UNITED STATES

Securities and Exchange Commission

Washington, D.C. 20549



Form 10-KSB

(Mark One)

(X)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2007



OR



(  )

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Commission File Number 000-29895



SMART-TEK SOLUTIONS, INC.



Nevada

98-0206542



State or other jurisdiction of incorporation

(I.R.S.) Employer Identification Number



Smart-tek Solutions, Inc.

3702 South Virginia Street

Suite G12-401

Reno, NV 89502



Address of principal executive offices



(778) 452-2298



Registrants telephone number, including area code



433 Town Center, Suite 316

Corte Madera, CA 94925



Former address of principal executive offices







Securities registered pursuant to Section 12(b) of the Act: None



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Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value

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 and 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) had been subject to such filing requirements for the past 90 days.



YES  (X)

NO



Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will 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-KSB or any amendment to this Form 10-KSB.



The issuers revenues for its most recent fiscal year ended June 30, 2007: $2,595,356



The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and ask price, as of June 30, 2007 was $12,453,013 based on a share value of $0.17



The number of shares of Common Stock, $.001 par value, outstanding on June 30, 2007 was 73,253,016.



Transitional Small Business Disclosure Format (Check One)

Yes

No (X)





































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SMART-TEK SOLUTIONS, INC.

FOR THE FISCAL YEAR ENDED

JUNE 30, 2007



INDEX TO REPORT ON FORM 10-KSB



PART I



Item 1. Description of Business

Item 2. Description of Property

Item 3. Legal Proceedings

Item 4. Submission of Matters to a Vote of Security Holders



PART II



Item 5. Market for Common Equity and Related Stockholder Matters

Item 6. Managements Discussion and Analysis or Plan of Operation

Item 7. Financial Statements

Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 8(a) Controls and Procedures

Item 8(b) Other information



PART III



Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance with Section 16(a) of    the Exchange Act

Item 10. Executive Compensation

Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters

Item 12. Certain Relationships and Related Transactions

Item 13. Exhibits

Item 14. Principal Accountants Fees and Services















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FORWARD-LOOKING STATEMENTS



This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements other than statements of historical fact are forward-looking statements for purposes of federal and state securities laws, including but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements regarding future economic conditions or performance; any statements or belief, and any statements of assumptions underlying any of the foregoing.



Forward-looking statements may include the words may, could, estimate, intend, continue, believe, expect, or anticipate or other similar words.  These forward-looking statements present our estimates and assumptions only as of the date of this report.  We do not intend, and undertake no obligation, to update any forward-looking statement.



Although we believe that the expectations reflected in any of our forward looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements.  Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.  The factors impacting these risks and uncertainties include, but are not limited to:

·

Increased competitive pressures from existing competitors and new entrants;

·

Increases in interest rates or our cost of borrowing or a default under any material debt agreements;

·

Deterioration in general or regional economic conditions;

·

Adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

·

Loss of customers or sales weakness;

·

Inability to achieve future sales levels or other operating results; and

·

The unavailability of funds for capital expenditures.



For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see Factors that May Affect our Results of Operation in this document.



In this form 10-KSB references to Smart-tek Solutions, the Company, we, us, and our refer to SMART-TEK SOLUTIONS, INC.



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PART I



Item I. Description of Business



Smart-tek Solutions, Inc. (STS or the Company) formerly known as Royce Biomedical Inc., was incorporated in Nevada on March 22, 1995.



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



In December 2004, the Company replaced all of its Directors and Officers and embarked on a transition of the companys business activities from the biomedical industry to the security services industry.  Through various consulting agreements with outside professionals, the Company was able to identify an acquisition target in the security market.



Pursuant to a Share Exchange Agreement In April 2005, Smart-tek Communications, Inc., a British Columbia, Canada based security contractor (SCI) became a wholly-owned subsidiary of the Company.  As a result of this acquisition, the Company ceased all ongoing business relationships with Xili and commenced efforts to effectively operate and expand in the security sector.



In July 2005, the Company filed with the State of Nevada to change its name to Smart-tek Solutions, Inc., pursuant to the Schedule 14C filed on June 13, 2005.



Along with operating, through its wholly-owned subsidiary, in the approximately $100M security sector of the Greater Vancouver Area, the company embarked in 2005 in the development of a Radio Frequency Identification (RFID) based device geared towards the agricultural industry.  With the increased importance of food chain safety, the Company entered into the Animal Agriculture Security and Monitoring industry with its RFID based product.











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Products and Services



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



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

1.

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

2.

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

3.

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

4.

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

5.

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



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



Since 2005, STS has been working on developing and perfecting a RFID based monitoring and tracking system to be used in the agriculture industry.  The system was designed to be scaleable and versatile in order to be customized to fit any animal producing farms.  The design concept stemmed from our exposure to RFID equipment that we have installed as part of integrated security systems in the Security industry, and the outbreaks of the H5N1 (Bird Flu) virus.



The system is designed to track and record the movement of animals using passive and active RFID tags and readers.  The data is then captured into a database allowing the farmer or government officials to track the movement of a herd should a disease outbreak occur, thereby allowing officials to track the movement of a herd to trace the source of the outbreak.



The next phase for the RFID product development phase will be to have it installed on a farm for testing.  The company is currently in negotiations with a start-up cattle farm in the United States to have the system installed on their site for full evaluation of the functionality of the system.





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Marketing Strategy



The Company relies on current relationships as their primary means of marketing their security technology products and services in the Greater Vancouver Area.  Since 1997, the Company has been successful in developing its security business this market and nurturing its relationships with Real Estate Developers and contractors.  The residential and commercial real estate market in the local area continues to be strong.  With construction of the Olympic Village to accommodate thousands of athletes and volunteers for the upcoming 2010 Winter Olympics to be held in Vancouver yet to begin, the real estate market is expected to remain strong for the foreseeable future.  We hope to leverage our relationships as well as our reputation to be able to provide some of the security solutions that are required to make this event a safe one for all.   Accordingly, the Company has assigned two of its senior employees to participate in the meetings and make every effort possible to obtain contracts for this highly prestigious event.



The Company has adopted a different marketing strategy for marketing its RFID system.  We began by arranging for meetings in third world countries that we affected by the H5N1 virus.  After many visits and meetings with various levels of governments and businesses wanting to act as agents and distributors for our products, it became apparent that while there was a tremendous need for a tracking and monitoring system such as ours to help in the fight against the Bird Flu, there was a lack of financial resources and financial aid for these countries to implement a system such as ours.



We are now looking to implement the RFID system in the United States and are in advanced negotiations with a start-up cattle farmer located in New Mexico.  The farm will be used as the Companys beta site to perfect its software and hardware.  It is believed that with the input for the cattle farmer, we will be able to leverage our relationship to further market our product with other farmers in the Southwestern United States.  Our system is designed to be adapted by other types of animal producing farms, such as poultry or pork.



The Company has engaged an agent in this area to attend trade shows, gather market intelligence and market the Company and its RFID solutions to the farming community.





Market



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



We expect to be able to leverage our reputations and relationships to enable us to continue to grow our security business.  We currently supply a substantial portion of the security technology needs of new



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residential and commercial real estate developments in the Greater Vancouver Area and anticipate this trend to continue.



The safety of worlds food chain supply is gaining increased exposure with the recent outbreaks of the H5N1 (Bird Flu) virus and Hoof and Mouth Disease.  There is an increase in demand for systems that provide data to officials on the potential sources of these outbreaks to limit the devastating impact viruses such at these can have on economies as well as the health of humans who are exposed to these potentially deadly diseases.



The US livestock market is extremely important to the North American food chain.  The protection of it, has created a niche market for technology solutions to provide more sophisticated tracking capabilities along with data that is important in containing communicable diseases that can spread rapidly and result in widespread economic losses.



Backlog



The following schedule shows a reconciliation of backlog representing the amount of revenue the Company expects to realize from work to be performed on uncompleted contracts in progress at June 30, 2007 and from contractual agreements on which work has not yet begun.



Balance at June 30, 2006
      $5,908,333New contracts, July 1, 2006 to June 30, 2007
      3,669,0029,577.355Less: Contract revenue earned from July 1, 2006
        to June 30, 2007
      (2,466,122)Balance June 30, 2007
      $7,111,213




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



We face competition in our RFID solutions for the agriculture industry from various sources.  While we are not aware of any companies that have a containment/monitoring solution such as ours, we do have competition from the various pharmaceutical companies who are aggressively working on developing vaccines to eradicate the various diseases that affect livestock.







