---

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,
2009

[ ] 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.)

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

604.270.2084(Registrants telephone number,
including area code)

Not Applicable(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 ]

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

---

2

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
20, 2009, there were 69,314,124 shares of common stock, par value $0.001,
outstanding.

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- 3 -

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Three Months Ended September 30, 2009 and 2008
|                                              

PART I -- FINANCIAL INFORMATION

|CONTENTS                                                             | PAGES     
|-------------------------------------------------------------------- | ----------
|                                                                     |           
|UNAUDITED FINANCIAL STATEMENTS                                       |           
|                                                                     |           
|Consolidated Balance Sheets                                          | F-2       
|                                                                     |           
|Consolidated Statements of Operations and Comprehensive
      Loss   | F-3       
|                                                                     |           
|Consolidated Statements of Changes in
      Stockholders Deficiency | F-4       
|                                                                     |           
|Consolidated Statements of Cash Flows                                | F-5       
|                                                                     |           
|Notes to the Consolidated Financial
      Statements                 | F-6 - F-18

F-1

---

|Smart-tek Solutions Inc.                                    
|------------------------------------------------------------
|Consolidated Balance Sheets                                 
|As at September 30, 2009 (Unaudited) and June 30,
      2009

|                                                                     |   | September 30, |   |   | June 30,   |  
|-------------------------------------------------------------------- | - | ------------- | - | - | ---------- | -
|                                                                     |   | 2009          |   |   | 2009       |  
|                                                                     |   | (unaudited)   |   |   |            |  
|                                                                     |   |               |   |   |            |  
|Assets                                                               |   |               |   |   |            |  
|Current assets                                                       |   |               |   |   |            |  
|Cash and cash
      equivalents                                      | $ | 269,469       |   | $ | 73,272     |  
|Accounts receivable                                                  |   | 721,060       |   |   | 639,284    |  
|Contract retention
      receivable                                  |   | 358,349       |   |   | 235,196    |  
|Cost of uncompleted contracts in excess
      of billings            |   | 50,257        |   |   | 37,097     |  
|Prepaid expenses and
      deposits                                  |   | 1,588         |   |   | 1,376      |  
|Total current assets                                                 |   | 1,400,723     |   |   | 986,225    |  
|                                                                     |   |               |   |   |            |  
|Equipment, net of accumulated depreciation                           |   | 74,357        |   |   | 15,122     |  
|                                                                     |   |               |   |   |            |  
|Goodwill                                                             |   | 451,311       |   |   | 451,311    |  
|                                                                     |   |               |   |   |            |  
|                                                                     | $ | 1,926,391     |   | $ | 1,452,658  |  
|                                                                     |   |               |   |   |            |  
|                                                                     |   |               |   |   |            |  
|                                                                     |   |               |   |   |            |  
|Liabilities                                                          |   |               |   |   |            |  
|Current liabilities                                                  |   |               |   |   |            |  
|Bank overdraft                                                       | $ |               |   | $ | -          |  
|Accounts payable and
      accrued liabilities                       |   | 503,902       |   |   | 408,365    |  
|Bonus payable                                                        |   | 709,840       |   |   | 240,744    |  
|Billings on uncompleted
      contracts                              |   |               |   |   |            |  
|in excess of costs and estimated revenues                            |   | 124,668       |   |   | 297,600    |  
|Deferred revenue                                                     |   | 12,996        |   |   | 12,389     |  
|Loans payable                                                        |   | 310,265       |   |   | 310,265    |  
|Shareholder loans                                                    |   | 821,756       |   |   | 625,392    |  
|Amounts due to officers and directors                                |   | 435,790       |   |   | 400,172    |  
|                                                                     |   |               |   |   |            |  
|Total current liabilities                                            |   | 2,919,217     |   |   | 2,294,927  |  
|                                                                     |   |               |   |   |            |  
|                                                                     |   |               |   |   |            |  
|Stockholders Deficiency                                             |   |               |   |   |            |  
|Preferred stock, $0.001 par value, 5,000,000 shares                  |   |               |   |   |            |  
|authorized, one (1)
      shares of Class A preferred                |   |               |   |   |            |  
|issued and outstanding at September 30,
      2009 and June 30, 2009 |   | -             |   |   | -          |  
|Common stock: $0.001 par value,
      500,000,000, shares            |   |               |   |   |            |  
|authorized,                                                          |   |               |   |   |            |  
|45,447,589 issued and
      outstanding at September 30, 2009 and    |   |               |   |   |            |  
|447,589 issued and
      outstanding at June 30, 2009 respectively   |   | 45,448        |   |   | 448        |  
|Additional paid in capital                                           |   | 6,566,464     |   |   | 6,566,464  |  
|Accumulated other comprehensive loss                                 |   | (98,679       | ) |   | (67,722    | )
|Accumulated deficit                                                  |   | (7,506,059    | ) |   | (7,341,459 | )
|Total stockholders deficiency                                       |   | (992,826      | ) |   | (842,269   | )
|                                                                     |   |               |   |   |            |  
|                                                                     | $ | 1,926,391     |   | $ | 1,452,658  |  

