Automated Services
  Inc.s operations are in the United States.

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 subsidiary Smart-tek Automated
  Services Inc. Significant inter-company transactions have been eliminated in
  consolidation.

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-6

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|December 31, 2010                             
|                                              

Cash and equivalents

Cash and cash equivalents consist of cash on hand and bank
  deposits. For financial reporting purposes, the Company considers all highly
  liquid debt instruments with original maturities of three months or less to be
  cash equivalents. The Company maintains its cash in bank deposit accounts, which
  at times, may exceed federally insured limits. The Company has not experienced
  any losses related to this concentration of risk. At December 31, 2010 and June
  30, 2010, the Company did not have any deposits in excess of federally insured
  limits.

Accounts Receivable

Accounts receivables are recorded at net realizable value
  consisting of the carrying amount less an allowance for uncollectible accounts,
  as needed. The Company uses the allowance method to account for uncollectible
  accounts receivable balances. Under the allowance method, if needed, an estimate
  of uncollectible customer balances is made based upon specific account balances
  that are considered uncollectible. Factors used to establish an allowance
  include the credit quality and payment history of the customer. There is an no
  allowance for doubtful accounts as of December 31, 2010 (June 30, 2010 
  $Nil).

Workers compensation claims reserve

The Company maintains reserves for workers' compensation claims
  which are made up of estimated collateral required to pay claims and estimated
  expenses to settle the claims. The collateral amounts are determined by the
  insurance carrier and are not recoverable by the Company until all claims
  related to a policy period are settled. Accordingly, the Company accrues
  workers compensation losses, as provided by the Insurance Carriers Third Party
  Administrator and charges expense. As such, the claim reserve will not be
  recoverable in the near term and accordingly, they are classified as a long term
  asset. The Company as well as the Insurance Carriers evaluate the reserves
  regularly throughout the year and make adjustments accordingly. If the actual
  cost of such claims and related expenses exceeds the amounts estimated,
  additional reserves may be required.

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 accounts 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.

Equipment

Equipment, including computer equipment under capital lease
  agreements, is accounted for in accordance with Financial Accounting Standards
  Board (FASB) Accounting Standards Codification (ASC) topic 360: Property Plant
  and Equipment. It 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.

F-7

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|December 31, 2010                             
|                                              

Income taxes

In accordance with FASB ASC 740 (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.

Revenue recognition

The Company recognizes professional employment organizations
  (PEO) revenues when each periodic payroll is delivered to the ASC 605-45:
  Principal Agent Consideration. Consistent with its revenue recognition policy,
  the Companys net PEO revenues and cost of PEO revenues do not include the
  payroll cost of its worksite employees. Instead, PEO revenues and cost of PEO
  revenues are comprised of all other costs related to its worksite employees,
  such as payroll taxes, employee benefit plan premiums and workers compensation
  insurance. PEO revenues also include professional service fees, which are
  primarily computed as a percentage of client payroll or on a per check
  basis.

In determining the pricing of the markup component of its
  billings, the Company takes into consideration its estimates of the costs
  directly associated with its worksite employees, including payroll taxes,
  benefits and workers compensation costs, plus an acceptable gross profit
  margin. As a result, the Companys operating results are significantly impacted
  by the Companys ability to accurately estimate, control and manage its direct
  costs relative to the revenues derived from the markup component of the
  Companys gross billings.

Comprehensive (loss) income

Comprehensive income is presented in accordance with FASB ASC
  220. 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
|December 31, 2010                             
|                                              

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 FASB ASC 718:
  Compensation-Stock Compensation (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 ASC 718
  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
  are no longer an alternative to financial statement recognition.

F-9

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|December 31, 2010                             
|                                              

Recovery of long-lived assets

The Company adopted FASB ASC Topic 360: Property Plant and
  Equipment, sub topic 360-10-35-15: Impairment or Disposal of Long Lived Assets
  (SFAs 144). ASC 360-10-35-15 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.

Earnings (loss) per share

The Company computes net earnings (loss) per common share in
  accordance with FASB ASC 260 (SFAS No. 128 Earnings per Share and SAB No. 98).
  Under the provisions of ASC 260, 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.