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Personnel



We currently have over 30 employees to carry out our security technology business.  We rely on external consultants to perform various professional services in regards to the development of the RFID technology solution geared towards the agriculture industry.



Registrant Information



We file annual, quarterly and special reports and other information with the Securities and Exchange Commission (SEC) that can be inspected and copied at the public reference facility maintained by the SEC at 100 F. Street N.E. Room 1580, Washington, D.C. 20549-0405.  Information regarding the public reference facilities may be obtained from the SEC by telephone 1-800-SEC-0330.  The Companys filings are also available through the SECs Electronic Data Gathering Analysis and Retrieval System which is publicly available through the SECs website (www.sec.gov).  Copies of such materials may also be obtained by mail from the public reference section of the SEC at 100 F Street N E room 1580, Washington, D.C. 20549-0405 at prescribed rates.  In addition, all of our SEC filings and Press Releases can be accessed through our website (www.smart-teksolutions.com).



ITEM 2. Description of Property



We do not maintain an executive office but rather utilize the facilities, when required, of our operating subsidiary located at #10-11720 Voyageur Way, Richmond, BC, Canada, V6X 3G9.  The property is approximately 2,000 square feet and is a 36 month lease with a payment of approximately $1,250 per month.  We utilize a mail service for our corporate correspondence at 3702 South Virginia Street, Unit G12-401, Reno, Nevada, 89502.



ITEM 3.

Legal Proceedings



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



In November, 2006, the Company dismissed its lawsuit against RFID, Ltd in order to continue its focus on its operations.  In November 2006, RFID issued a press release to redact its statements against Smart-tek Solutions, Inc.



On May 9, 2006, the Company filed a Complaint in the District Court of Clark County, Nevada against the owners and operators of Stocklemon.com (Stocklemon).  The Complaint alleges causes of action for (1) Defamation; (2) Intentional Interference with Contractual Relations; (3) Intentional Interference with Prospective Economic Advantage and (4) Violation of State Securities Laws.  The Complaint alleges that



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Stocklemon made a series of provably false assertions of fact and other misleading statements concerning Smart-tek Solutions, Inc.s financial affairs and business activities.  The Complaint further alleges that Stocklemon intentionally sought to damage Plaintiffs value, contractual relationships and expectancies via the misrepresentations and misleading statements contained in a Stocklemon report issued on or about April 4, 2006.  The Complaint further alleges that Stocklemon utilized the Report and the untrue statements of material fact contained therein to deliberately manipulate the market for personal gain.  The Complaint filed by Smart-tek Solutions, Inc. seeks compensatory and punitive damages in excess of $100 million and equitable relief against Stocklemon. While the Company remains adamant that it was wronged and damaged by the Stocklemon report, the Company was not able to continue to afford the cost of legal actions and has temporarily suspended their legal efforts and its attorneys have filed a petition to be removed as legal representatives of the Company in this complaint.



While the Company remains adamant that it was wronged and damaged by the Stocklemon report, the Company was not able to continue to afford the cost of legal actions and has temporarily suspended their legal efforts and its attorneys have filed a petition to be removed as legal representatives of the Company in this complaint.



ITEM 4.

Submission of Matters to a vote of Security Holders



None



PART II



ITEM 5.

Market for Common Equity and Related Shareholder Matters



(a)

Market information



The Company is eligible to participate in the over-the counter securities market through the NASDAQ Bulletin Board System under the trading symbol STTK.  The following table sets forth the quarterly high and low bid prices for our Common Stock during our last two fiscal years, as reported by a Quarterly Trade and Quote Summary Report of the OTC Bulletin Board.  The quotations reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.



Fiscal 2006Fiscal 2007HighLowHighLow1st Quarter$0.45$0.14$0.25$0.172nd Quarter$0.85$0.08$0.31$0.193rd Quarter$1.11$0.15$0.24$0.154th Quarter$1.78$0.17$0.22$0.15






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(b)

Holders of Common Stock



As of October 31, 2007, we had approximately 4,500 shareholders of record of the 92,253,016 shares outstanding.  As of June 30, 2007, the closing price of our shares of common stock was $0.17.



(c)

Dividends



We intend to follow a policy of retaining earnings, if any, to finance the growth of the business and do not anticipate paying any cash dividends in the foreseeable future.  The declaration and payment of future dividends on the Common Stock will be the sole discretion of the Board of Directors and will depend on our profitability and financial condition, capital requirements, statutory and contractual restrictions, future prospects and other factors deemed relevant.



(d)

Securities Authorized for Issuance under Equity Compensation Plans



2005 Stock Incentive Plan



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



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



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















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



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



Recent Sales of Unregistered Securities



In September 2007, the Company entered into a consulting agreement with an unaffiliated third party to provide the company with software development services.  Under terms of the agreement, the Company issued 6,500,000 restricted shares of its common stock as payment for the services.



In September 2007, the Company entered into a consulting agreement with an unaffiliated third party to provide the company with international business strategy development to market its RFID based agricultural products.  Under the terms of the agreement, the Company issued 7,000,000 restricted shares of its common stock as payment for the services.



In September 2007, the Company entered into a consulting agreement with an unaffiliated third party to provide the company with marketing services.  As per the terms of the agreement, the Company issued to the Consultant 5,500,000 restricted shares of its common stock as payment for services.



















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ITEM 6.

Managements Discussion and Analysis or Plan of Operation



With the exception of historical matters, the matters discussed herein are forward-looking statements that involve risks and uncertainties.  Forward-looking statements include, but are not limited to, statements concerning anticipated trends in revenues and net income, the date of award or completion of our projects, projections concerning operations and available cash flow.  Actual results and events could differ materially from those projected, anticipated, or implicit, in the forward-looking statements as a result of the risk factors set forth below and elsewhere in this report.  The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto appearing elsewhere herein.



The following discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  On an on-going basis, we evaluate these estimates, including those related to revenue recognition and concentration of credit risk.  We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which  the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.



Critical Accounting Policies



We believe that of the significant accounting policies used in the preparation of our financial statements (See Note 1 to the Financial Statements), the following are critical accounting policies, which may involve a higher degree of judgment, complexity and estimates.



Revenue Recognition



The Company accounts for its construction projects using the percentage of completion method, measured using the cost-to-cost method.  This method of accounting requires a calculation of job profit to be recognized in each reporting period for each contract based upon the predictions 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 revenues.



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



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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.



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



Goodwill and Intangible Assets



The Company accounts for goodwill and intangible assets pursuant to SFAS No. 142, Goodwill and Other Intangible Assets.  Under SFAS 142, intangibles with definite lives continue to be amortized on a straight-lined 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 which includes analyzing at least annually the companys subsidiarys backlog of contracts, estimated income to be provided from these contracts over the next 12 months and cash flows to be generated by these contracts.



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



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for Stock-Based Compensation.  Under APB No 25, compensation expense was recorded based on the 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).  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.

Significant Customers



For the twelve months ended June 30, 2007, we received 46% of our revenues from2 customers.  All two customers respectively represented more than 10% of revenues.  We believe we have a good relationship with these customers.



Principal Suppliers



The principal suppliers for the security equipment installed by SCI is Burtek Systems Inc. a Canada wide distributor and importer specializing in audio, video, security access control and structured wiring products and Nedco Division of Westburne Ind Ent Ltd..  These suppliers represent 54% of all purchases and each of these suppliers represents more than 10% of total purchases.



Results of Operations



The results of operations reflected in this discussion include the operations of Smart-tek Communications, Inc.



Year ended June 30, 2007 vs. Year ended June 30, 2006



Revenue



Revenues increased by $375,867, from $2,219,489 for the year ended June 30, 2006 to $2,595,356 for the same period ended in 2007.  The 17% increase is directly attributable to an increase in the Companys subsidiarys security and technology business in the Greater Vancouver Area.



Cost of Services



Cost of services decreased by $33,412 during the year ended June 30, 2007 as compared to the same period ended June 30, 2006.  Cost of services for the year ended June 30, 2007 was $1,902,541 as



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compared to $1,935,953 for the year ended June 30, 2006, an 2% decrease.  The decrease in cost of services is due to the more efficient construction activities in 2007.



Gross profit increase substantially from $283,536 during the year ended June 30, 2006 to $692,814 for the same period ended in 2007, an increase of $409,278.







Operating Expenses



Total operating expenses increased by 15%, or $134,213, from $916,969 during the year ended June 30, 2006 to $1,051,183 for the same period ended in 2007.  The increase is mainly attributable to the increase operating activities and increase costs in legal and accounting expenses for the year ended June 30, 2007.



Operating loss decrease from $633,433 during the year ended June 30, 2006 to $358,368 for the year ended June 30, 2007, a decrease of $275,065.



