---

UNITED STATESSECURITIES
AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30,
2010

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
EXCHANGE ACT

For the transition period from _________ to 
________Commission File No. 000-29895

SMART-TEK SOLUTIONS INC.(Exact
name of registrant as specified in its charter)

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

1100 Quail Street, Newport Beach, CA 92660(Address
of principal executive offices) (zip code)

(858) 798-1644(Registrants telephone number, including area code) (Former name,
former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X]      No [  ]

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).

Yes [  ]      No [  ]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of large accelerated filer," "accelerated
filer, and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
(Check one):

|Large accelerated filer [  ]                  | Accelerated filer  [  ]      
|--------------------------------------------- | -----------------------------
|Non-accelerated filer [  ]                    | Smaller reporting company [X]
|(Do not check if a smaller reporting company) |                              

Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]      No [X]

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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after
distribution of securities under a plan confirmed by a court.

Yes [  ]      No [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuers
classes of common equity as of the latest practicable date: As of November
15, 2010, there were 69,314,124 shares of common stock, par value $0.001,
outstanding.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Smart-tek Solutions Inc.Three Months Ended
September 30, 2010 and 2009(Unaudited)

PART I -- FINANCIAL INFORMATION

|CONTENTS                                                                      | PAGES
|----------------------------------------------------------------------------- | -----
|                                                                              |      
|UNAUDITED FINANCIAL STATEMENTS                                                |      
|                                                                              |      
|Consolidated
      Balance Sheets                                             | 2    
|                                                                              |      
|Consolidated
      Statements of Operations and Comprehensive Loss            | 3    
|                                                                              |      
|Consolidated
      Statements of Changes in Stockholders Equity (Deficiency) | 4    
|                                                                              |      
|Consolidated
      Statements of Cash Flows                                   | 5    
|                                                                              |      
|Notes
      to the Consolidated Financial Statements                          | 6-17 

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Smart-tek Solutions Inc.Consolidated Balance
SheetsAs at September 30, 2010 (Unaudited) and June 30, 2010

|                                                                                                                        |   | September 30, |   |   | June 30,   |  
|----------------------------------------------------------------------------------------------------------------------- | - | ------------- | - | - | ---------- | -
|                                                                                                                        |   | 2010          |   |   | 2010       |  
|                                                                                                                        |   | (unaudited)   |   |   |            |  
|                                                                                                                        |   |               |   |   |            |  
|Assets                                                                                                                  |   |               |   |   |            |  
|                                                                                                                        |   |               |   |   |            |  
|Current assets                                                                                                          |   |               |   |   |            |  
|Cash and cash
      equivalents                                                                                         | $ | 675,223       |   | $ | 416,389    |  
|Accounts receivable                                                                                                     |   | 1,824,897     |   |   | 1,041,593  |  
|Contract retention
      receivable                                                                                     |   | 116,258       |   |   | 118,804    |  
|Cost of uncompleted contracts in excess
      of billings                                                               |   | 128,834       |   |   | 11,713     |  
|Prepaid expenses and
      deposits                                                                                     |   | 2,202,400     |   |   | 1,526,094  |  
|                                                                                                                        |   |               |   |   |            |  
|Total current assets                                                                                                    |   | 4,947,612     |   |   | 3,114,593  |  
|                                                                                                                        |   |               |   |   |            |  
|Equipment, net of accumulated depreciation                                                                              |   | 96,691        |   |   | 104,803    |  
|                                                                                                                        |   |               |   |   |            |  
|Goodwill                                                                                                                |   | 451,311       |   |   | 451,311    |  
|                                                                                                                        |   |               |   |   |            |  
|                                                                                                                        | $ | 5,495,614     |   | $ | 3,670,707  |  
|                                                                                                                        |   |               |   |   |            |  
|                                                                                                                        |   |               |   |   |            |  
|                                                                                                                        |   |               |   |   |            |  
|Liabilities                                                                                                             |   |               |   |   |            |  
|                                                                                                                        |   |               |   |   |            |  
|Current liabilities                                                                                                     |   |               |   |   |            |  
|Accounts payable and accrued
      liabilities                                                                          | $ | 3,403,536     |   | $ | 2,287,493  |  
|Accounts payable to
      related parties                                                                               |   | 1,246,698     |   |   | 1,227,210  |  
|Billings on uncompleted
      contracts in excess of costs and estimated revenues                                       |   | 157,287       |   |   | 73,117     |  
|Deferred revenue                                                                                                        |   | 13,869        |   |   | 21,027     |  
|Shareholder loans                                                                                                       |   | 518,382       |   |   | 500,024    |  
|                                                                                                                        |   |               |   |   |            |  
|Total current liabilities                                                                                               |   | 5,339,772     |   |   | 4,108,871  |  
|                                                                                                                        |   |               |   |   |            |  
|                                                                                                                        |   |               |   |   |            |  
|Stockholders Deficiency                                                                                                |   |               |   |   |            |  
|                                                                                                                        |   |               |   |   |            |  
|Preferred stock, $0.001 par value,
      5,000,000 shares                                                               |   |               |   |   |            |  
|authorized, zero shares of
      Class A preferred issued and outstanding at September 30, 2010 and June
      30, 2010 |   | -             |   |   | -          |  
|Common stock: $0.001 par value,
      500,000,000, shares                                                               |   |               |   |   |            |  
|authorized, 69,314,124
      issued and outstanding at September 30, 2010 and June 30, 2010                             |   | 69,315        |   |   | 69,315     |  
|Additional paid in capital                                                                                              |   | 6,852,863     |   |   | 6,852,863  |  
|Accumulated other comprehensive loss                                                                                    |   | (241,919      | ) |   | (221,963   | )
|Accumulated deficit                                                                                                     |   | (6,524,417    | ) |   | (7,138,379 | )
|                                                                                                                        |   |               |   |   |            |  
|Total stockholders deficiency                                                                                          |   | 155,842       |   |   | (438,164   | )
|                                                                                                                        |   |               |   |   |            |  
|                                                                                                                        | $ | 5,495,614     |   | $ | 3,670,707  |  
|                                                                                                                        |   |               |   |   |            |  

See accompanying notes to the consolidated financial statements.