Fair Value of Financial Instruments

Effective January 1, 2008, fair value measurements are
  determined by the Company's adoption of authoritative guidance issued by the
  under FASB ASC 870-10: Fair Value Measurements and Disclosures (FASB 157), with
  the exception of the application of the statement to non-recurring,
  non-financial assets and liabilities as permitted. The adoption of the
  authoritative guidance did not have a material impact on the Company's fair
  value measurements. Fair value is defined in the authoritative guidance as the
  price that would be received to sell an asset or paid to transfer a liability in
  the principal or most advantageous market for the asset or liability in an
  orderly transaction between market participants at the measurement date. A fair
  value hierarchy was established, which prioritizes the inputs used in measuring
  fair value into three broad levels as follows:

Level 1Quoted prices in active markets
  for identical assets or liabilities.

Level 2Inputs, other than the quoted
  prices in active markets, are observable either directly or indirectly.

Level 3Unobservable inputs based on
  the Company's assumptions.

The Company is required to use of observable market data if
  such data is available without undue cost and effort.

At December 31, 2010 and June 30, 2010, the carrying amounts of
  financial instruments, including cash, accounts and other receivables, accounts
  payable and accrued liabilities, and accounts payable to related parties
  approximate fair value because of their short maturity.

Recent Accounting Pronouncements

In October 2009, the FASB issued authoritative guidance on
  revenue recognition that will become effective in fiscal years beginning on or
  after June 15, 2010, with earlier adoption permitted. Under the new guidance on
  arrangements that include software elements, tangible products that have
  software components that are essential to the functionality of the tangible
  product will no longer be within the scope of the software revenue recognition
  guidance, and software-enabled products will now be subject to other relevant
  revenue recognition guidance. Additionally, the FASB issued authoritative
  guidance on revenue arrangements with multiple deliverables that are outside the
  scope of the software revenue recognition guidance. Under the new guidance, when
  vendor specific objective evidence or third party evidence for deliverables in
  an arrangement cannot be determined, a best estimate of the selling price is
  required to separate deliverables and allocate arrangement consideration using
  the relative selling price method. The new guidance includes new disclosure
  requirements on how the application of the relative selling price method affects
  the timing and amount of revenue recognition. We believe the adoption of this
  new guidance will not have a material impact on our financial statements.

F-10

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|December 31, 2010                             
|                                              

Recent Accounting Pronouncements, continued

In January 2010, the FASB issued guidance under FASB ASU No.
  2010-08, Technical Corrections to various Topics related to ASC Topic 820-10
  on improving disclosures about fair value measurements to add new disclosure
  requirements for significant transfers in and out of Level 1 and 2 measurements
  and to provide a gross presentation of the activities within the Level 3
  rollforward. The guidance also clarifies existing fair value disclosures about
  the level of disaggregation and about inputs and valuation techniques used to
  measure fair value. The disclosure requirements are effective for interim and
  annual reporting periods beginning after December 15, 2009, except for the
  requirement to present the Level 3 rollforward on a gross basis, which is
  effective for fiscal years beginning after December 15, 2010. The adoption of
  this guidance was limited to the form and content of disclosures, and will not
  have a material impact on our consolidated results of operations and financial
  condition.

Other recent accounting pronouncements issued by the FASB
  (including its Emerging Issues Task Force), the AICPA, and the SEC did not or
  are not believed by management to have a material impact on the Company's
  present or future consolidated financial statements.

In May 2009, the FASB issued new guidance for accounting for
  subsequent events. The new guidance, which is now part of ASC 855-10, Subsequent
  Events (formerly, SFAS No. 165, Subsequent Events) is consistent with existing
  auditing standards in defining subsequent events as events or transactions that
  occur after the balance sheet date but before the financial statements are
  issued or are available to be issued, but it also requires the disclosure of the
  date through which an entity has evaluated subsequent events and the basis for
  that date. The new guidance defines two types of subsequent events: recognized
  subsequent events and non-recognized subsequent events. Recognized subsequent
  events provide additional evidence about conditions that existed at the balance
  sheet date and must be reflected in the companys financial statements.
  Non-recognized subsequent events provide evidence about conditions that arose
  after the balance sheet date and are not reflected in the financial statements
  of a company. Certain non-recognized subsequent events may require disclosure to
  prevent the financial statements from being misleading. The new guidance was
  effective on a prospective basis for interim or annual periods ending after June
  15, 2009. The Company adopted the provisions of ASC 855-10 as required.

In June 2009, the FASB issued new guidance which is now part of
  ASC 105-10 (formerly Statement of Financial Accounting Standards No. 168, The
  FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
  Accounting Principles). ASC 105-10 replaces FASB Statement No. 162, "The
  Hierarchy of Generally Accepted Accounting Principles", and establishes the FASB
  Accounting Standards Codification as the source of authoritative accounting
  principles recognized by the FASB to be applied by nongovernmental entities in
  the preparation of financial statements in conformity with generally accepted
  accounting principles. ASC 105-10 is effective for interim and annual periods
  ending after September 15, 2009. The adoption of ASC 105-10 did not have a
  material impact on the Companys financial statements.