Other Expenses



Total other expenses, including interest expense and financing costs, increased by $7,746, from $17,097 during the year ended June 30, 2006 to $24,843 during the year ended June 30, 2007.



Net Loss



Net loss decrease by $269,120, from $650,530 during the year ended June 30, 2006 as compared to $381,409 for the year ended June 30, 2007.  The substantial decrease in net loss is due to the increase revenues from its wholly-owned subsidiarys security technology system designs and implementation during the year ended June 30, 2007 along with a decrease in operating costs during the same period.



Liquidity and Capital Resources



We have incurred significant losses and negative cash flows from operations for the last two years.  We have obtained our required cash resources principally through loans from shareholders and our executive officer.  While the operations of our wholly-owned subsidiary are profitable, we still do not operate profitably as a consolidated entity.



Managements plans to improve its financial condition are as follows:

·

Continued growth of Smart-tek Communications business activities in the security technology industry in the Greater Vancouver Area;

·

We believe that our RFID tracking and monitoring software developed for the agriculture industry will be rolled out into the United States during the next 12 months;



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·

We believe the beta test for the software and hardware will be successful on a start-up cattle farm in New Mexico; and

·

We will continue to look for opportunities to grow organically where feasible as well as evaluate potential acquisition opportunities that may present themselves in the next 12 months.



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



Cash used for operating activities was $321,585 during the twelve months ended June 30, 2007 as compared to $214,950 during the same period ended June 30, 2006.  Cash used in operating activities for the year ended June 30, 2007 consisted of Net loss increased by an increase in accounts receivable, increase in contract retention receivables, increase costs of projects in progress and decrease in deferred income offset by depreciation and amortization expenses, decreases in prepaid expenses, increases in accounts payable and accrued expenses and an increase in billings in excess of earned revenues.  During the year ended June 30, 2006, cash used for operating activities consisted of the net loss, increases in accounts and contract retention receivable, increase in costs on uncompleted contracts in excess of billings, decrease in prepaid expenses, increase in accounts payable and accrued liabilities and an increase in billings on uncompleted contracts in excess of costs and estimated revenues.  Furthermore, the net loss in fiscal 2006 was partially offset by the following non-cash operating activities, depreciation and amortization of stock options.



Cash provided by financing activities for fiscal 2007 was 318,465 which consisted of proceeds from shareholder and related party loans partially offset by a decrease in bank indebtedness.



The Companys wholly owned subsidiary, Smart-tek Communications Inc., currently has a backlog schedule of $7,111,213 which represents revenues that will be derived from signed contracts that work has not been completed or work is yet to begin as at June 30, 2007.



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



We believe we currently have adequate capital resources to fund our anticipated cash needs through June 30, 2007 and beyond.  However, an adverse business or legal development could require us to raise



---

additional financing sooner than anticipated.  In the longer term, the Company will be looking for acquisition and merger acquisition or venture relationships, along with continuing to grow our security and surveillance technology business and continue to market our RFID products and services geared towards the Agriculture Industry in order to generate long-term growth opportunities for the Company and to permit the Company to meet its financial obligations and to provide increased shareholder value.



The following summarizes our contractual obligations at June 30, 2007 and the effects such obligations are expected to have on liquidity and cash:



|                              |          |        |          |            |            |            |            |      |      |     
|----------------------------- | -------- | ------ | -------- | ---------- | ---------- | ---------- | ---------- | ---- | ---- | ----
|                              |          |        |          | Total      |            | 2008       | 2009       | 2010 | 2011 | 2012
|                              |          |        |          |            |            |            |            |      |      |     
|Employment Agreements         | $219,250 |        | $219,850 | $        - | $        - | $        - | $        -
|Lease Obligations-Office      |          | 11,011 |          | 11,011     | -          | -          | -          | -   
|Lease Obligations-Vehicles    | 56,896   |        | 40,760   | 16,136     | -          | -          | -         
|                              |          |        |          |            |            |            |            |      |      |     
|Total Contractual Obligations | $287,157 |        | $271,021 | $16,136    | $        - | $        - | $        -
|                              |          |        |          |            |            |            |            |      |      |     



The Companys wholly-owned subsidiary entered into new employment agreements in April 2005 for a term from April 23, 2005 to April 23, 2008.  Under the terms of the agreements, the Company is committed to pay each of the president and vice-president annual salaries of $120,000 each along with annual car allowances of $11,500.



The Companys wholly-owned subsidiary entered into a non-cancellable operating lease for office space on March 1, 2005.



The Companys wholly-owned subsidiary is committed to operating leases for six company vehicles.



Recent Accounting Pronouncements



FASB Statement of Financial Accounting Standards (SFAS) No. 157 Fair Value Measurements establishes a formal framework for measuring fair value under GAAP.  It defines and codifies the many definitions of fair value included among various other authoritative literature, clarifies and, in some instances, expands on the guidance for implementing fair value measurements, and increases the level of disclosure  required for fair value measurements.  Although SFAS No. 157 applies to and amends the provisions of existing FASB and AICPA pronouncements, it does not, of itself, require any new fair value measurements, nor does it establish valuation standards.  SFAS No. 157 applies to all other accounting pronouncements requiring or permitting fair value measurements, except for SFAS 123(r)Share-Based payment and related pronouncements, the practicability exceptions to fair value determination allowed by various other authoritative pronouncements, and AICPA Statements of Position 97-2 and 98.9 that deal with software revenue recognition.  This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.



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Factors that may affect our results



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



We have incurred losses for the last four fiscal years.  Our net losses and negative cash flow may continue for the foreseeable future.  As of June 30, 2007, our accumulated deficit was $(3,942,012).  We believe that our planned growth and profitability will depend in large part on our ability to market our businesses and gain clients and to expand our relationships with existing clients.  Accordingly, we intend to invest heavily in marketing, strategic partnerships and development of our client base.  If we are not successful in expanding our client base, it will have a material adverse effect on our financial condition and our ability to continue to operate our business.  Furthermore, we will continue to market our RFID based system developed for the Agriculture Industry.  We believe that at the conclusion of the beta site testing phase of development, that we will be able to successful obtain customers for the system.  However, there is no guarantee that the system will be able to successfully exit from its beta stage.



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



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

·

Diversion of managements attention;

·

Failure to retain key acquired personnel; and

·

Risks associated with unanticipated events, circumstances or legal liabilities.



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



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



We believe we currently have adequate cash resources to fund anticipated cash requirements through June 30, 2008 and beyond primarily as a result of our contract backlog at June 30, 2007 of $7,111,213.  However, we may need to raise additional capital in the future.  Any equity financing may be dilutive to shareholders, and debt financing, if available, will increase expenses and may involve restrictive covenants.  We may be required to raise additional capital, at times and amounts which are uncertain, especially under the current capital market conditions.  Under these circumstances, if we are unable to obtain capital or are required to raise it on undesirable terms, it may have a material adverse effect on our financial condition, which could require us to:

·

Curtail our operations significantly

·

Sell significant assets

·

Seek arrangements with strategic partners or other parties that may require us to relinquish rights to products, technologies or market, or

·

Explore other strategic alternatives, including a merger or sale.



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



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

·

Market acceptance of and changes in demand for our products and services;

·

Gain or loss of clients or strategic relationships;

·

Announcement or introduction of new services and products by us or by our customers;

·

Our ability to build brand recognition;

·

Timing of customer sales;

·

Price competition;

·

Our ability to upgrade and develop systems and infrastructure to accommodate growth;

·

Our ability to attract and integrate new personnel in a timely and effective manner;

·

General economic conditions, including economic conditions specific to the construction security  services industries;

·

Real estate development market in the Greater Vancouver Area; and

·

The market for RFID tracking systems within the animal agriculture industry.



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





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



We have a limited geographic area where our customers account for a significant portion of our revenue.  Our revenue could decline because of a delay in signing agreements with a single customer or the failure to retain an existing customer.  We may not obtain additional customers.  The failure to obtain additional customers and the failure to retain existing customers will harm our operating results.  If general economic and business conditions do not continue to expand, we may experience decreased revenue or lower growth rates.



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



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



We may have difficulty managing growth



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



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



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





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



At June 30, 2007, STS had available federal net operating loss (NOL) carry-forwards of approximately $3,639,480.  Under Section 382 of the Internal Revenue Code of 1986, as amended, the use of prior losses, including NOLs is limited if a corporation undergoes an ownership change.  Future issuances of equity interests by us for acquisitions or the exercise of outstanding options to purchase our capital stock may result in an ownership change that is large enough for this limitation to apply.  If the limitation applies, we may be unable to use a material portion of its available NOL carry-forwards to reduce future taxable income.