2

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Smart-tek Solutions Inc.Consolidated Statements
of Operations and Comprehensive LossThree months ended September 30,
2010 and 2009(Unaudited)

|                                                             |   | 2010       |   |   | 2009      |  
|------------------------------------------------------------ | - | ---------- | - | - | --------- | -
|Revenue                                                      |   |            |   |   |           |  
|Contract revenue                                             | $ | 5,240,037  |   | $ | 1,804,257 |  
|Services revenue                                             |   | 40,807     |   |   | 17,997    |  
|Other revenue                                                |   | 92         |   |   | 386       |  
|Total revenue                                                |   | 5,280,936  |   |   | 1,822,640 |  
|                                                             |   |            |   |   |           |  
|Cost of revenue and service delivery                         |   | 3,868,328  |   |   | 1,197,281 |  
|                                                             |   |            |   |   |           |  
|Gross profit                                                 |   | 1,412,608  |   |   | 625,359   |  
|                                                             |   |            |   |   |           |  
|Selling, general and administrative expenses                 |   | 792,419    |   |   | 788,023   |  
|                                                             |   |            |   |   |           |  
|Operating income (loss)                                      |   | 620,189    |   |   | (162,664  | )
|                                                             |   |            |   |   |           |  
|Other expense                                                |   |            |   |   |           |  
|Interest                                                     |   | (6,227     | ) |   | (1,936    | )
|                                                             |   |            |   |   |           |  
|Net income (loss)                                            |   | 613,962    |   |   | (164,600  | )
|                                                             |   |            |   |   |           |  
|Currency translation adjustment                              |   | (19,956    | ) |   | (30,957   | )
|                                                             |   |            |   |   |           |  
|Comprehensive income (loss)                                  | $ | 594,006    |   | $ | (195,557  | )
|                                                             |   |            |   |   |           |  
|Loss per share, basic and diluted                            | $ | 0.01       |   | $ | (0.02     | )
|                                                             |   |            |   |   |           |  
|Weighted average shares outstanding, basic
      and diluted |   | 69,314,124 |   |   | 8,273,676 |  

See accompanying notes to the consolidated financial statements.

3

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Smart-tek Solutions Inc.Consolidated Statement of
Changes in Stockholders Equity (Deficiency)Three months ended
September 30, 2010(Unaudited)

|                                             |  | Common Stock |  |   |        |  |   |            |  |   |               |   |   |             |  
|-------------------------------------------- |  | ------------ |  | - | ------ |  | - | ---------- |  | - | ------------- | - | - | ----------- | -
|                                             |  |              |  |   |        |  |   |            |  |   | Accumulated   |   |   |             |  
|                                             |  |              |  |   |        |  |   | Additional |  |   | Other         |   |   |             |  
|                                             |  |              |  |   |        |  |   | Paid in    |  |   | Comprehensive |   |   | Accumulated |  
|                                             |  | Shares       |  |   | Amount |  |   | Capital    |  |   | Income        |   |   | Deficit     |  
|                                             |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Balance  June 30, 2009                      |  | 447,589      |  | $ | 448    |  | $ | 6,566,465  |  | $ | (67,722       | ) | $ | (7,341,459  | )
|                                             |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Shares issued for MarketingPartner Agreement |  | 45,000,000   |  |   | 45,000 |  |   | -          |  |   | -             |   |   | -           |  
|                                             |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Shares issued for settlementof debt          |  | 23,866,535   |  |   | 23,867 |  |   | 286,398    |  |   | -             |   |   | -           |  
|                                             |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Net Income                                   |  | -            |  |   | -      |  |   | -          |  |   | -             |   |   | 203,080     |  
|                                             |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Currency translationadjustment               |  | -            |  |   | -      |  |   | -          |  |   | (154,241      | ) |   | -           |  
|                                             |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Balance  June 30, 2010                      |  | 69,314,124   |  | $ | 69,315 |  | $ | 6,852,863  |  | $ | (221,963      | ) | $ | (7,138,379  | )
|                                             |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Net Income                                   |  |              |  |   |        |  |   |            |  |   |               |   |   | 613,962     |  
|                                             |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Currency translationadjustment               |  |              |  |   |        |  |   |            |  |   | (19,956       | ) |   |             |  
|                                             |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|                                             |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Balance  September 30,2010                  |  | 69,314,124   |  | $ | 69,315 |  | $ | 6,852,863  |  |   | (241,919      | ) |   | (6,524,417  | )

See accompanying notes to the consolidated financial
statements.

4

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Smart-tek Solutions Inc.Consolidated Statements of
Cash FlowsThree months ended September 30, 2010 and 2009(Unaudited)

|                                                                                          |   | 2010      |   |   | 2009     |  
|----------------------------------------------------------------------------------------- | - | --------- | - | - | -------- | -
|                                                                                          |   |           |   |   |          |  
|                                                                                          |   |           |   |   |          |  
|Operating activities                                                                      |   |           |   |   |          |  
|                                                                                          |   |           |   |   |          |  
|Net income (loss)                                                                         | $ | 613,962   |   | $ | (164,600 | )
|Adjustments to reconcile net income (loss) to net cash used
      in operating activities |   |           |   |   |          |  
|Depreciation and amortization                                                             |   | 8,112     |   |   | 3,271    |  
|Shares issued for Marketing Partner Agreement                                             |   | -         |   |   | 45,000   |  
|                                                                                          |   |           |   |   |          |  
|Changes in operating assets and liabilities                                               |   |           |   |   |          |  
|Accounts receivable                                                                       |   | (783,304  | ) |   | (81,776  | )
|Contract retention receivable                                                             |   | 2,546     |   |   | (123,153 | )
|Costs of uncompleted contracts in excess
      of billings                                |   | (117,121  | ) |   | (13,160  | )
|Prepaid expenses and deposits                                                             |   | (676,306  | ) |   | (212     | )
|Accounts payable and accrued liabilities                                                  |   | 1,116,043 |   |   | 95,537   |  
|Accounts payable to related parties                                                       |   | 19,488    |   |   | -        |  
|Bonus payable                                                                             |   | -         |   |   | 469,096  |  
|Billings
      on uncompleted contracts in excess of costs and estimated revenues         |   | 84,170    |   |   | (172,932 | )
|Deferred revenue                                                                          |   | (7,158    | ) |   | 607      |  
|                                                                                          |   |           |   |   |          |  
|Net cash provided by operating activities                                                 |   | 260,432   |   |   | 57,678   |  
|                                                                                          |   |           |   |   |          |  
|Investing activities                                                                      |   |           |   |   |          |  
|Purchase of equipment                                                                     |   | -         |   |   | (62,506  | )
|                                                                                          |   |           |   |   |          |  
|Net cash used in investing activities                                                     |   | -         |   |   | (62,506  | )
|                                                                                          |   |           |   |   |          |  
|Financing activities                                                                      |   |           |   |   |          |  
|Proceeds from shareholders loan                                                           |   | 18,358    |   |   | 196,364  |  
|Proceeds from officer and directors                                                       |   | -         |   |   | 35,618   |  
|                                                                                          |   |           |   |   |          |  
|Net cash provided by financing activities                                                 |   | 18,358    |   |   | 231,982  |  
|                                                                                          |   |           |   |   |          |  
|                                                                                          |   |           |   |   |          |  
|Effects of exchange rates on cash                                                         |   | (19,956   | ) |   | (30,957  | )
|                                                                                          |   |           |   |   |          |  
|                                                                                          |   |           |   |   |          |  
|Net increase in cash                                                                      |   | 258,834   |   |   | 196,197  |  
|                                                                                          |   |           |   |   |          |  
|Cash and cash equivalents, beginning of period                                            |   | 416,389   |   |   | 73,272   |  
|                                                                                          |   |           |   |   |          |  
|Cash and cash equivalents, end of period                                                  | $ | 675,223   |   | $ | 269,469  |  
|                                                                                          |   |           |   |   |          |  
|                                                                                          |   |           |   |   |          |  
|Supplemental cash flow information                                                        |   |           |   |   |          |  
|Interest paid                                                                             | $ | 6,227     |   | $ | 1,936    |  