In January 2010, the FASB issued ASU No. 2010-01, amending SFAS
  No. 168, The FASB Accounting Standards Codification and the Hierarchy of
  Generally Accepted Accounting Principles. This Standard codified in ASC 105 is
  being modified to include the authoritative and non-authoritative levels of
  GAAP. This amendment is effective for financial statements issued for interim
  and annual periods ending after September 15, 2009. ASU No. 2010-01 has no
  effect on the Companys financial position, statements of operations, or cash
  flows at this time.

In February 2010, the FASB issued ASU No. 2010-09, Subsequent
  Events ( ASC Topic 855), Amendments to Certain Recognition and Disclosure
  Requirements. This Standard update requires a SEC Filer to (1) evaluate
  subsequent events through the date that the financial statements are issued or
  available to be issued, (2) defines SEC Filer as an entity that is required to
  file or furnish its financial statements with either the SEC or, with respect to
  an entity subject to Section 12(i) of the Securities Exchange Act of 1934, as
  amended, the appropriate agency under that Section, (3) not be bound to
  disclosing the date through which subsequent events have been evaluated, (4)
  note the definition of public entityis not longer defined nor necessary
  for Topic 855, (5) note the scope of the reissuance disclosure requirements is
  refined to include revised financial statements only. These Updates are
  effective for interim or annual periods ending after June 15, 2010. ASU No.
  2010-09 has no effect on the Companys financial position, statements of
  operations, or cash flows at this time.

F-11

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|December 31, 2010                             
|                                              

|2. | Discontinued operations
|-- | -----------------------

Smart-Tek Communications Inc.

On July 1, 2010, the Company completed the sale of the
  Companys wholly owned subsidiary Smart-Tek Communications Inc. to its president
  and founder Perry Law.

The aggregate purchase price of Smart-Tek Communications, Inc.
  is $821,757 allocated as follows:

| | (a) | $821,756 of the purchase price shall be paid and
      satisfied by setting-off the Companys indebtedness to Perry Law;
      and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                   
| | (b) | $1.00 of the purchase price shall be paid by Perry Law
      for transferring 32,817 shares owned by him to the
      Company.    

Results of operations and cash flows are classified as
  pertaining to discontinued operations if those operations and cash flows are
  attributable to a distinguishable component of the Company that will be
  eliminated from the ongoing operations of the Company as a result of the
  disposition.

The results of discontinued operations are classified
  separately in both the current period and prior years. The results of
  discontinued operations are presented net of applicable income taxes.

If certain long-term assets and liabilities of the Company can
  be distinguished as being directly related to the discontinued operations, and
  if those assets and liabilities are disposed of pursuant to the disposition of
  the discontinued business component, then those assets and liabilities are
  classified on the balance sheet in both the current and prior periods as current
  or non-current assets of discontinued operations and liabilities of discontinued
  operations, respectively.

Current and non-current assets and liabilities of discontinued
  operations are re-measured at the time of discontinuation at the lower of their
  carrying amount or their fair value less cost to sell. Any resultant unrealized
  gains or losses are recognized in net income in the period when the Company
  disposes the related operations.

F-12

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|December 31, 2010                             
|                                              

The following table presents the effect of the discontinued
  operations in the Consolidated Statements of Operations and Comprehensive
  Income:

|                                               |   | Six Months   |  |   | Six Months           |   |   | Year      |   |   | Year      |  
|---------------------------------------------- | - | ------------ |  | - | -------------------- | - | - | --------- | - | - | --------- | -
|                                               |   | Ended        |  |   | Ended                |   |   | Ended     |   |   | Ended     |  
|                                               |   | December 31, |  |   | December 31,         |   |   | June 30,  |   |   | June 30,  |  
|                                               |   | 2010         |  |   | *2009* *(unaudited)* |   |   | 2010      |   |   | 2009      |  
|Revenue                                        | $ | -            |  | $ | 3,035,058            |   | $ | 4,673,084 |   | $ | 3,274,138 |  
|Cost of revenue and service delivery           |   | -            |  |   | 1,959,868            |   |   | 3,294,783 |   |   | 2,558,706 |  
|Gross profit                                   |   | -            |  |   | 1,075,190            |   |   | 1,378,301 |   |   | 715,432   |  
|Selling, general and administrative expenses   |   | -            |  |   | 797,519              |   |   | 1,531,267 |   |   | 672,760   |  
|Operating income (loss)                        |   | -            |  |   | 277,671              |   |   | (152,966  | ) |   | 42,672    |  
|Other expense                                  |   |              |  |   |                      |   |   |           |   |   |           |  
|Interest                                       |   | -            |  |   | (2,732               | ) |   | (4,262    | ) |   | (4,277    | )
|Income (loss) from discontinued operations     |   | -            |  |   | 274,939              |   |   | (157,228  | ) |   | 38,395    |  
|Currency translation adjustment                |   | -            |  |   | (28,674              | ) |   | -         |   |   | -         |  
|Gain on disposition of discontinued operations |   | 897,378      |  |   | -                    |   |   | -         |   |   | -         |  
|Net income from discontinued operations        | $ | 897 378      |  | $ | 246,265              |   | $ | (157,228  | ) | $ | 38,395    |  