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ITEM 7.

Financial Statements



FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To: The Board of Directors and Shareholders of 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 June 30, 2007 and the related consolidated statements of operations and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Companys management.  My responsibility is to express an opinion on these consolidated financial statements based on my audit.

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

In my opinion the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Smart-tek Solutions, Inc. and its subsidiaries as of June 30, 2007, and the results of its operations and its cash flows for year then ended, in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses.  As discussed in Note 1 to the financial statements, the Company incurred a net loss of $381,409 and a negative cash flow from operations of $321,585 during the year ended June 30, 2007, and a working capital deficiency of $1,773,345 and a shareholders deficiency of $1,314,359 at June 30, 2007.   This raises substantive doubt about the Companys ability to continue as a going concern.  Managements plans in regard to these matters are also described in Note 1.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.





John Kinross-Kennedy

Certified Public Accountant

Irvine, California

November 6, 2007



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Report of Independent Registered Public Accounting Firm



To the Board of Directors of

Smart-tek Solutions, Inc. (formerly Royce Biomedical Inc.)



We have audited the accompanying consolidated balance sheet of Smart-tek Solutions, Inc. (formerly Royce Biomedical Inc.) (the Company) and its subsidiary as of June 30, 2006 and the related consolidated statements of operations and comprehensive loss, changes in shareholders deficiency and cash flows for the year then ended.  These consolidated financial statements are the responsibility of the Companys management.  Our responsibility is to express an opinion on these financial statements based on our audit.



We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  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.  We believe that our audit provides a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as at June 30, 2006 and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.



The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the consolidated financial statements, the Company incurred a net loss of $640,114 and a negative cash flow from operations of $214,950 during the year ended June 30, 2006, and had a working capital deficiency of $1,426,592 and a shareholders deficiency of $959,671 at June 30, 2006.  These matters raise substantial doubt about its ability to continue as a going concern.  Managements plans in regards to these matters are also described in Note 1.  The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.





Weinberg & Company, P.A.



Los Angeles, California

October 5, 2006



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Smart-tek Solutions, Inc. (formerly Royce Biomedical Inc.)

Consolidated Balance Sheets

As of June 30, 2007 and 2006

|                                                      |   | 2007       |   |   | 2006       |  
|----------------------------------------------------- | - | ---------- | - | - | ---------- | -
|Assets                                                |   |            |   |   |            |  
|Current assets                                        |   |            |   |   |            |  
|Cash and cash equivalents                             | $ | 47,019     |   | $ | 49,469     |  
|Accounts receivable                                   |   | 716,853    |   |   | 662,132    |  
|Contract retention receivable                         |   | 186,096    |   |   | 100,988    |  
|Cost of uncompleted contracts in excess of bilings    |   | 49,920     |   |   | 6,906      |  
|Prepaid expenses and deposits                         |   | 1,952      |   |   | 4,964      |  
|Total current assets                                  |   | 1,001,840  |   |   | 824,459    |  
|Equipment, net of accumulated depreciation of $15,578 |   |            |   |   |            |  
|at June 30, 2007 and $7,773 at June 30, 2006          |   | 7,805      |   |   | 15,610     |  
|Other                                                 |   |            |   |   |            |  
|Goodwill                                              |   | 451,311    |   |   | 451,311    |  
|                                                      | $ | 1,460,956  |   | $ | 1,291,380  |  
|Liabilities                                           |   |            |   |   |            |  
|Current liabilities                                   |   |            |   |   |            |  
|Bank overdraft                                        | $ | 148,175    |   | $ | 206,091    |  
|Account payable and accrued liabilities               |   | 967,465    |   |   | 445,631    |  
|Bonus payable                                         |   | 169,268    |   |   | 251,060    |  
|Billings on uncompleted contracts in excess           |   |            |   |   |            |  
|of costs and estimated revenues                       |   | 485,089    |   |   | 432,558    |  
|Deferred revenue                                      |   | 13,003     |   |   | 16,401     |  
|Shareholder loans                                     |   | 383,518    |   |   | 281,061    |  
|Amounts due to officers and directors                 |   | 411,851    |   |   | 408,325    |  
|Current portion of related party debt                 |   | 196,946    |   |   | 209,924    |  
|Total liabilities                                     |   | 2,775,315  |   |   | 2,251,051  |  
|Commitments and contingencies                         |   |            |   |   |            |  
|Shareholders' Deficiency                              |   |            |   |   |            |  
|Common stock: $0.001 par value, 500,000,000 shares    |   |            |   |   |            |  
|Authorized, 73,253,016 issued and outstanding         |   |            |   |   |            |  
|at June 30, 2007 and 2006 respectively                |   | 73,253     |   |   | 73,253     |  
|Preferred stock: $0.001 par value, 5,000,000 shares   |   |            |   |   |            |  
|Authorized, one (1) share of Class A preferred        |   |            |   |   |            |  
|issued and outstanding at June 30, 2007 and 2006      |   |            |   |   |            |  
|Additional paid-in-capital                            |   | 2,861,561  |   |   | 2,796,561  |  
|Accumulated other comprehensive loss                  |   | (103,709   | ) |   | (65,430    | )
|Accumulated deficit                                   |   | (4,145,464 | ) |   | (3,764,055 | )
|                                                      |   | (1,314,359 | ) |   | (959,671   | )
|                                                      | $ | 1,460,956  |   | $ | 1,291,380  |  

See accompanying notes to the consolidated financial statements

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Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Consolidated Statements of Operations and Comprehensive Loss

For the years ended June 30, 2007 and 2006

|                                             |   | 2007       |   |   | 2006       |  
|-------------------------------------------- | - | ---------- | - | - | ---------- | -
|Revenue                                      |   |            |   |   |            |  
|Contract revenue                             | $ | 2,466,122  |   | $ | 2,122,636  |  
|Services revenue                             |   | 125,717    |   |   | 92,398     |  
|Other revenue                                |   | 3,518      |   |   | 4,455      |  
|Total revenue                                |   | 2,595,357  |   |   | 2,219,489  |  
|Cost of revenue and service delivery         |   | 1,902,541  |   |   | 1,935,953  |  
|Gross profit                                 |   | 692,816    |   |   | 283,536    |  
|Selling, general and administrative expenses |   | 1,051,183  |   |   | 906,553    |  
|Operating loss                               |   | (358,367   | ) |   | (623,017   | )
|Other expense                                |   |            |   |   |            |  
|Interest                                     |   | (23,042    | ) |   | (17,097    | )
|Net loss                                     |   | (381,409   | ) |   | (640,114   | )
|Currency translation adjustment              |   | (38,279    | ) |   | (56,934    | )
|Comprehensive loss                           | $ | (419,688   | ) | $ | (697,048   | )
|Weighter average number of common shares and |   |            |   |   |            |  
|equivalents basic and diluted                |   | 73,253,016 |   |   | 85,183,792 |  
|Loss per share, basic and diluted            | $ | (0.01      | ) | $ | (0.01      | )

See accompanying notes to the consolidated financial statements.

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Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Consolidated Statements of Changes in Shareholders Deficiency