See accompanying notes to the consolidated financial
statements.

5

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Smart-tek Solutions Inc.Notes to the Consolidated
Financial StatementsSeptember 30, 2010

---

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

Nature of operations, basis of financial statement
presentation

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

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.

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.

On February 11, 2009, Smart-tek Automated Services Inc., a
wholly owned subsidiary of the Company was incorporated in the State of Nevada
for the purpose of adding a yet to be determined new business line. On June 17,
2010, Brian Bonar was contracted to use his expertise and contacts in the PEO
area for the benefit of Smart-tek Automated Services, Inc. Smart-tek Automated
Services Inc. provides integrated and cost-effective management solutions in the
area of human resources for public and private companies. Though Smart-tek
Automated Services Inc., provides mainly professional employer organization
(PEO) services, it is equipped to provide temporary staffing services as well.
In a PEO co-employment contract, the Company becomes the employer of record for
client company employees for tax and insurance purposes. The client company
continues to direct the employees day-to-day activities, and Allegiant charges
a service fee for providing services.

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

Principles of consolidation

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

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.

Cash and equivalents

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

6

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Smart-tek Solutions Inc.Notes to the Consolidated
Financial StatementsSeptember 30, 2010

---

Accounts Receivable

Accounts receivables are recorded at net realizable value
consisting of the carrying amount less an allowance for uncollectible accounts,
as needed. The Company uses the allowance method to account for uncollectible
accounts receivable balances. Under the allowance method, if needed, an estimate
of uncollectible customer balances is made based upon specific account balances
that are considered uncollectible. Factors used to establish an allowance
include the credit quality and payment history of the customer. There is an
allowance for doubtful accounts as of September 30, 2010 of $12,021 (June 30,
2010  $11,628).

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.

Equipment

Equipment, including computer equipment under capital lease
agreements, is accounted for in accordance with Financial Accounting Standards
Board (FASB) Accounting Standards Codification (ASC) topic 360: Property Plant
and Equipment. It is recorded at cost and depreciated using accelerated methods
over the estimated useful lives of the related assets ranging from 3 to 5 years.
The Company reviews the carrying value of long-term assets to be held and used
when events and circumstances warrant such a review. If the carrying value of a
long-lived asset is considered impaired, a loss is recognized based on the
amount by which the carrying value exceeds the fair market value. Fair market
value is determined primarily using the anticipated cash flows discounted at a
rate commensurate with the risk involved. The cost of normal maintenance and
repairs is charged to operations as incurred. Major overhaul that extends the
useful life of existing assets is capitalized. When equipment is retired or
disposed, the costs and related accumulated depreciation are eliminated and the
resulting profit or loss is recognized in income.

Goodwill and intangible assets

The Company accounts for goodwill and intangible assets
pursuant to FASB ASC 350 (SFAS No.142), Goodwill and Other Intangible Assets.
Under ASC 350 , 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.

Income taxes

In accordance with FASB ASC 740 (SFAS No. 109), Accounting for
Income Taxes, the Company uses the asset and liability method to account for
income taxes, including recognition of deferred tax assets for the anticipated
future tax consequences attributable to differences between financial statement
amounts and their respective tax bases. The Company reviews its deferred tax
asset for recovery and a valuation allowance is established when the Company
believes that it is more likely than not that some portion of its deferred tax
asset will not be realized. Changes in valuation allowances from period to
period are included in the Companys tax provision in the period of change.

7

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Smart-tek Solutions Inc.Notes to the Consolidated
Financial StatementsSeptember 30, 2010

---

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 FASB Topic 605-35: Construction Type 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 Company recognizes professional employment organizations
(PEO) revenues when each periodic payroll is delivered to the ASC 605-45:
Principal Agent Consideration. Consistent with its revenue recognition policy,
the Companys net PEO revenues and cost of PEO revenues do not include the
payroll cost of its worksite employees. Instead, PEO revenues and cost of PEO
revenues are comprised of all other costs related to its worksite employees,
such as payroll taxes, employee benefit plan premiums and workers compensation
insurance. PEO revenues also include professional service fees, which are
primarily computed as a percentage of client payroll or on a per check basis.

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

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.

8

---

Smart-tek Solutions Inc.Notes to the Consolidated
Financial StatementsSeptember 30, 2010

---

Comprehensive (loss) income

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

Stock-based compensation

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

On January 1, 2006, the Company adopted FASB ASC 718:
Compensation-Stock Compensation (SFAS No. 123 - revised 2004), Share-based
Payment (SFAS No.123R) a revision of SFAS No. 123, Accounting for Stock Based
Compensation, SFAS No.123R superseded APB Opinion No.25 Accounting for Stock
Issued to Employees and amended SFAS 95 Statement of Cash Flows ASC 718
requires that the Company measure the cost of employee services received in
exchange for equity awards based on the grant date fair-value of the awards. The
cost will be recognized as compensation expense over the vesting period of the
awards.