F-13

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|December 31, 2010                             
|                                              

The following table presents the effect of discontinued
  operations in the Consolidated Balance Sheets

|                                                                                  |   | December 31, |  |   | June 30,  | 
|--------------------------------------------------------------------------------- | - | ------------ |  | - | --------- | 
|                                                                                  |   | 2010         |  |   | 2010      | 
|Assets                                                                            |   |              |  |   |           | 
|Current assets                                                                    |   |              |  |   |           | 
|Cash                                                                              | $ | -            |  | $ | 146,967   | 
|Accounts receivable                                                               |   | -            |  |   | 380,345   | 
|Contract retention receivable                                                     |   | -            |  |   | 118,804   | 
|Cost of uncompleted contracts in excess of
      billing                          |   | -            |  |   | 11,713    | 
|Prepaid expenses and deposits                                                     |   | -            |  |   | 1,597     | 
|                                                                                  |   |              |  |   |           | 
|                                                                                  |   | -            |  |   | 659,426   | 
|Equipment                                                                         |   | -            |  |   | 47,897    | 
|                                                                                  |   |              |  |   |           | 
|                                                                                  | $ | -            |  | $ | 707,323   | 
|Current liabilities                                                               |   |              |  |   |           | 
|Accounts payable and accrued liabilities                                          | $ | -            |  | $ | 297,433   | 
|Billings on uncompleted
      contracts in excess of costs and estimated revenues |   | -            |  |   | 73,117    | 
|Deferred revenue                                                                  |   | -            |  |   | 21,027    | 
|Amounts due to officers and
      directors                                       |   | -            |  |   | 838,795   | 
|                                                                                  |   |              |  |   |           | 
|                                                                                  | $ | -            |  | $ | 1,230,372 | 

F-14

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|December 31, 2010                             
|                                              

|3. | Equipment
|-- | ---------

|                              |   | Cost   |  |   | Accumulated Depreciation |  |   | December 31, 2010 Net Book Value |  |   | Cost   |  |   | Accumulated Depreciation |  |   | June 30, 2010 Net Book Value | 
|----------------------------- | - | ------ |  | - | ------------------------ |  | - | -------------------------------- |  | - | ------ |  | - | ------------------------ |  | - | ---------------------------- | 
|                              |   |        |  |   |                          |  |   |                                  |  |   |        |  |   |                          |  |   |                              | 
|Computer equipment & software | $ | 28,882 |  | $ | 9,628                    |  | $ | 19,254                           |  | $ | 28,882 |  | $ | 7,439                    |  | $ | 21,443                       | 
|Office furniture & equipment  |   | 12,993 |  |   | 8,008                    |  |   | 4,985                            |  |   | 12,993 |  |   | 2,645                    |  |   | 10,348                       | 
|Automobile                    |   | 27,989 |  |   | 4,727                    |  |   | 23,262                           |  |   | 27,989 |  |   | 2,874                    |  |   | 25,115                       | 
|                              |   |        |  |   |                          |  |   |                                  |  |   |        |  |   |                          |  |   |                              | 
|                              | $ | 69,864 |  | $ | 22,363                   |  | $ | 47,501                           |  | $ | 69,864 |  | $ | 12,958                   |  | $ | 56,906                       | 

|4. | Shareholder loans
|-- | -----------------

At December 31, 2010 the Company is indebted to a company
  controlled by the Companys president in the amount of $Nil (June 30, 2010 -
  $500,024). The loan is unsecured, bears 0% interest and has no fixed terms of
  repayment.