For the years ended June 30, 2007 and 2006

|                                |              |   |   |         |   |   | Additional |   |   |              |   |   | Accumulated        |   |   |            |   |   |            |  
|------------------------------- | ------------ | - | - | ------- | - | - | ---------- | - | - | ------------ | - | - | ------------------ | - | - | ---------- | - | - | ---------- | -
|                                | Common Stock |   |   | Paid in |   |   | Deferred   |   |   | Other        |   |   | Accumulated        |   |   |            |  
|                                | Shares       |   |   | Amount  |   |   | Capital    |   |   | Compensation |   |   | Comprehensive Loss |   |   | Deficit    |   |   | Total      |  
|Balance - June 30, 2005         | 106,219,683  |   | $ | 106,220 |   | $ | 2,865,261  |   | $ | (180,000     | ) | $ | (8,496             | ) | $ | (3,123,941 | ) | $ | (340,956   | )
|Issuance of common stock for    |              |   |   |         |   |   |            |   |   |              |   |   |                    |   |   |            |   |   |            |  
|settlement of accrued liability | 33,333       |   |   | 33      |   |   | 13,300     |   |   | -            |   |   | -                  |   |   | -          |   |   | 13,333     |  
|Reversal of previously recorded |              |   |   |         |   |   |            |   |   |              |   |   |                    |   |   |            |   |   |            |  
|deferred compensation in        |              |   |   |         |   |   |            |   |   |              |   |   |                    |   |   |            |   |   |            |  
|accordance with FAS 123R        | -            |   |   | -       |   |   | (180,000   | ) |   | 180,000      |   |   | -                  |   |   | -          |   |   | -          |  
|Fair value of options issued    |              |   |   |         |   |   |            |   |   |              |   |   |                    |   |   |            |   |   |            |  
|to employees                    | -            |   |   | -       |   |   | 65,000     |   |   | -            |   |   | -                  |   |   | -          |   |   | 65,000     |  
|Share cancellation              | (33,000,000  | ) |   | (33,000 | ) |   | 33,000     |   |   | -            |   |   | -                  |   |   | -          |   |   | -          |  
|Net loss                        | -            |   |   | -       |   |   | -          |   |   | -            |   |   | -                  |   |   | (640,114   | ) |   | (640,114   | )
|Currency translation adjustment | -            |   |   | -       |   |   | -          |   |   | -            |   |   | (56,934            | ) |   | -          |   |   | (56,934    | )
|Balance - June 30, 2006         | 73,253,016   |   |   | 73,253  |   |   | 2,796,561  |   |   | -            |   |   | (65,430            | ) |   | (3,764,055 | ) |   | (959,671   | )
|Fair value of options issued    |              |   |   |         |   |   |            |   |   |              |   |   |                    |   |   |            |   |   |            |  
|to employees                    | -            |   |   | -       |   |   | 65,000     |   |   | -            |   |   | -                  |   |   | -          |   |   | 65,000     |  
|Net loss                        | -            |   |   | -       |   |   | -          |   |   | -            |   |   | -                  |   |   | (381,409   | ) |   | (381,409   | )
|Currency translation adjustment | -            |   |   | -       |   |   | -          |   |   | -            |   |   | (38,279            | ) |   | -          |   |   | (38,279    | )
|Balance - June 30, 2007         | 73,253,016   |   | $ | 73,253  |   | $ | 2,861,561  |   | $ | -            |   | $ | (103,709           | ) | $ | (4,145,464 | ) | $ | (1,314,359 | )

See accompanying notes to the consolidated financial statements

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Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Consolidated Statements of Cash Flows

For the years ended June 30, 2007 and 2006

|                                                     |   | 2007     |   |   | 2006     |  
|---------------------------------------------------- | - | -------- | - | - | -------- | -
|Cash flows from operating activities                 |   |          |   |   |          |  
|Net loss from operations                             | $ | (381,409 | ) | $ | (640,114 | )
|Adjustments to reconcile net loss to net cash        |   |          |   |   |          |  
|provided by operations                               |   |          |   |   |          |  
|Depreciation and amortization                        |   | 8,037    |   |   | 8,089    |  
|Fair value of options issued for services            |   | 65,000   |   |   | 65,000   |  
|Changes in operating assets and liabilities          |   |          |   |   |          |  
|Accounts receivable                                  |   | (21,843  | ) |   | (276,009 | )
|Contracts retention receivable                       |   | (80,094  | ) |   | (25,442  | )
|Costs of uncompleted contracts in excess             |   |          |   |   |          |  
|of billings                                          |   | (42,671  | ) |   | (4,488   | )
|Prepaid expenses and deposits                        |   | 3,049    |   |   | 10,836   |  
|Accounts payable and accrued liabilities             |   | 97,979   |   |   | 187,535  |  
|Amounts due to officers and directors                |   | 3,526    |   |   | 225,756  |  
|Bonus payable                                        |   | -        |   |   | 75,840   |  
|Billings on uncompleted contracts in                 |   |          |   |   |          |  
|excess of costs and                                  |   |          |   |   |          |  
|estimated revenues                                   |   | 31,054   |   |   | 151,901  |  
|Deferred revenue                                     |   | (4,213   | ) |   | 6,146    |  
|Net cash used in operating activities                |   | (321,585 | ) |   | (214,950 | )
|Cash flows from financing activities                 |   |          |   |   |          |  
|(Decrease) Increase in bank overdraft, net           |   | (66,906  | ) |   | 84,454   |  
|Net proceeds from shareholders loan                  |   | 231,756  |   |   | 199,985  |  
|Proceeds (repayment) of related party loan           |   | 153,615  |   |   | (18,089  | )
|Net cash provided by financing activities            |   | 318,465  |   |   | 266,350  |  
|Effects of exchange rates on cash                    |   | 670      |   |   | (2,399   | )
|Net increase (decrease) in cash and cash equivalents |   | (2,450   | ) |   | 49,001   |  
|Cash and cash equivalents, beginning of year         |   | 49,469   |   |   | 468      |  
|Cash and cash equivalents, end of year               | $ | 47,019   |   | $ | 49,469   |  
|Supplemental cash flow information                   |   |          |   |   |          |  
|Interest paid                                        | $ | 24,843   |   | $ | 17,097   |  
|Taxes paid                                           | $ | -        |   | $ | -        |  

Non-cash investing and financing activities

During the year ended June 30, 2006, the Company issued 33,333 restricted shares of its common stock in full settlement of a $13,333 amount owed to a shareholder.

During the year end ended June 30, 2006, the Company cancelled 33,000,000 shares of common stock that were returned by the holders. The shares were returned without cost to the
Company.

See accompanying notes to the consolidated financial statements

---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007



1.

Summary of significant accounting policies



Nature of operations, basis of financial statement presentation



In August 2005, the Company changed its name from Royce Biomedical Inc. to Smart-tek Solutions Inc. (STS or the Company) to better reflect its new business activities.



STS was incorporated in Nevada on March 22, 1995.



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



Xili Pharmaceutical Group, Inc. through its subsidiary, Xili USA, Inc. owned approximately 44% of the outstanding common shares of the Company through December 5, 2004 and is controlled by Dr. Yan Xiao Wen, who is also the former Chairman of the Companys Board of Directors.  At June 30, 2007, Xili USA, Inc., owns approximately 2.1% of the outstanding common shares of the Company.



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



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







---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





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



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 Communications Inc.  Significant inter-company transactions have been eliminated in consolidation.



Accounts Receivable



The Company reports accounts receivable at net realizable value.  The Companys term of sale provide the basis for when accounts become delinquent or past due.  The Company provides an allowance for doubtful accounts, when necessary, equal to the estimated uncollectible amounts.  There is no allowance for doubtful accounts as of June 30, 2007 and 2006.



---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





Equipment



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



Financial instruments



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



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



Cash and equivalents



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



---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





Income taxes



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



Goodwill and intangible assets



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.



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.













---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





Revenue recognition



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

·

Estimates of total cost to complete the contract;

·

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.



---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





Concentration of credit risk



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



Foreign currency translation



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



Comprehensive (loss) income



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



---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





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.







---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





The Company had two partially vested stock options outstanding at December 31, 2005 pursuant to employment agreements entered into between the Companys and its president and vice-president.  Under these agreements, the Company issued options to purchase up to 650,000 shares of its common stock at a purchase price of $0.15 per share that vest in equal quarterly installments over a three (3) year period.  The Company calculated the fair value of the options to be $195,000 using our option pricing model, of which $65,000 was recognized as expense during the year ended June 30, 2007.



In addition, commencing January 1, 2006, the Company is required to recognize the unvested portion of the grant date fair value of awards issued prior to the adoption of SFAS No. 123R based on the fair values previously calculated for disclosure purposes over the remaining vesting period of the outstanding stock options and warrants.  At June 30, 2007, the value of the unvested options was $50,000 which will be amortized in future periods as the options vest.



Recovery of long-lived assets



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



Advertising expenses



The Company expenses advertising costs as incurred which was $3,892 for the year ended June 30, 2007 and $3,003 for the year ended June 30, 2006.

Loss per share



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



---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





Recent accounting pronouncements



FASB Statement of Financial Accounting Standards (SFAS) No. 157 Fair Value Measurements establishes a formal framework for measuring fair value under GAAP.  It defines and codifies the many definitions of fair value included among various other authoritative literature, clarifies and, in some instances, expands on the guidance for implementing fair value measurements, and increases the level of disclosure  required for fair value measurements.  Although SFAS No. 157 applies to and amends the provisions of existing FASB and AICPA pronouncements, it does not, of itself, require any new fair value measurements, nor does it establish valuation standards.  SFAS No. 157 applies to all other accounting pronouncements requiring or permitting fair value measurements, except for SFAS 123(r)Share-Based payment and related pronouncements, the practicability exceptions to fair value determination allowed by various other authoritative pronouncements, and AICPA Statements of Position 97-2 and 98.9 that deal with software revenue recognition.  This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.