Under this method, the Company began recognizing compensation
cost for equity-based compensation for all new or modified grants after the date
of adoption. The pro-forma disclosures previously permitted under SFAS No. 123
are no longer an alternative to financial statement recognition.

Recovery of long-lived assets

The Company adopted FASB ASC Topic 360: Property Plant and
Equipment, sub topic 360-10-35-15: Impairment or Disposal of Long Lived Assets
(SFAs 144). ASC 360-10-35-15 requires recognition of impairment losses on
long-lived assets when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets
carrying amounts.

Advertising expenses

The Company expenses advertising costs as incurred which was
$2,935 for the period ended September 30, 2010 (September 30, 2009 -
$64).

Earnings (loss) per share

The Company computes net earnings (loss) per common share in
accordance with FASB ASC 260 (SFAS No. 128 Earnings per Share and SAB No. 98).
Under the provisions of ASC 260, the basic net earnings (loss) per common share
is computed by dividing the net earnings (loss) available to common stock
outstanding during the period. Net earnings (loss) per share on a diluted basis
is computed by dividing the net earnings (loss) for the period by the weighted
average number of common and dilutive common stock equivalent shares outstanding
during the period.

9

---

Smart-tek Solutions Inc.Notes to the Consolidated
Financial StatementsSeptember 30, 2010

---

Fair Value of Financial Instruments

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

|Level 1Quoted prices in active markets for identical
      assets or liabilities.                                 
|-------------------------------------------------------------------------------------------------------------------
|                                                                                                                   
|Level 2Inputs, other than the quoted prices in active
      markets, are observable either directly or indirectly.
|                                                                                                                   
|Level 3Unobservable inputs based on the Company's
      assumptions.                                              

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

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

Recent Accounting Pronouncements

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

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

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

10

---

Smart-tek Solutions Inc.Notes to the Consolidated
Financial StatementsSeptember 30, 2010

---

Recent Accounting Pronouncements, continued

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

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

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

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

11

---

Smart-tek Solutions Inc.Notes to the Consolidated
Financial StatementsSeptember 30, 2010

---

|   |             
|-- | ------------
|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 Preferred certificate was redeemed by the Company on June 1,
2010.

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

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

|3. | Contract Retention Receivable
|-- | -----------------------------

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

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

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

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

As of September 30, 2010 and June 30 2010, contract retention
receivables were $116,258 and $118,804 respectively.

12

---

Smart-tek Solutions Inc.Notes to the Consolidated
Financial StatementsSeptember 30, 2010

---

|   |          
|-- | ---------
|4. | Equipment

|                                      |   |         |  |   |              |  |   | September 30 |  |   |         |  |   |              |  |   | June 30  | 
|------------------------------------- | - | ------- |  | - | ------------ |  | - | ------------ |  | - | ------- |  | - | ------------ |  | - | -------- | 
|                                      |   |         |  |   | Accumulated  |  |   | 2010         |  |   |         |  |   | Accumulated  |  |   | 2010     | 
|                                      |   | Cost    |  |   | Depreciation |  |   | Net Book     |  |   | Cost    |  |   | Depreciation |  |   | Net Book | 
|                                      |   |         |  |   |              |  |   | Value        |  |   |         |  |   |              |  |   | Value    | 
|                                      |   |         |  |   |              |  |   |              |  |   |         |  |   |              |  |   |          | 
|Computer equipment &
      software   | $ | 29,781  |  | $ | 10,441       |  | $ | 19,340       |  | $ | 29,781  |  | $ | 8,244        |  | $ | 21,537   | 
|Office furniture & equipment          |   | 26,194  |  |   | 9,572        |  |   | 16,622       |  |   | 26,194  |  |   | 8,548        |  |   | 17,646   | 
|Computer equipment undercapital lease |   | 2,140   |  |   | 1,914        |  |   | 226          |  |   | 2,140   |  |   | 1,896        |  |   | 244      | 
|Automobile                            |   | 77,216  |  |   | 16,713       |  |   | 60,503       |  |   | 77,216  |  |   | 11,840       |  |   | 65,376   | 
|                                      |   |         |  |   |              |  |   |              |  |   |         |  |   |              |  |   |          | 
|                                      | $ | 135,331 |  | $ | 38,640       |  | $ | 96,691       |  | $ | 135,331 |  | $ | 30,528       |  | $ | 104,803  | 

|5. | Bank Overdraft
|-- | --------------

At September 30, 2010, bank overdrafts covered by a revolving
line of credit were $Nil. The revolving line of credit agreement is between SCI,
the Companys wholly owned subsidiary, and HSBC Bank of Canada. The revolving
line of credit facility bears interest at the rate of prime plus 4.50% per
annum, allows authorized bank overdrafts of up to $121,388 ($125,000 CDN) and is
secured by a shareholder guarantee and $51,229 ($52,754 CDN) in the form of a
term deposit.

Pursuant to the banking facility, the Companys wholly owned
subsidiary is required to maintain minimum equity of $97,110 (CDN$100,000). The
Companys wholly owned subsidiary is not in compliance with this condition at
September 30, 2010.

|6. | Shareholder loans
|-- | -----------------

At September 30, 2010 the Company is indebted to a company
controlled by the Companys president in the amount of $518,382. The loan is
unsecured, bears 7.5% interest and has no fixed terms of repayment. The
Companys president has waived any interest earned in fiscal 2010.

|7. | Income taxes
|-- | ------------

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

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

13

---

Smart-tek Solutions Inc.Notes to the Consolidated
Financial StatementsSeptember 30, 2010

---

|7. | Income taxes, continued
|-- | -----------------------

The Company generated a deferred tax credit through net
operating loss carry forwards. As of September 30, 2010 the company had federal
and state net operating loss carry forwards of approximately $6,204,274 that can
be used to offset future federal income tax. The federal and state net operating
losses are reduced by a valuation allowance, when, in the opinion of management,
utilization is not reasonably assured. A valuation allowance of 100% has been
established; based on it is more likely than not that some portion or all of the
deferred tax credit will not be realized.