|5. | 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-15

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|December 31, 2010                             
|                                              

|5. | Income taxes, continued
|-- | -----------------------

The Company generated a deferred tax credit through net
  operating loss carry forwards. As of December 31, 2010 the company had federal
  and state net operating loss carry forwards of approximately $5,687,402 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 December 31, 2010, STS had available federal net operating
  loss (NOL) carry forwards of approximately $5,687,402. 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 December 31, 2010 and June 30, 2010 as follows:

|                                                   |   | December 31, |   |   | June 30,   |  
|-------------------------------------------------- | - | ------------ | - | - | ---------- | -
|                                                   |   | 2010         |   |   | 2010       |  
|Deferred tax asset, beginning                      | $ | 2,386,382    |   | $ | 2,457,460  |  
|Provision of current years operating gain         |   |              |   |   |            |  
|                                                   |   | (440,355     | ) |   | (71,078    | )
|Deferred tax asset, ending                         | $ | 1,946,027    |   | $ | 2,386,382  |  
|Valuation allowance, beginning                     | $ | (2,386,382   | ) | $ | (2,457,460 | )
|Current years gain provision                      |   | 440,355      |   |   | 71,078     |  
|Valuation allowance, ending                        | $ | (1,946,027   | ) | $ | (2,386,382 | )
|Deferred tax asset, net                            | $ | -            |   | $ | -          |  
|Tax at blended U.S./Canadian statutory
      rates |   | (35%         | ) |   | (35%       | )
|Loss carryover                                     |   | 35%          |   |   | 35%        |  
|Tax expense                                        | $ | -            |   | $ | -          |  

|6. | Common Stock
|-- | ------------

At December 31, 2010, 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 December 31, 2010, there are 24,314,124 shares of common
  stock outstanding.

During the quarter a certificate for 45,000,000 shares was
  cancelled and returned to treasury pursuant to an Amended Marketing Agreement
  dated December 9, 2010, by and between Smart-Tek Solutions Inc., its wholly
  owned subsidiary Smart-Tek Automated Services, Inc., and its affiliated
  businesses (hereinafter collectively referred to as the Company) and, Brian
  Bonar.

F-16

---





|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|December 31, 2010                             
|                                              



|6. | Common Stock, continued
|-- | -----------------------

Preferred Stock

There are no preferred shares issued or outstanding.

|7. | Related Party Transactions
|-- | --------------------------

Amounts due to officers and directors were $388,415 as of
  December 31, 2010.

F-17

---

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

None.

ITEM 9A(T). CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Exchange Act, we have
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures at June 30, 2010, which is the end of the period covered
by this report. This evaluation was carried out by our principal executive
officer and our principal financial officer. Based on this evaluation, our
principal executive officer and our principal financial officer have concluded
that the design and operation of our disclosure controls and procedures are
effective as at the end of the period covered by this report.

There were no changes in our internal control over financial
reporting during the fiscal quarter ended December 31, 2010 that have materially
affected or are reasonably likely to materially affect, our internal control
over financial reporting.

Limitations on the Effectiveness of Internal Controls

Disclosure controls and procedures, no matter how well designed
and implemented, can provide only reasonable assurance of achieving an entity's
disclosure objectives. The likelihood of achieving such objectives is affected
by limitations inherent in disclosure controls and procedures. These include the
fact that human judgment in decision-making can be faulty and that breakdowns in
internal control can occur because of human failures such as simple errors or
mistakes or intentional circumvention of the established process.

Item 9A(T). Controls and Procedures.

Disclosure Controls and Procedures

As of December 31, 2010, under the supervision and with the
participation of the Company's Chief Executive Officer and the Chief Financial
Officer, management has evaluated the effectiveness of the design and operation
of the Company's disclosure controls and procedures. Based on that evaluation,
the Chief Executive Officer and the Chief Financial Officer have concluded that
the Company's disclosure controls and procedures were not effective as of
December 31, 2010.

Changes in Internal Control over Financial Reporting

There were no changes in internal control over financial
reporting that occurred during the last fiscal quarter covered by this report
that have materially affected, or are reasonably likely to affect, the Company's
internal control over financial reporting.

Management's Report on Internal Control over Financial
Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in
the Securities Exchange Act of 1934 Rule 13a-15(f). Our Chief Executive Officer
and Chief Financial Officer conducted an evaluation of the effectiveness of our
internal control over financial reporting based on the framework in Internal
Control - Integrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO Framework").