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

---

|Smart-tek Solutions Inc.                                          
|------------------------------------------------------------------
|Consolidated Statements of Operations and
      Comprehensive Loss
|Three months ended September 30, 2009 and 2008                    
|(Unaudited)                                                       

|                                             |   | 2009      |   |   | 2008        |  
|-------------------------------------------- | - | --------- | - | - | ----------- | -
|                                             |   |           |   |   |             |  
|Revenue                                      |   |           |   |   |             |  
|Contract revenue                             | $ | 1,804,257 |   | $ | 878,034     |  
|Services revenue                             |   | 17,997    |   |   | 18,116      |  
|Other revenue                                |   | 386       |   |   | 271         |  
|Total revenue                                |   | 1,822,640 |   |   | 898,421     |  
|                                             |   |           |   |   |             |  
|Cost of revenue and service delivery         |   | 1,197,281 |   |   | 776,515     |  
|                                             |   |           |   |   |             |  
|Gross profit                                 |   | 625,359   |   |   | 119,906     |  
|                                             |   |           |   |   |             |  
|Selling, general and administrative expenses |   | 788,023   |   |   | 153,720     |  
|                                             |   |           |   |   |             |  
|Operating loss                               |   | (162,664  | ) |   | (33,814     | )
|                                             |   |           |   |   |             |  
|Other expense                                |   |           |   |   |             |  
|Interest                                     |   | (1,936    | ) |   | (1,689      | )
|                                             |   |           |   |   |             |  
|Net income (loss)                            |   | (164,600  | ) |   | (35,503     | )
|                                             |   |           |   |   |             |  
|Currency translation adjustment              |   | (30,957   | ) |   | 10,450      |  
|                                             |   |           |   |   |             |  
|Comprehensive income (loss)                  | $ | (195,557  | ) | $ | (25,053     | )
|                                             |   |           |   |   |             |  
|Loss per share, basic and diluted            | $ | (0.02     | ) | $ | (0.01       | )
|                                             |   |           |   |   |             |  
|Weighted average shares outstanding,         |   |           |   |   |             |  
|basic and diluted                            |   | 8,273,676 |   |   | 111,812,971 |  

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

---

|Smart-tek Solutions Inc.                                           
|-------------------------------------------------------------------
|Consolidated Statement of Changes in Stockholders
      Deficiency
|Three months ended September 30, 2009                              
|(Unaudited)                                                        