At September 30, 2010, STS had available federal net operating
loss (NOL)carry forwards of approximately $6,204,274. Under Section 382
of the internal Revenue Code of 1986, as amended, the use of prior losses
including NOLs is subject to rules if a corporation undergoes an ownership
change. Future issuances of equity interests by us for acquisitions or the
exercise of outstanding options to purchase our capital stock may result in an
ownership change that is large enough for a limitation on the use of NOLs to
apply. If the limitation applies, we may be unable to use a material portion of
its available NOL carry forwards to reduce future taxable income. The income tax
effect of temporary differences between financial and tax reporting gives rise
to the deferred tax asset at September 30, 2010 and June 30, 2010 as follows:

|                                                                                |   | September 30,       |  |   | June 30,    | 
|------------------------------------------------------------------------------- | - | ------------------- |  | - | ----------- | 
|                                                                                |   | 2010                |  |   | 2010        | 
|Deferred tax asset, beginning                                                   | $ | 2,386,382           |  | $ | 2,457,460   | 
|                                                                                |   |                     |  |   |             | 
|Benefit (provision )of current years operating loss carry
      forward (gain) |   | (214,886)           |  |   | (71,078)    | 
|                                                                                |   |                     |  |   |             | 
|Deferred tax asset, ending                                                      | $ | 2,171,496           |  | $ | 2,386,382   | 
|                                                                                |   |                     |  |   |             | 
|Valuation allowance, beginning                                                  | $ | (2,386,382)         |  | $ | (2,457,460) | 
|Current years loss carry forward (provision)                                   |   | 214,886             |  |   | 71,078      | 
|                                                                                |   |                     |  |   |             | 
|Valuation allowance, ending                                                     | $ | $
      (2,171,496) |  | $ | (2,386,382) | 
|                                                                                |   |                     |  |   |             | 
|Deferred tax asset, net                                                         | $ | -                   |  | $ | -           | 
|                                                                                |   |                     |  |   |             | 
|Tax at blended U.S./Canadian statutory rates                                    |   | (35%)               |  |   | (35%)       | 
|Loss carryover                                                                  |   | 35%                 |  |   | 35%         | 
|                                                                                |   |                     |  |   |             | 
|Tax expense                                                                     | $ | -                   |  | $ | -           | 

|8. | Common Stock
|-- | ------------

At September 30, 2010, the Company is authorized to issue:

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

At September 30, 2010, there are 69,314,124 shares of common
stock outstanding.

14

---

Smart-tek Solutions Inc.Notes to the Consolidated
Financial StatementsSeptember 30, 2010

---

|8. | Common Stock, continued
|-- | -----------------------

Preferred Stock

Pursuant to the share exchange agreement dated April 15, 2005,
the Company agreed to issue one share of Class A preferred stock to the sole
shareholder of SCI, Perry Law. The preferred share will enable the holder to
exercise the voting control of 40% of the Company upon issuance. The remaining
60% voting control is to be assigned to the outstanding common shares of the
Company. Such preferred shares shall not be convertible, exchangeable,
transferable or otherwise purchased, conveyed or redeemed at any time while
outstanding during a two-year period. In addition, the voting power of such
preferred share shall decrease over such two-year period so as to have 20%
voting control 12 months after issuance, 10% voting control 18 months after
issuance and zero voting control 24 months after issuance, at which time the
preferred share will be redeemed by the Company for no consideration. This
preferred share had no voting rights since April 15, 2007 and was redeemed prior
to the June 30, 2010 fiscal year end.

|9. | Costs and Estimated Earnings on Uncompleted Contracts
|-- | -----------------------------------------------------

|                                        |   | September 30, |   |   | June 30,    |  
|--------------------------------------- | - | ------------- | - | - | ----------- | -
|                                        |   | 2010          |   |   | 2010        |  
|                                        |   |               |   |   |             |  
|Costs incurred on uncompleted contracts | $ | 2,444,442     |   | $ | 1,247,521   |  
|Estimated earnings                      |   | 1,563,286     |   |   | 907,139     |  
|                                        |   | 4,007,728     |   |   | 2,154,660   |  
|                                        |   |               |   |   |             |  
|Less: Billings to Date                  |   | (3,979,275    | ) |   | ( 2,216,064 | )
|                                        |   |               |   |   |             |  
|                                        | $ | (28,453       | ) | $ | (61,404     | )

Included in accompanying balance sheets under the following
captions:

|Costs of uncompleted contracts in excess of
      billings                        | $ | 128,834  |   | $ | 11,713  |  
|--------------------------------------------------------------------------------- | - | -------- | - | - | ------- | -
|Billings on uncompleted contracts in excess of costs and
      estimated revenues |   | (157,287 | ) |   | (73,117 | )
|                                                                                  |   |          |   |   |         |  
|                                                                                  | $ | (28,453  | ) | $ | (61,404 | )

|10. | Related Party Transactions
|--- | --------------------------

During the quarter ended September 30, 2010, the Companys
wholly owned subsidiary paid $34,646 in management salaries to its President and
Vice president and consulting fees of $31,422. Such costs have been reflected in
the accompanying statement of operations.

Amounts due to officers and directors were $1,246,698 as of
September 30, 2010.

15

---

Smart-tek Solutions Inc.Notes to the Consolidated
Financial StatementsSeptember 30, 2010

---

|11. | Commitments
|--- | -----------

Operating leases

The Companys wholly owned subsidiary Smart-tek Communications
Inc. entered into a non-cancellable operating lease for office space on March 1,
2008. Furthermore, the Companys wholly-owned subsidiary is committed to
operating leases for four company vehicles up to April 2014. The minimum
payments required under these operating leases for each of the five years
subsequent to September 30, 2010 are approximately as follows:

| |      |   | Year ending | 
| | ---- | - | ----------- | 
| |      |   | June 30     | 
| |      |   |             | 
| | 2011 | $ | 16,818      | 
| | 2012 | $ | 17,659      | 
| | 2013 | $ | 8,437       | 
| | 2014 | $ | 6,679       | 

Employment agreements

The Companys wholly owned subsidiary Smart-tek Communications
Inc. has annual employment agreements with the president and vice-president and
is committed to pay each of them annual salaries of $145,665 (CDN$150,000) along
with annual car allowances of $14,566 (CDN$15,000).