Going Concern



The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  The Company incurred a net loss of $381,409 and a negative cash flow from operations of $321,585 during the year ended June 30, 2007, and had a working capital deficiency of $1,773,475 and a shareholders deficiency of $1,314,359.  .  These matters raise substantial doubt about its ability to continue as a going concern.  Management believes that actions are presently being taken to revise the Companys operating results.  Management believes that the Company will have adequate cash to fund anticipated needs through June 30, 2008 and beyond primarily as a result of our contract backlog at June 30, 2007 of $7,111,213.  The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.















---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





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



2.

Acquisitions



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



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



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



---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





|                                                        |         |           |        
|------------------------------------------------------- | ------- | --------- | -------
|                                                        |         |          
|Valuation of shares of common stock and preferred stock | $1     
|Assets acquired                                         | 276,012 |          
|Liabilities assumed                                     |         | (727,324) |        
|                                                        |         | 451,312   |        
|Goodwill                                                |         |           | 451,311



3.

Contract Retention Receivable



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

(a)

The value of the work or materials as they are actually provided under contract or subcontract, and

(b)

The amount of any payment made on account of the contract or subcontract price.



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



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



As of June 30, 2007 and 2006, contract retention receivables were $186,096 and $100,988 respectively.



















---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





4.

Equipment







5.

Bank Overdraft



At June 30, 2007, bank overdrafts covered by a revolving line of credit were$117,547.  The revolving line of credit agreement is between SCI, the Companys wholly owned subsidiary, and HSBC Bank of Canada.  The revolving line of credit facility bears interest at the rate of prime plus 4.50% per annum, allows authorized bank overdrafts of up to $117,547 ($125,000 CDN) and is secured by a shareholder guarantee and $47,019 ($50,000 CDN) in the form of a term deposit.  As of June 30, 2007, the Company had written checks in excess of the operating line of credit in the amount of $30,628.



6.

Related Party Debt





2007
      2006Unsecured loan from related party, (father of
        company President).  Non-interest bearing, with no fixed repayment terms
      $190,711
      $181,689Various related party
        loans, unsecured non-interest bearing advances with no fixed terms of
        repayment due on demand
      8,254
      28,235$198,965
      $209,924








---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





7.

Shareholder loans



Commencing in the second quarter of 2003, the Company borrowed funds from Xili USA, a shareholder, on an unsecured basis.  The loans are non-interest bearing and are payable on demand.  The total due to Xili USA under these borrowings aggregated $81,076 as at June 30, 2007 and 2006.



In December 2005, the Company borrowed $49,985 from a shareholder on an unsecured basis.  The loan is non-interest bearing and payable on demand.  In January 2006, the Company borrowed $150,000 from the same shareholder, also on an unsecured basis as well as non-interest bearing with no fixed repayment terms.



During the year ended June 30, 2007, the Company borrowed $98,996 from a company controlled by the Companys president.  The loan is unsecured and bears 7.5% interest commencing in January 2008.  The loan has no fixed terms of repayment.



At June 30, 2007, the above shareholder loans aggregated to $383,518.



8.

Income taxes



As of June 30, 2007, for Federal income tax purposes, the Company has approximately $3,639,480 in net operating loss carry forwards expiring through 2021.  The Company has provided a 100% valuation as it cannot determine that it is more likely than not that will realize the deferred tax assets.



At June 30, 2007, STS had available federal net operating loss (NOL)carry forwards of approximately $3,659,480.  Under Section 382 of the internal Revenue Code of 1986, as amended, the use of prior losses including NOLs is limited if a corporation undergoes an ownership change.  Future issuances of equity interests by us for acquisitions or the exercise of outstanding options to purchase our capital stock may result in an ownership change that is large enough for this limitations to apply.  If the limitation applies, we may be unable to use a material portion of its available NOL carry forwards to reduce future taxable income.  The income tax effect of temporary differences between financial and tax reporting gives rise to the deferred tax asset at June 30, 2007 and June 30, 2006 as follows:







---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





June 30
2007June 30,
2006Deferred tax asset, beginning$ 1,205,369$ 1,038,000Benefit of current years operating loss carry forward133,493167,369Deferred tax asset, ending$  1,338,862$ 1,205,369Valuation allowance, beginning$(1,205,369)$(1,038,000)Current years provision(133,493)(167,369)Valuation allowance, ending$(1,338,862)$(1,205,369)Deferred tax asset, net$                  -$                   -Tax at blended U.S./Canadian statutory rates(35%)(35%)Loss carryover35%35%Tax expense$                  -$                 -




9.

Common Stock



At June 30, 2007, the Company is authorized to issue:

1.

5,000,000 shares of preferred stock, par value $0.001 per share

2.

500,000,000 shares of common stock, par value $0.001 per share



At June 30, 2007, there are 73,253,016 shares of Common Stock outstanding.

























---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007



Stock Issuance



On August 12, 2005, the Company accepted a settlement agreement with Mr. Richard Short (Short), a former Shareholder, whereby the Company would issue to Short 33,333 shares of the Companys common stock in lieu of a cash payment to Short of CDN $16,000 (USD $13,333) for the 8,000 shares rescinded by Short in 1997.  This settlement was inclusive of Short and the Company and did not include any of the former officers, directors or employees of the Company, as individuals.  On August 16, 2005 the Company issued Short 33,333 shares of its common stock, in full settlement of CDN$ 16,000 (USD$13,333) owed Short as a former Shareholder.  These securities were issued pursuant to an exemption from registration provided under Section 4(2) and 4(6) of the Securities Act of 1933.  The parties to whom the shares were issued received information concerning the Company.  The shares were appropriately restricted.  No underwriters were involved in the transactions and no commissions were paid.



Stock Cancellation



On November 10, 2005, the Company received notification from its former Chief Financial Officer that he was rescinding receipt of ten million (10,000,000) shares issued to him in February 2005 previously valued at $10,000.  The Company has accepted the rescinding of shares and has subsequently cancelled the shares.



On November 10, 2005, the Company received notification from Palm Coast Funding, LLP, that they were cancelling the professional services contract that they have issued to them in February 2005 previously valued at $23,000.  The Company has accepted the rescinding of shares and has subsequently cancelled the shares.



In connection with the rescinded agreements discussed above, the Company reversed the previously recorded value of the shares issued of $33,000.





















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Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007



Preferred Stock



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



2005 Stock Incentive Plan



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



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



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

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





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Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007

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

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



At June 30, 2007, options outstanding are as follows:



Shares
      Average 
        Exercise PriceBalance at July 1, 2005
      1,300,000
      $0.15Granted
      -
      -Exercised
      -
      -Cancelled
      -
      -Balance at June 30, 2006
      1,300,000
      $0.15Granted
      -
      -Exercised
      -
      -Cancelled
      -
      -Balance at June 30, 2007
      1,300,000
      $0.15




Additional information regarding options outstanding as of June 30, 2007 is as follows:

Options
        outstanding
      Options
        exercisableExercise 
        price
      Number 
        outstanding
      Weighted
        average 
        remaining 
        contractual life (years)
      Weighted 
        average 
        exercise 
        price
      Number
      Weighted 
        average 
        exercise 
        price$0.15
      1,300,000
      8.75
      $0.15
      523,611
      $0.15






---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)
Notes to the Consolidated Financial StatementsJune 30, 2007



The Company had two partially vested stock options outstanding at December 31, 2005 pursuant to employment agreements entered into between the Company's and its president and vice-president. Under these agreements, the Company issued options to purchase up to 650,000 shares of its common stock at a purchase price of $0.15 per share that vest in equal quarterly installments over a three (3) year period.  The Company calculated the fair value of the options to be $195,000 using an option pricing model, of which $65,000 was recognized as expense during the year ended June 30, 2007.

In addition, commencing January 1, 2006, the Company is required to recognize the unvested portion of the grant date fair value of awards issued prior to the adoption of SFAS No. 123R based on the fair values previously calculated for disclosure purposes over the remaining vesting period of the outstanding stock options and warrants. At June 30, 2007, the value of the unvested options was $50,000 which will be amortized in future periods as the options vest.



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Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)
Notes to the Consolidated Financial StatementsJune 30, 2007



10.