|                            |  | Common Stock |  |   |        |  |   |            |  |   |               |   |   |             |  
|--------------------------- |  | ------------ |  | - | ------ |  | - | ---------- |  | - | ------------- | - | - | ----------- | -
|                            |  |              |  |   |        |  |   |            |  |   | Accumulated   |   |   |             |  
|                            |  |              |  |   |        |  |   | Additional |  |   | Other         |   |   |             |  
|                            |  |              |  |   |        |  |   | Paid in    |  |   | Comprehensive |   |   | Accumulated |  
|                            |  | Shares       |  |   | Amount |  |   | Capital    |  |   | Income        |   |   | Deficit     |  
|                            |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Balance  June 30, 2008     |  | 447,589      |  | $ | 448    |  | $ | 6,533,964  |  | $ | (121,568      | ) | $ | (7,205,092  | )
|                            |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|                            |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Fair Value Options issued   |  | -            |  |   | -      |  |   | 32,500     |  |   | -             |   |   | -           |  
|to employees                |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|                            |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Net Loss                    |  | -            |  |   | -      |  |   | -          |  |   | -             |   |   | (136,367    | )
|                            |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Currency translation        |  | -            |  |   | -      |  |   | -          |  |   | 53,846        |   |   | -           |  
|adjustment                  |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|                            |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Balance  June 30, 2009     |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|                            |  | 447,589      |  | $ | 448    |  | $ | 6,566,464  |  | $ | (67,722       | ) | $ | (7,341,459  | )
|                            |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Shares issued for Marketing |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Partner Agreement           |  | 45,000,000   |  |   | 45,000 |  |   | -          |  |   | -             |   |   | -           |  
|                            |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Net Loss                    |  | -            |  |   | -      |  |   | -          |  |   | -             |   |   | (164,600    | )
|                            |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Currency translation        |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|adjustment                  |  | -            |  |   | -      |  |   | -          |  |   | (30,957       | ) |   | -           |  
|                            |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|                            |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|Balance  September 30,     |  |              |  |   |        |  |   |            |  |   |               |   |   |             |  
|2009                        |  | 45,447,589   |  |   | 45,448 |  |   | 6,566,464  |  |   | (98,679       | ) |   | (7,506,059  | )

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

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Consolidated Statements of Cash Flows         
|Three months ended September 30, 2009 and 2008
|(Unaudited)                                   

|                                                          |   | 2009     |   |   | 2008    |  
|--------------------------------------------------------- | - | -------- | - | - | ------- | -
|                                                          |   |          |   |   |         |  
|                                                          |   |          |   |   |         |  
|Operating activities                                      |   |          |   |   |         |  
|                                                          |   |          |   |   |         |  
|Net loss                                                  | $ | (164,600 | ) | $ | (35,503 | )
|Adjustments to reconcile net loss to net cash used in     |   |          |   |   |         |  
|operating activities                                      |   |          |   |   |         |  
|                                                          |   |          |   |   |         |  
|Depreciation and amortization                             |   | 3,271    |   |   | 399     |  
|Amortization of deferred compensation                     |   | -        |   |   | 16,250  |  
|Common stock issued for Marketing
      Partner Agreement |   | 45,000   |   |   | -       |  
|                                                          |   |          |   |   |         |  
|Changes in operating assets and liabilities               |   |          |   |   |         |  
|Accounts receivable                                       |   | (81,776  | ) |   | 184,907 |  
|Contract retention receivable                             |   | (123,153 | ) |   | 4,203   |  
|Costs of uncompleted contracts in excess of billings      |   | (13,160  | ) |   | 15,464  |  
|Prepaid expenses and deposits                             |   | (212     | ) |   | 59      |  
|Accounts payable and accrued liabilities                  |   | 95,537   |   |   | (62,937 | )
|Bonus payable                                             |   | 469,096  |   |   | (9,598  | )
|Billings on uncompleted contracts in excess of costs      |   |          |   |   |         |  
|and
      estimated revenues                              |   | (172,932 | ) |   | (48,600 | )
|Deferred revenue                                          |   | 607      |   |   | 204     |  
|Net cash used in operating activities                     |   | 57,678   |   |   | 64,848  |  
|                                                          |   |          |   |   |         |  
|Investing activities                                      |   |          |   |   |         |  
|Purchase of
      equipment                               |   | (62,506  | ) |   | (6,158  | )
|Net cash used in investing activities                     |   | (62,506  | ) |   | (6,158  | )
|                                                          |   |          |   |   |         |  
|Financing activities                                      |   |          |   |   |         |  
|(Decrease)
      Increase in bank overdraft, net          |   | -        |   |   | (62,176 | )
|Proceeds from shareholders loan                           |   | 196,364  |   |   | 5,837   |  
|Proceeds
      from officer and directors                 |   | 35,618   |   |   | (14,745 | )
|Net cash provided by financing activities                 |   | 231,982  |   |   | (71,084 | )
|                                                          |   |          |   |   |         |  
|                                                          |   |          |   |   |         |  
|Effects of exchange rates on cash                         |   | (30,957  | ) |   | 10,450  |  
|                                                          |   |          |   |   |         |  
|                                                          |   |          |   |   |         |  
|Net increase (decrease) in cash                           |   | 196,197  |   |   | (1,944  | )
|                                                          |   |          |   |   |         |  
|Cash and cash equivalents, beginning of
      period      |   | 73,272   |   |   | 51,245  |  
|                                                          |   |          |   |   |         |  
|Cash and cash equivalents, end of period                  | $ | 269,469  |   | $ | 49,301  |  
|                                                          |   |          |   |   |         |  
|                                                          |   |          |   |   |         |  
|Supplemental cash flow information                        |   |          |   |   |         |  
|                                                          |   |          |   |   |         |  
|Interest
      paid                                       | $ | 1,936    |   | $ | 1,638   |  