Marketing partner agreement

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

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

Settlement agreement

In July, 2009 Smart-Tek negotiated a settlement with Richardson
& Patel LLP pursuant to the terms of which Smart-Tek would be required to
pay Richardson & Patel $10,000 per month, commencing August 1, 2009, until
payments in the aggregate of $200,000 were made in full and final settlement of
all claims that the firm had or may have had against Smart-Tek with respect to
certain outstanding accounts owed by Smart-Tek to the firm totaling
approximately $315,000 for legal services rendered. In connection with the
settlement, Richardson & Patel requested that the parties enter into a stock
pledge agreement pursuant to which Perry Law (1,829 shares pledged), P5 Holdings
Ltd (30,984 shares pledged), Agri-Tech Marketing (22,000 shares pledged), Donald
Gee (40,000 shares pledged) and Joe Law (21,795 shares pledged) would pledge an
aggregate of 116,608 (post-split) shares of Smart-Teks issued and outstanding
common stock as security for repayment of the amounts owed to Richardson &
Patel. As of the date of this Annual Report: there has been no settlement of all
amounts owed to Richardson & Patel, Richardson & Patel received and
continues to hold the pledged shares and Smart-Tek has not made any payments to
Richardson & Patel.

16

---

Smart-tek Solutions Inc.Notes to the Consolidated
Financial StatementsSeptember 30, 2010

---

|11. | Commitments, continued
|--- | ----------------------

Sale of Smart-Tek Communications Inc.

On August 20, 2010, the Company filed a preliminary 14A proxy
to approve the sale of the Companys wholly owned subsidiary Smart-Tek
Communications Inc. to its president and founder Perry Law.

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

| | (a) | $821,756 of the purchase price shall be paid and satisfied by
      setting-off the Companys indebtedness to the Perry Law pursuant to a
      Loan, including all accrued and unpaid interest there under up to the date
      that the sale close; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                          
| | (b) | $1.00 of the purchase price shall be paid by Perry Law for
      transferring 32,817 shares owned by him to the Company.                                                                                                                                 

The Company received a comment letter from the Securities and
Exchange Commission on the above filing and is in the process of responding to
such letter.,

17

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|ITEM 2. | **MANAGEMENT'S**
      **DISCUSSION** AND ANALYSIS OF
      FINANCIAL CONDITION AND **RESULTS OF
      OPERATIONS.**
|------- | --------------------------------------------------------------------------------------------------------------------

Forward Looking Statements

This quarterly report contains forward-looking statements.
Forward-looking statements are projections in respect of future events or our
future financial performance. In some cases, you can identify forward-looking
statements by terminology such as may, should, expects, plans,
anticipates, believes, estimates, predicts, potential or continue or
the negative of these terms or other comparable terminology. These statements
are only predictions and involve known and unknown risks, uncertainties and
other factors, including the risks in the section entitled Risks and
Uncertainties and the risks set out below, any of which may cause our or our
industrys actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. These
risks include:

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

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

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

Our financial statements are stated in United States dollars
(US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles.

In this quarterly report, unless otherwise specified, all
dollar amounts are expressed in United States dollars.

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

Overview

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

18

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On June 17, 2009, we determined to add a new line of business
providing integrated and cost-effective management solutions in the area of
human resources for public and private companies. In connection with the
expansion of business operations, we incorporated a subsidiary, Smart-Tek
Automated Services, Inc. (Smart-Tek Automated), a private Nevada corporation
through which we operate our new line of business. Since its inception,
Smart-Tek Automated Services Inc. has provided services to small and medium-size
businesses, relieving its clients from many of the day-to-day tasks that
negatively impact their core business operations, such as payroll processing,
human resources support, workers' compensation insurance, safety programs,
employee benefits, and other administrative and aftermarket services
predominantly related to staffing - staff leasing, temporary staffing and
co-employment. We intend to continue to expand this new business in the next
twelve months.

Plan of Operation

Short Term

Smart-Tek Communications Inc.: Continue to rely on current
relationships as our primary means of marketing the security technology products
and services in the Greater Vancouver Area.

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

Long Term

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

PEO Business Environment

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

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

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

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

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

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

To successfully execute our current strategy, we will need to
improve our working capital position. The report of our independent auditors
accompanying our September 30, 2008 financial statements included elsewhere in
this Form 10K includes an explanatory paragraph indicating there is a
substantial doubt about our ability to continue as a going concern, due primarily to a
working capital deficiency and negative net worth. In addition, we are
delinquent in our filing of payroll tax returns for certain of our PEO divisions
and are delinquent in the payment of payroll tax withholdings. We plan to
overcome the circumstances that impact our ability to remain a going concern
through a combination of achieving profitability and renegotiating existing
obligations. In addition, we continue to work with the Internal Revenue Service
and State taxing Authorities to reconcile and resolve all open accounts and
issues.

19

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There can be no assurance that we will be able to complete any
additional debt or equity financings on favorable terms or at all, or that any
such financings, if completed, will be adequate to meet our capital
requirements. Any equity or debt financings could result in substantial dilution
to our shareholders. If adequate funds are not available, we may be required to
delay, reduce or eliminate some or all of our planned activities, including any
potential mergers or acquisitions. Our inability to fund our capital
requirements would have a material adverse effect on the Company.

PEO Market Overview

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

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

RESULTS OF OPERATIONS

Three Month Summary

|                                             |   |                    |   |  | Percentage |  
|-------------------------------------------- | - | ------------------ | - |  | ---------- | -
|                                             |   | Three Months Ended |   |  | Increase/  |  
|                                             |   | September 30,      |   |  | (Decrease) |  
|                                             |   | 2010               |   |  | 2009       |  
|Revenue                                      | $ | 5,280,936          |   |  | 1,822,640  |  
|Selling, General and Administrative Expenses |   | 792,419            |   |  | 788,023    |  
|Interest expense                             |   | (6,227             | ) |  | (1,936     | )
|Net Income (Loss)                            | $ | 594,006            |   |  | ($195,557  | )

Revenue

The 189.7% increase in revenues for the three months ended
September 30, 2010 as compared to the comparative period in 2009 is primarily
attributable to the continued development of our payroll and staffing business
through Smart-Tek Automated services Inc. Smart-Tek automated revenue increased
$4,157,895 or 859.1% and Smart-Tek Communications revenue decreased ($699,598)
or (52.2%) from the same period prior year. The decrease in revenue in Smart-Tek
Communications is attributed to prior year revenue having a onetime pickup due
to the Olympics.