-16-

---

Based on this evaluation, management has concluded that our
internal control over financial reporting was not as effective as of December
31, 2010 due to the relatively small staff size of its financial group. As such,
our principal Chief Executive Officer and Chief Financial Officer concluded that
we could have a material weakness due to lack of segregation of duties. The
volume of administrative work peaks at the end of each quarter requiring
additional resources to process the workload. We have hired an additional
administrative person to assist in that additional workload

This annual report does not include an attestation report of
the Company's independent registered public accounting firm regarding internal
control over financial reporting. Management's report was not subject to
attestation by the Company's independent registered public accounting firm
pursuant to temporary rules of the SEC that permit the company to provide only
management's report on internal control in this annual report.

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE

Directors and Executive Officers, Promoters and Control
Persons

As at June 30, 2010, 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 AppointedPerry Law
    Chief Executive Officer and Chief
      Financial Officer of Smart-Tek Communications Inc, and Director of
      Smart-Tek Solutions, Inc.
    47
    September 30, 2006Brian Bonar
    Secretary,
      Treasurer, Chief Executive Officer, Chief Financial Officer President
      and Director
    63
    May 29, 2009Owen Naccarato
    Director
    61
    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 Lawis 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. Prior to Smart-tek
Communications Inc., Mr. Law was President of Smart Systems Corp., a similar
systems integration company that owned and operated by Mr. Law and several
investors for 1991-1996. Mr. Law has also held numerous executive management
positions in both private and public companies in the past and is very active in
charitable causes.

-17-

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Brian Bonaron March 12, 2010, was appointed as Chief
Executive Officer, Chief Financial Officer, Secretary, Treasurer of the issuer
and Chairman of the Board. Prior to this, Mr. Bonar was appointed to the STTN
Board on May 29, 2009 and named President of STTN on September 17, 2009. 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
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. Mr. Bonars specific experience and contacts in the PEO industry was a key
element in appointing Mr. Bonar CEO and subsequently as a director.

Owen Naccarato Esq.,was appointed as a Director on
September 29, 2009. Mr. Naccarato has for the last fourteen years been a sole
practitioner specializing in corporate and securities law. Prior to practicing
law, Mr. Naccarato was CFO and Director of Kaire Holdings, Inc., a publicly
traded corporation. Additionally Mr. Naccarato held various high level financial
and operating positions with fortune 500 firms including Baxter Edwards, Baxter
International Corp. and Tiger Leasing. Mr. Naccarato is a member of the
California State Bar Association, the Orange County and the Los Angeles County
Bar Associations. 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. Mr. Naccarato also matriculated as a CPA in the State of
Illinois in 1977. Smart-tek Solutions, Inc. felt Mr. Naccaratos broad
experience would be a benefit to assist in the future growth of the Company.

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. Our next annual
shareholder meeting is tentatively planned for July 20, 2011.

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:

-18-

---

| | 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.

Compensation of Directors

Directors do not receive compensation their duties as a
director.

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.

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.

-19-

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ITEM 11. EXECUTIVE COMPENSATION.

The following table sets forth all compensation paid for
services rendered during the six month period ended December 31, 2010, and for
the two years ended June 30, 2010 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
      TABLEName 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)Director
    Dec 2010 June 2010
      June 2009
    78,800 78,800 78,800
    132,040 132,040
      132,040
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil 725,742 Nil
    210,920 936,582
      210,920Brian Bonar(2)President,       Secretary, Treasurer, Chief       Executive
      Officer and       Chief Financial Officer
    Dec 2010 June 2010
    162,496 388,415
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    60,000 Nil
    222,496 388,415Kelly Mowrey       Chief
      Operating Officer
    Dec 2010 June 2010
    136,425 280,000
    6,250 24,000
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    142,675 304,000


|(1) | Mr. 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 resigned President
      and CEO of Smart-tek Solutions on March 5, 2010 effective March 5,
      2010.         
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                        
|(2) | Mr. Brian has been the President and CEO of Smart-tek
      Automated Services, Inc, since May, 29, 2009 its inception. Smart-tek
      Automated Services, Inc. is a wholly-owned subsidiary of Smart-tek
      Solutions. Mr. Bonar became CEO of Smart-tek Solutions on March 5, 2010
      effective March 5, 2010.

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.