Costs and Estimated Earnings on Uncompleted Contracts

|                                                                            |             |             |             |        
|--------------------------------------------------------------------------- | ----------- | ----------- | ----------- | -------
|                                                                            |             |             | 2007        | 2006   
|                                                                            |             |             |             |        
|Costs incurred on uncompleted contracts                                     | $735,430    | $282,628   
|Estimated earnings                                                          |             | 390,444     | 128,220    
|                                                                            |             |             | 1,125,874   | 410,848
|                                                                            |             |             |             |        
|Less: Billings to Date                                                      |             | 1,561,043   | 836,500    
|                                                                            |             |             |            
|                                                                            |             | (435,169)   | $ (425,652)
|Included in accompanying balance sheets under the following captions:       |            
|Costs of uncompleted contracts in excess of billings                        | 49,920      | 6,906      
|Billings on uncompleted contracts in excess of costs and estimated revenues | $ (485,089) | $ (432,558)
|                                                                            | $ (435,169) | $ (425,652)





---

Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





11.

Related Party Transactions



The Companys wholly owned subsidiary paid $63,419 and $114,726 to its president during the years 2007 and 2006 respectively.  During the year ended June 30, 2006, the Company declared bonuses of $143,200 payable to the Companys President and to the Vice President of its operating subsidiary.  Such costs has been reflected in the accompanying statement of operations.  As of June 30, 2006, $251,060 were payable to these officers and are reflected as such on the Companys balance sheet.



Officers salaries include $30,000 and $151,500 in 2007 and 2006, respectively, of accrued salaries owed to the Companys former Chief Executive and Chief Financial Officers.



The Company issued 650,000 options to purchase shares of its common stock to each of SCIs president and vice-president.  The options were valued at $195,000 and are being amortized over three years vesting period.  During the year ended June 30, 2006, $65,000 of the amortization of such costs has been reflected in the accompanying statement of operations.



Amounts due to officers and directors were $408,325 as of June 30, 2006.  This amount includes $302,532 of accrued salaries owed to the Companys former chief executive and former chief financial officer.



During the years ended June 30, 2007 and 2006, the Companys Chief Executive Officer paid some expenses on behalf of the Company. These advances are recognized as short-term liabilities as there are no fixed repayment terms, but the funds are due on demand.  The amount due him as of June 30, 2006 was $99,301 of unsecured, short term, non-interest bearing advances relating to the payment of certain Companys expenses.



Selling, general and administrative expenses for the years ended June 30, 2006 includes management fees of $114,726 paid to the president of the Company.





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Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





12.

Commitments



Operating leases



The Companys wholly owned subsidiary entered into a non-cancellable operating lease for office space on March 1, 2005.  Furthermore, the Companys wholly-owned subsidiary is committed to operating leases for six company vehicles.  The minimum payments required under these operating leases for each of the five years subsequent to June 30, 2007 are approximately as follows:



Year ending

June 30

2008

$ 51,771

2009

16,136

2010

-

2011



-

2012

-



13.

Legal Proceedings

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



In November, 2006, the Company dismissed its lawsuit against RFID, Ltd in order to continue its focus on its operations.  In November 2006, RFID issued a press release to redact its statements against Smart-tek Solutions, Inc.



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



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Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





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



14.

Concentrations of risk



At June 2007, four customers accounted for 74% of trade accounts receivable and each of these customers individually accounted for more than 10% of trade accounts receivable.



In 2007, two significant customers accounted for 46% of revenue and each of these customers individually accounted for more than 10% of revenue.



During 2007, 100% of the Companys sales and accounts receivable arose from sales to Canadian customers.



In 2007, three significant suppliers accounted for 73% of purchases.



At June 30, 2006, two significant customers accounted for 52% of trade accounts receivable and each of these three customers individually accounted for more than 10% of trade accounts receivable.



In 2006, three significant customers accounted for 35% of revenue and each of these customers individually accounted for more than 10% of revenue.



During 2006, 100% of the Companys sales and accounts receivable arose from sales to Canadian customers.

During 2006, three significant suppliers accounted for 70% of purchases.



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Smart-tek Solutions Inc. (formerly Royce Biomedical Inc.)

Notes to the Consolidated Financial Statements

June 30, 2007





15.

Subsequent Events



In September 2007, the Company entered into a consulting agreement with an unaffiliated third party to provide the company with software development services.  Under terms of the agreement, the Company issued 6,500,000 restricted shares of its common stock as payment for the services.



In September 2007, the Company entered into a consulting agreement with an unaffiliated third party to provide the company with international business strategy development to market its Radio Frequency Identification (RFID) based agricultural products.  Under the terms of the agreement, the Company issued 7,000,000 restricted shares of its common stock as payment for the services.



In September 2007, the Company entered into a consulting agreement with an unaffiliated third party to provide the company with marketing services.  As per the terms of the agreement, the Company issued to the Consultant 5,500,000 restricted shares of its common stock as payment for services.



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ITEM 8  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure



On February 10, 2007, Weinberg and Company, P.A. were terminated as the Companys independent registered public accounting firm.



Weinberg and Company, P.A audited the Companys financial statements for the fiscal years ended June 30, 2006 and 2005.  Weinberg and Companys report on our financial statements for the years ended June 30, 2006 and 2005 (Audit Period) did not contain an adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles, except for an explanatory paragraph discussing the Companys inability to continue as a going concern. During the Audit Period, and through February 10, 2007, there were no disagreements with Weinberg and Company, P.A. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure,  which disagreements, if not resolved to the satisfaction of Weinberg and Company, P.A., would have caused it to make reference to the subject matter of the disagreements in connection with its  report, and there were no reportable events as described in Item 304(a)(1)(iv) of Regulation S-B.



Effective as of February 10, 2007, the Company engaged John Kinross-Kennedy, CPA (Kennedy) as its new independent registered public accountant. The decision to engage Kennedy was made and approved by the Companys Board of Directors.

During the two most recent fiscal years and through February 10, 2007, the Company has not consulted with Kennedy regarding (i) either: the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Companys financial statements; or (ii) any matter that was either subject of a disagreement, as that term is defined in Item 304 (a)(1)(iv) of Regulation S-B and the related instructions to Item 304 of Regulation S-B, or a reportable event, as that term is described in Item 304(a)(1)(iv) of Regulation S-B.



ITEM 8A  Controls and Procedures



As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures are effective alerting them on a timely basis to material information relating to Smart-tek Solutions, Inc. that is required to be included in our periodic filings under the Exchange Act.



There has been no change in our internal control over financial reporting (as defined in Rules 13a-13(f) and 15d-15(f) under the Exchange Act) that occurred during our fourth fiscal quarter of the fiscal year ended June 30, 2007, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 8B  Other Information

On November 10, 2005, the Company received and accepted the resignation of Joseph C. Sienkiewicz as the Companys Chief Financial Officer, Secretary, Treasurer and Director.  As requested by Mr. Sienkiewicz, the Company will proceed with the cancellation of 10,000,000 restricted shares of common stock issued to Mr. Sienkiewicz in February 2005.



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On November 10, 2005, the Company received notification from Palm Coast Funding LLP that it was voiding the contract entered into in February 2005.  Consequently, Palm Coast has requested that the 23,000,000 restricted shares issued to Palm Coast Funding LLP be cancelled by the Company.



On September 14th, 2006, the Company and its board of directors received and accepted the resignation of Donald Gee effective September 30, 2006, as the Companys President, CEO and Director.  Mr. Gee has resigned in order to pursue other business ventures.  There were no disagreements between the Company and Mr. Gee.

The Company and its board have appointed Mr. Perry Law as its new President and CEO.



On December 12, 2006, the Company and its board of directors received and accepted the resignation of Denis Gallant effective December 12, 2006, as the Companys Chief Financial Officer.  Mr. Gallant has resigned in order to pursue other business ventures.  There were no disagreements between the Company and Mr. Gallant.



Perry Law, the current President and Chief Executive Officer of the registrant, has been appointed as the Companys Chief Financial Officer effective December 12, 2006.



ITEM 9  Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16 (a) of the Exchange Act



Organization of the Board of Directors



As of September 30, 2007, our directors were as follows:



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



Audit Committee



The Company does not currently have separately designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act by the Board of Directors for the purpose of overseeing our accounting and financial reporting processes and our audits and financial statements.



Executive Officers



As of September 30, 2007, the following persons were our executive officers:



Perry Law

45

President, CEO, CFO and Director



Information concerning Mr. Law is provided under the section captioned Organization of the Board of Directors.





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Section 16(a) Beneficial Ownership Reporting Compliance



Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers, directors and 10% shareholders to file reports regarding initial ownership and changes in ownership with the Securities and Exchange Commission. Executive officers, directors, and 10% shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Our information regarding compliance with Section 16 is based solely on a review of the copies of such reports furnished to us by our executive officers, directors and 10% shareholders. These forms include (i) Form 3, which is the Initial Statement of Beneficial Ownership of Securities, (ii) Form 4, which is a Statement of Changes in Beneficial Ownership, and (iii) Form 5, which is an Annual Statement of Changes in Beneficial Ownership.