20

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Expenses

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

|                                             |   |                    |   |   | Percentage |  
|-------------------------------------------- | - | ------------------ | - | - | ---------- | -
|                                             |   | Three Months Ended |   |   | Increase/  |  
|                                             |   | September 30,      |   |   | (Decrease) |  
|                                             |   | 2010               |   |   | 2009       |  
|Cost of revenue and service delivery         | $ | 3,868,328          |   |   | 1,197,281  |  
|Selling, General and Administrative Expenses |   | 792,419            |   |   | 788,023    |  
|Interest expense                             |   | (6,227             | ) |   | (1,936     | )
|Total Expenses                               | $ | 4,654,520          |   | $ | 1,983,368  |  

Cost of revenue and service delivery

The Cost of revenue and service delivery for the three month
period ended Sept, 2010 was $3,868,328 compared to $1,197,281 for the same
period prior year for an increase of $2,671,047 or 223.1%. The increase was
primarily due to the business of our subsidiary Smart-Tek Automated Services,
which accounts for $3,272,260 of the increase with the balance of $596,068
relating to the core business.

Selling, General and Administrative

Selling, general and administrative expenses remained flat with
an increase of of $4,396 or 0.01% for the three month period ended September 30,
2010 from the comparative period in 2009.

Net Income

Net Income for the three months ending September 30, 2010 is
$594,006 compared to a loss of ($195,557) for the same period prior year. The
net income of $594,006 consists of $695,118 in income from the new Smart-Tek
Automated Services subsidiary, offset by a loss of $72,696 from the Smart-Tek
Communications Inc. subsidiary plus corporate charges of $8,460 and a loss in
currency translation adjustment of $19,956..

Liquidity and Capital Resources

|Working Capital            |   |               |   |   |               |   |  |            |  
|-------------------------- | - | ------------- | - | - | ------------- | - |  | ---------- | -
|                           |   | Three Months  |   |   |               |   |  | Percentage |  
|                           |   | Ended         |   |   | Year Ended    |   |  | Increase/  |  
|                           |   | September 30, |   |   | June 30, 2009 |   |  | (Decrease) |  
|                           |   | 2010          |   |   |               |   |  |            |  
|Current Assets             | $ | 4,947,612     |   | $ | 986,225       |   |  | 401.7%     |  
|Current Liabilities        |   | 5,339,772     |   |   | 2,294,927     |   |  | 132.7%     |  
|Working Capital Deficiency |   | ($392,160     | ) |   | ($1,308,702   | ) |  | (70.0%     | )

|Cash Flows                               |   |               |   |   |               |   |  |            |  
|---------------------------------------- | - | ------------- | - | - | ------------- | - |  | ---------- | -
|                                         |   | Three Months  |   |   | Three Months  |   |  | Percentage |  
|                                         |   | Ended         |   |   | Ended         |   |  | Increase/  |  
|                                         |   | September 30, |   |   | September 30, |   |  | (Decrease) |  
|                                         |   | 2010          |   |   | 2009          |   |  |            |  
|Cash from (used in) Operating Activities | $ | 260,432       |   | $ | 57,678        |   |  | 351.5%     |  
|Cash (used in) Investing Activities      | $ | 0             |   |   | ($62,506      | ) |  | (100.0%    | )
|Cash provided by Financing Activities    | $ | 18,358        |   | $ | 231,982       |   |  | (92.1%     | )
|Net Increase (Decrease) in Cash          |   | ($19,956      | ) |   | ($30,957      | ) |  | 35.5%      |  

We had cash on hand of $675,223and a working capital deficit of
$(392,160) as of September 30, 2010 compared to cash on hand of $57,678 and a
working capital deficit of $(1,308,702) for the year ended June 30, 2009. We anticipate that we will incur approximately $260,000 for
operating expenses per month, including professional, legal and accounting
expenses associated with our reporting requirements under the Exchange Act
during the next twelve months.

21

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Cash Used In Operating Activities

We had cash from operating activities in the amount of $260,432
during the three months ended September 30, 2010 as compared to cash provided in
operating activities of $57,678 in the comparative period in 2009. Cash from
operating activities resulted from the increased revenues from the business of
our subsidiaries.

Cash Used In Investing Activities

We used cash in investing activities in the amount of $nil
during the three months ended September 30, 2010. Cash used in investing
activities was funded by cash from financing activities. At September 30, 2010
the Company is indebted to a company controlled by the Companys president in
the amount of $858,283. The loan is unsecured and has no fixed terms of
repayment.

Cash from Financing Activities

We had cash of $18,358 from financing activities during the
three months ended September 30, 2010, a decrease of 92.1% from the comparative
period in 2009. Cash provided by financing activities during the period
decreased primarily due to proceeds from officers and directors in 2009 which
did not occur in 2010.

Financing

During the quarter ended March 31, 2010, Smart-tek Automated
Services secured a line of credit for $1,000,000 USD from J.P. Chase Manhattan
Bank to facilitate its automatic withdrawals from client accounts as well as for
the provision of direct deposit services to its clients.

Off-Balance Sheet Arrangements

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

Important Event

On August 20, 2010, the Company filed an amended preliminary
proxy seeking the shareholders of the Company to vote on the following
proposals:

Approve the vend-out of our wholly owned subsidiary Smart-Tek
Communications Inc. to its president and founder Perry Law.

The main terms of the vend-out (sale) are s follows: The
Company is selling its wholly owned subsidiary Smart-Tek Communications Inc. to
its president and founder Perry Law for $821,757 which consists of the following
-

| | (a) | $821,756of the Purchase Price shall be paid and satisfied by
      setting-off the Vendor's indebtedness to the Purchaser pursuant to a Loan,
      including all accrued and unpaid interest there under up to the Closing
      Date, against the Purchase Price;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                    
| | (b) | $1.00of the Purchase Price shall be paid by the Purchaser
      transferring the Smart-Tek Shares to the Vendor as provided for in Section
      6.3 hereof; and                                                                                                   
| |     |                                                                                                                                                                                                                                                                    
| | (c) | Purchaser consents to the cancellation of any outstanding options
      beneficially owned by him.                                                                                                                                                                 

22

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The Company feels it can best benefit the shareholders by concentrating its resources and efforts on the new business of Smart-tek Automated Services, Inc.

On September 15, 2010 the Company received comments from the Securities and Exchange Commission to be cleared before a definitive proxy can be distributed.

|Item 3. Quantitative and Qualitative Disclosures About Market Risk.
|-------------------------------------------------------------------

Not Applicable.

|Item 4T. Controls and Procedures.
|---------------------------------

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

There were no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2010 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by our company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company
in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required
disclosure.