-20-

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Securities Authorized for Issuance Under Equity Compensation
Plans

EQUITY COMPENSATION PLANS

OUTSTANDING
      EQUITY AWARDS AT FISCAL YEAR-ENDOPTION AWARDS
    STOCK AWARDSName
    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 ($)
    Option
      Expiration Date
    Number
      of Shares or Units of Stock That Have Not
      Vested (#)
    Market
      Value of Shares or Units of Stock That Have
      Not Vested ($)
    Equity
      Incentive Plan Awards: Number of Unearned Shares,
      Units or Other Rights That Have Not Vested (#)
    Equity Incentive Plan
      Awards: Market or Payout Value of Unearned Shares,
    Units or Other Rights That Have Not Vested (#)Brian Bonar
    o
    o
    o
    o
    o
    o
    o
    o
    oPerry Law
    o
    o
    o
    o
    o
    o
    o
    o
    oStephen Platt
    o
    o
    o
    o
    o
    o
    o
    o
    o


Compensation of Directors

DIRECTOR COMPENSATIONName
    Fees Earned or Paid
      in Cash ($)
    Stock Awards
      ($)
    Option Awards
      ($)
    Non-Equity Incentive
      Plan Compensation ($)
    Non-Qualified Deferred
      Compensation Earnings ($)
    All Other
      Compensation ($)
    Total ($)Brian Bonar
    $0
    0
    0
    0
    0
    0
    $0Perry Law
    $0
    0
    0
    0
    0
    0
    $0Owen Naccarato
    $0
    0
    0
    0
    0
    0
    $0


-21-

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Options/SAR Grants in the Last Fiscal Year:

None

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. 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.

On December 9, 2010, the board of Smart-Tek Solutions Inc.
(Smart-Tek) amended the marketing agreement entered into on June 17, 2009 in
order to clarify basis for calculating the shares to be issued for compensation
pursuant to the marketing agreement. The agreement was between Smart-Tek
Solutions Inc., its wholly owned subsidiary Smart-Tek Automated Services, Inc.,
and its affiliated businesses (hereinafter collectively referred to as the
Company) and, Brian Bonar, an individual (hereinafter referred to as the
Marketing Partner)

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: For
each US$1,000,000 in actual net sales of the Company subsequent to the first
aggregate of US $20,000,000 in actual net sales and up to the first aggregate of
US $30,000,000 in actual net sales of the Company, introduced by Marketing
Partner to the Company (the Client Contacts), Marketing Partner will receive
4,500,000 Shares without further compensation. The maximum aggregate Shares that
may be issued to the Marketing Partner under the Agreement are 45,000,000
Shares.

After an aggregate of US$30,000,000 in actual net sales is
reached by the Company resulting from Client contacts introduced by Marketing
Partner to the Company, Marketing Partner will receive two percent (2%) of
annual net revenues of the Company for the amounts in excess of US$5,000,000 of
actual net revenues in any given fiscal year in cash.

The agreement is for an indefinite term

HEALTH INSURANCE FOR EMPLOYEES

Smart-tek Automated Services  yes

-22-

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

As of December 31, 2010, there were 24,314,124 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.

|Title of Class
      Directors and Officers: | Name and Address
      of Beneficial Owner                                | Number of Shares
      Beneficially Owned(1) | Percentage of Class(1)
|-------------------------------------------- | ------------------------------------------------------------------------- | -------------------------------------------- | ----------------------
|Common Stock                                 | Perry Law Unit 10  11720
      Voyageur Way Richmond, BC V6X 3G9         | 32,817                                       | 0.1%                  
|Common Stock                                 | Brian Bonar 1100 Quail
      Street, Suite 100 Newport Beach, CA 92660    | -                                            | 0%                    
|Common Stock                                 | Owen Naccarato 1100 Quail
      Street, Suite 100 Newport Beach, CA 92660 | -                                            | 0%                    
|Common Stock                                 | Directors and Officers as a
      group (1)                               | 32,817                                       | 0.1%                  

Notes

|(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 24,314,124 shares of common stock issued and
    outstanding as of December 31, 2010.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Changes in Control

On December 9, 2010, the board of Smart-Tek Solutions Inc.
(Smart-Tek) amended the marketing agreement entered into on June 17, 2009 in
order to clarify basis for calculating the shares to be issued for compensation
pursuant to the marketing agreement. The agreement was between Smart-Tek
Solutions Inc., its wholly owned subsidiary Smart-Tek Automated Services, Inc.,
and its affiliated businesses (hereinafter collectively referred to as the
Company) and, Brian Bonar, an individual (hereinafter referred to as the
Marketing Partner)

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: For
each US$1,000,000 in actual net sales of the Company subsequent to the first
aggregate of US $20,000,000 in actual net sales and up to the first aggregate of
US $30,000,000 in actual net sales of the Company, introduced by Marketing
Partner to the Company (the Client Contacts), Marketing Partner will receive
4,500,000 Shares without further compensation. The maximum aggregate Shares that
may be issued to the Marketing Partner under the Agreement are 45,000,000
Shares. Therefore, this agreement upon reaching the performance goals laid out
will result in a change of ownership.