Based solely upon our review of Forms 3, 4 and 5, we are not aware of any transactions that were not reported on a timely basis.



Code of Ethics



In June 2004, our Board of Directors adopted a Code of Business Conduct and Ethics governing its Chief Executive Officer, Chief Financial Officer, its other executive officers, the Board of Directors and employees. The Board is undertaking the task of updating this Code of Ethics during fiscal 2008. We intend to disclose on our website any waivers or amendments to our Code of Business Conduct and Ethics within five business days of such action.





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ITEM 10  Executive Compensation



The following table sets forth compensation for services rendered in all capacities to Smart-tek Solutions, Inc. for the three fiscal years ended June 30, 2007 for our Chief Executive Officer and the four most highly compensated executive offices as of June 30, 2007 whose total annual salary and bonus for fiscal 2006 exceeded $100,000 (collectively, the Named Officers).



Name and Principal PositionYearSalary ($)Bonus ($)All Other 
 CompensationStock 
 AwardsOptions 
 GrantedOther 
 Compensation ($)Perry Law(a)200763,419-----President, CFO and CEO2006114,72677,418----200520,005---650,000-Stephen Platt(b)200743,865-----Vice-President
Smart-tek Communications2006114,72660,214----200520,005---650,000-Donald Gee(c)2006120,000-----President and CEO200548,500--10,000,000--




(a)

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 was appointed President and CEO of Smart-tek Solutions on September 14, 2006 effective September 30, 2006.

(b)

Stephen Platt is the Vice-President of Smart-tek Communications, the Registrants wholly owned subsidiary.

(c)

Mr. Gee was appointed President and CEO on December 2, 2004.  Mr. Gee resigned from his position as President and CEO of the Registrant on September 14, 2006 effective September 30, 2006.



Stock Options



Mr. Platt and Mr. Law were granted 650,000 options each to purchase shares of common stock of Smart-tek Solutions in April 2005.  These options vest over a three year period.



Compensation of Directors



Each non-employee director does not receive a fee for attendance at each meeting of the Board of Directors; these directors are reimbursed only for reasonable out-of-pocket expenses incurred in attending meetings of the Board of Directors of the committees thereof.



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ITEM 11  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters



Security Ownership of Certain Beneficial Owners and Management



The following table sets forth certain information as of June 30, 2007, as to shares of our common stock beneficially owned by: (i) each person who is known by us to own beneficially more than 5% of any class of our capital stock, (ii) each of our Named Officers, (iii) each of our directors and (iv) all of our current directors and executive officers as a group. Unless otherwise stated below, the address of each beneficial owner listed on the table is c/o Smart-tek Solutions Inc, 3702 South Virginia Street, G12-401, Reno, NV, 89502.





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Amount and Nature ofBeneficial OwnershipPercentage of ClassShares ofBeneficially OwnedShares ofClass APercentageCommonPreferredof VotingStockStockClass ASecuritiesBeneficiallyBeneficiallyCommonPreferredBeneficiallyOwnedOwnedStockStockOwned5% ShareholdersEssex Property Management9,000,00012.29%9.83%#1 Mapp StBelize City, Belize(3)Dublin Asset Protection A.G.5,000,0006.83%5.46%800 Second AveNew York, New York(4)Farthingham Capital Corporation4,000,0005.46%4.37%3465 Hutchinson, Suite 506Montreal, Quebec(5)Perry Law217,6671-100%0%Unit 10-11720 Voyageur WayRichmond, BCV6X 3G9Named Officers and DirectorsPerry Law217,6671-100%0%All current executive officers and directors217,66710-%100%0%




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(1)

To our knowledge, the persons named in the table have sole voting and investment power with respect to all shares of voting securities shown as beneficially owned by them, subject to community property law, where applicable.

(2)

Applicable percentage ownership of common stock is based on 73,253,016 shares of common stock issued and outstanding as of June 30, 2007.  Class A Preferred Stock, at June 30, 2007, had 0% of the voting power of all common and preferred shares issued.  Beneficial ownership is determined in accordance with the rules and regulations of the Securities and Exchange Commission.  In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options or convertible or exchangeable into such shares of common stock, held by that person, that are currently exercisable or exercisable within 60 days of June 30, 2007 are deemed outstanding.  These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person.

(3)

On December 8, 2004, the Company entered into a consulting agreement with Essex Property Management, Ltd. ("Essex") to provide professional services to the Company, principally to identify, recruit and introduce two (2) acceptable candidates to the Board of Directors for service on the Company's Board. As Essex had satisfied the terms of the agreement effective December 5, 2004, the Company issued nine million (9,000,000) restricted shares of the common stock of the Company for these services.

(4)

On December 7, 2004, the Company entered into a consulting agreement with Dublin Asset Protection A.G. to provide corporate finance and merchant banking services to the Company, principally to arrange equity financing for the Company. The Company issued five million (5,000,000) restricted shares of the common stock of the Company for these services.

(5)

On December 6, 2004, the Company entered into a consulting agreement with Farthingham Capital Corporation to provide corporate finance and merchant banking services to the Company, principally to arrange debt financing for the Company. The Company issued four million (4,000,000) restricted shares of the common stock of the Company for these services.





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Equity Compensation Plan Information



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



At June 30, 2007, options outstanding are as follows:

|                         | Shares    | Average 
      Exercise Price
|------------------------ | --------- | -----------------------------
|Balance at July 1, 2005  | 1,300,000 | $0.15                        
|Granted                  | -         | -                            
|Exercised                | -         | -                            
|Cancelled                | -         | -                            
|Balance at June 30, 2006 | 1,300,000 | $0.15                        
|Granted                  | -         | -                            
|Exercised                | -         | -                            
|Cancelled                | -         | -                            
|Balance at June 30, 2007 | 1,300,000 | $0.15                        





Additional information regarding options outstanding as of June 30, 2006 is as follows:

Options outstandingExerciseNumberWeighted Average remanining contractualWeighted averagePriceOutstandinglife (years)Exercise Price$0.151,300,0008.75$0.15




The Company had two partially vested stock options outstanding at December 31, 2005 pursuant to employment agreements entered into between the Company's and its president and vice-president. Under these agreements, the Company issued options to purchase up to 650,000 shares of its common stock at a purchase price of $0.15 per share that vest in equal quarterly installments over a three (3) year period.  The Company calculated the fair value of the options to be $195,000 using an option pricing model, of which $65,000 was recognized as expense during the year ended June 30, 2007.

The Companys 2005 Stock Incentive Plan is our equity plan that has been approved by our shareholders and is our only plan in effect and with options outstanding.



ITEM 12  Certain Relationships and Related Transactions



The Companys wholly owned subsidiary paid $63,419 and $114,726 to its president during the years 2007 and 2006 respectively.



Officers salaries include $30,000 and $151,500 in 2007 and 2006, respectively, of accrued salaries owed to the Companys former Chief Executive and Chief Financial Officers.





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The Company issued 650,000 options to purchase shares of its common stock to each of SCIs president and vice-president.  The options were valued at $195,000 and are being amortized over three years vesting period.



During the years ended June 30, 2007 and 2006, the Companys Chief Executive Officer paid some expenses on behalf of the Company. These advances are recognized as short-term liabilities as there are no fixed repayment terms, but the funds are due on demand.



ITEM 13  Exhibits



The exhibits below are required by Item 601 of Regulation S-B.  Each management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-KSB has been identified.



Exhibit Number

Description



31.1

Section 302 Certification of our Chief Executive Officer

31.2

Section 302 Certification of our Chief Financial Officer

32.2

Section 906 Certification of our Chief Executive Officer

32.3

Section 906 Certification of our Chief Financial Officer



ITEM 14  Principal Accountant Fees and Services



The aggregate fees billed for professional services rendered by Weinberg & Company for the audit of our financial statements for the fiscal year ended June 30, 2006 was $59,087.

Audit Related Fees

None

Tax Fees

None







All Other Fees

There were no other fees billed for services rendered by Weinberg & Company not reportable as Audit Fees, Audit Related Fees or Tax Fees for the fiscal year ended June 30, 2006.

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SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant  has duly  caused  this report to be signed on its behalf by the undersigned, thereunto duly authorized.



SMART-TEK SOLUTIONS, INC.

(Registrant)



Date:
November 8, 2007

/s/



-----------------------------------



Perry Law



Chief Executive Officer



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



Date:
November 8, 2007

/s/



-----------------------------------



Perry Law



Chief Executive Officer, President

Chairman of the Board



(Principal Executive Officer)