23

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PART II - OTHER INFORMATION

|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

In July, 2009 Smart-Tek negotiated a settlement with Richardson
& Patel LLP pursuant to the terms of which Smart-Tek would be required to
pay Richardson & Patel $10,000 per month, commencing August 1, 2009, until
payments in the aggregate of $200,000 were made in full and final settlement of
all claims that the firm had or may have had against Smart-Tek with respect to
certain outstanding accounts owed by Smart-Tek to the firm totaling
approximately $315,000 for legal services rendered. In connection with the
settlement, Richardson & Patel requested that the parties enter into a stock
pledge agreement pursuant to which Perry Law (1,829 shares pledged), P5 Holdings
Ltd (30,984 shares pledged), Agri-Tech Marketing (22,000 shares pledged), Donald
Gee (40,000 shares pledged) and Joe Law (21,795 shares pledged) would pledge an
aggregate of 116,608 (post-split) shares of Smart-Teks issued and outstanding
common stock as security for repayment of the amounts owed to Richardson &
Patel. As of the date of this quarterly report the Company has not made any
payments and is in default of this agreement.

|ITEM 1A. | RISK FACTORS.
|-------- | -------------

Not Applicable.

|ITEM 2. | **UNREGISTERED SALES OF EQUITY SECURITIES
      AND USE OF PROCEEDS.**
|------- | ----------------------------------------------------------------------

None.

|ITEM 3. | **DEFAULTS UPON SENIOR
      SECURITIES.**
|------- | ------------------------------------------

None.

|ITEM 4. | **(Removed and Reserved)**
|------- | --------------------------



|ITEM 5. | **OTHER INFORMATION.**
|------- | ----------------------

None.

24

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|ITEM 6. | **EXHIBITS**
|------- | ------------
|        |             

|Exhibit |  | Description                                                                                                             
|------- |  | ------------------------------------------------------------------------------------------------------------------------
|Number  |  |                                                                                                                         
|3.1     |  | Articles of Incorporation as amended(1)                                                                                 
|3.2     |  | Bylaws(1)                                                                                                               
|3.3     |  | Certificate of Amendment to Certificate of Incorporation
      (2)                                                      
|4.1     |  | Incentive Stock Option Plan (1)                                                                                         
|4.2     |  | Non-Qualified Incentive Stock Option Plan (1)                                                                           
|4.3     |  | Stock
      Bonus Plan (1)                                                                                              
|4.4     |  | 2005
      Incentive Stock Plan (2)                                                                                     
|10.1    |  | Letter
      of Intent between Smart-Tek Communications and Smart-Tek (3)                                               
|10.2    |  | Share
      Exchange Agreement between Registrant and Smart-Tek Communication, Inc
      dated April 15, 2005 (4)       
|10.3    |  | Employment Agreement with Perry Law dated April 23, 2005
      (5)                                                      
|10.4    |  | Employment Agreement with Stephen Platt dated April 23, 2005
      (5)                                                  
|10.5    |  | Stock
      Option Grant to Perry Law dated April 23, 2005 (6)                                                          
|10.6    |  | Stock
      Option Grant to Stephen Platt dated April 23, 2005 (6)                                                      
|10.7    |  | Amendment to Employment Agreement between Smart-Tek
      Communications Inc. and Perry Law dated July 31, 2009         
|10.8    |  | Form
      of Debt Settlement and Subscription Agreement dated September 30, 2009                                       
|10.9    |  | Strategic Marketing Partner Agreement between Smart-Tek
      Automated Services Inc. and ACEO Inc. dated August 1, 2009
|10.10   |  | Marketing Partner Agreement dated June 17, 2009                                                                         
|14.1    |  | Amended and Restated Code of Ethics                                                                                     
|21.1    |  | Subsidiaries                                                                                                            
|31.1*   |  | CEO
      and CFO Section 302 Certification under Sarbanes-Oxley Act of 2002                                            
|32.1*   |  | CEO
      and CFO Section 906 Certifications under Sarbanes-Oxley Act of 2002                                           

*Filed herewith

|(1) | Incorporated by reference to our Registration Statement on Form 10-SB,
      filed September 28, 1995.
|--- | ------------------------------------------------------------------------------------------------------
|(2) | Incorporated by reference to our Annual Report on Form 10-KSB, filed
      October 26, 1995.          
|(3) | Incorporated by reference to our Current Report on Form 8-K, filed
      March 8, 2005.               
|(4) | Incorporated by reference to our Current Report on Form 8-K, filed
      April 19, 2005.              
|(5) | Incorporated by reference to our Current Report on Form8-K, filed
      April 27, 2005.               
|(6) | Incorporated by reference to our Current Report on Form 8-K, filed on
      August 22, 2005.          
|(7) | Incorporated by reference to our Current Report on Form 8-K, filed on
      June 27, 2008.            

|(8)  | Incorporated by reference to our Form 10-Q for the period ended
      December 31, 2008, filed on February 23, 2009.
|---- | --------------------------------------------------------------------------------------------------------------------
|(9)  | Incorporated by reference to our Current Report on Form 8-K, filed on
      June 24, 2009.                          
|(10) | Incorporated by reference to our Annual Report on Form 10-K, filed
      October 15, 2008.                          
|(11) | Incorporated by reference to our Annual Report on Form 10-K, filed
      October 13, 2009.                          
|(12) | Incorporated by reference to our Current Report on Form 8-K, filed on
      March 17, 2010.                         

25

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SIGNATURES

Pursuant to the requirements 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.

|By    | /s/ Brian Bonar   | 
|----- | ----------------- | 
|      | Brian Bonar       | 
|      | President         | 
|      |                   | 
|Date: | November 11, 2010 | 

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

|By    | /s/
      Perry Law                                                                               | 
|----- | ------------------------------------------------------------------------------------------------- | 
|      | Perry Law                                                                                         | 
|      | Director                                                                                          | 
|      |                                                                                                   | 
|Date: | November 11, 2010                                                                                 | 
|      |                                                                                                   | 
|      |                                                                                                   | 
|      | /s/
      Brian Bonar                                                                             | 
|      | Brian Bonar                                                                                       | 
|      | Chief Executive Officer, Chief
      Financial Officer and Director                              
|      | (Principal Executive Officer,
      Principal Accounting Officer and Principal Financial Officer)
|      |                                                                                                   | 
|Date: | November 11, 2010                                                                                 | 
|      |                                                                                                   | 
|      |                                                                                                   | 
|      | /s/
      Owen Naccarato                                                                          | 
|      | Owen Naccarato                                                                                    | 
|      | Director                                                                                          | 
|      |                                                                                                   | 
|Date: | November 11, 2010                                                                                 | 

26

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