-23-

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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, 2010, 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. | On December 9, 2010, the board of Smart-Tek Solutions
      Inc. (Smart-Tek) amended the marketing agreement entered into on June
      17, 2009 in order to clarify basis for calculating the shares to be issued
      for compensation pursuant to the marketing agreement. The agreement was
      between Smart-Tek Solutions Inc., its wholly owned subsidiary Smart-Tek
      Automated Services, Inc., and its affiliated businesses (hereinafter
      collectively referred to as the Company) and, Brian Bonar, an individual
      (hereinafter referred to as the Marketing Partner)                                                                                                                                                                                                                                                                   
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | 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: For each US$1,000,000 in actual net sales of
      the Company subsequent to the first aggregate of US $20,000,000 in actual
      net sales and up to the first aggregate of US $30,000,000 in actual net
      sales of the Company, introduced by Marketing Partner to the Company (the
      Client Contacts), Marketing Partner will receive 4,500,000 Shares
      without further compensation. The maximum aggregate Shares that may be
      issued to the Marketing Partner under the Agreement are 45,000,000
      Shares.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 2. | During the year ended June 30, 2010, the Companys wholly
      owned subsidiary, Smart-Tek Automated Services, Inc. paid $388,415 in
      management salaries to its President which included bonuses of $Nil and
      consulting fees of $Nil.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

Brian Bonar is a controlling party of Dalrada Financial Corp.
who has a consulting arrangement with Smart-tek Automated Services, Inc. During
the fiscal year ended June 30, 2010, Dalrada invoiced Smart-tek Automated
Services Inc., $73,430 for services rendered.

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
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 our 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

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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 or accrued for the six months ended
six months ended December 31, 2010 and for the 12 month period ended June 30,
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:

Six months ended December 31,
      2010
    Twelve months ended June 30,
      2010Audit Fees
    $35,000
    $135,000Audit Related Fees
    $-
    $-Tax Fees
    $-
    $-All Other Fees
    $-
    $-Total
    $35,000
    $135,000


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
    Description3.1
    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 (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
    Amendment to Employment Agreement between
      Smart-Tek Communications Inc. and Perry Law dated July 31, 200910.8
    Form of Debt Settlement and Subscription
      Agreement dated September 30, 200910.9
    Strategic Marketing Partner Agreement between
    Smart-Tek Automated Services Inc. and ACEO Inc. dated August 1, 200910.10
    Marketing Partner Agreement dated June 17, 200910.11
    Amended Marketing Partner Agreement dated
      December 9, 2010 with Smart-Tek Automated Services, Inc. and Brian Bonar.
      (7)10.12
    General Release of Claims Agreement Entered
      into between Richardson Patel LLC and Smart-Tek Solutions, Inc (7)14.1
    Amended and Restated Code of Ethics21.1
    Subsidiaries31.1*
    CEO  Section 302 Certification under
      Sarbanes-Oxley Act of 200231.2*
    CFO Section 302 Certification under
      Sarbanes-Oxley Act of 200232.1*
    CEO  Section 906 Certifications under
      Sarbanes-Oxley Act of 200232.2*
    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.               
|(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 December 13, 2010.        

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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    | /x/ Brian Bonar                                                  | 
|----- | ---------------------------------------------------------------- | 
|      |                                                                  | 
|      | Brian Bonar                                                      | 
|      | Chief Executive Officer, Chief
      Financial Officer           | 
|      | and Director                                                     | 
|      | (Principal Executive Officer,
      Principal Accounting Officer | 
|      | and Principal Financial Officer)                                 | 
|      |                                                                  | 
|      |                                                                  | 
|      |                                                                  | 
|Date: | April 15, 2011                                                   | 

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                                                        | 
|      | Director                                                         | 
|      |                                                                  | 
|Date: | April 15, 2015                                                   | 
|      |                                                                  | 
|      | /s/ Brian Bonar                                                  | 
|      | Brian Bonar                                                      | 
|      | Chief Executive Officer, Chief
      Financial Officer           | 
|      | and Director                                                     | 
|      | (Principal Executive Officer,
      Principal Accounting Officer | 
|      | and Principal Financial Officer)                                 | 
|      |                                                                  | 
|      |                                                                  | 
|Date: | April 15, 2011                                                   | 
|      |                                                                  | 
|      | /s/ Owen Naccarato                                               | 
|      | Owen Naccarato                                                   | 
|      | Director                                                         | 
|      |                                                                  | 
|Date: | April 15, 2011                                                   | 

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