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

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|September 30, 2009                            
|                                              

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

Nature of operations, basis of financial statement
  presentation

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

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

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

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

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

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

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

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

Principles of consolidation

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

Accounts Receivable

The Company reports accounts receivable at net realizable
  value. The Companys term of sale provide the basis for when accounts become
  delinquent or past due. The Company provides an allowance for doubtful accounts,
  when necessary, equal to the estimated uncollectible amounts. There is an
  allowance for doubtful accounts as of September 30, 2009 of $4,205 (2008 
  $9,504).

F-6

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|September 30, 2009                            
|                                              

Equipment

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

Financial instruments

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

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

Cash and equivalents

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

Income taxes

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

Goodwill and intangible assets

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

Use of estimates

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

F-7

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|September 30, 2009                            
|                                              

Revenue recognition

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

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

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

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

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

Concentration of credit risk

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

Foreign currency translation

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

Comprehensive (loss) income

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

F-8

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|September 30, 2009                            
|                                              

Stock-based compensation

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

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

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

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

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

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

Recovery of long-lived assets

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

Advertising expenses

The Company expenses advertising costs as incurred which was
  $64 for the quarter ended September 30, 2009.

F-9

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|September 30, 2009                            
|                                              

Loss per share

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

Recent accounting pronouncements

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

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

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

Going Concern

The accompanying consolidated financial statements have been
  prepared assuming that the Company will continue as a going concern. The Company
  incurred a net loss of $164,600 and cash flow from operations of $57,678 during
  the quarter ended September 30, 2009, and had a working capital deficiency of
  $1,518,494 and a stockholders deficiency of $992,826. These matters raise
  substantial doubt about its ability to continue as a going concern. Management
  believes that actions are presently being taken to revise the Companys
  operating results. Management believes that the Company will have adequate cash
  to fund anticipated needs through June 30, 2010 and beyond primarily as a result
  of our contract backlog. The accompanying consolidated financial statements do
  not include any adjustments that might result from the outcome of this
  uncertainty.

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

F-10

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|September 30, 2009                            
|                                              

|2. | Acquisitions
|-- | ------------

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

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

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

Valuation of shares of common stock and
        preferred stock
      $
      1Assets acquired
      
      276,012Liabilities assumed
      
      (727,324
      )451,312Goodwill
      $
      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, 2009 and June 30 2009, contract retention
  receivables were $358,349 and $235,196 respectively.

F-11

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|September 30, 2009                            
|                                              

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

|                              |   |         |  |   |              |  |   | September 30 |  |   |        |  |   |              |  |   | June 30  | 
|----------------------------- | - | ------- |  | - | ------------ |  | - | ------------ |  | - | ------ |  | - | ------------ |  | - | -------- | 
|                              |   |         |  |   | Accumulated  |  |   | 2009         |  |   |        |  |   | Accumulated  |  |   | 2009     | 
|                              |   | Cost    |  |   | Depreciation |  |   | Net Book     |  |   | Cost   |  |   | Depreciation |  |   | Net Book | 
|                              |   |         |  |   |              |  |   | Value        |  |   |        |  |   |              |  |   | Value    | 
|                              |   |         |  |   |              |  |   |              |  |   |        |  |   |              |  |   |          | 
|Computer equipment & software | $ | 16,766  |  | $ | 1,007        |  | $ | 15,759       |  | $ | 899    |  | $ | 762          |  | $ | 137      | 
|Office furniture & equipment  |   | 16,320  |  |   | 4,461        |  |   | 11,859       |  |   | 13,202 |  |   | 3,885        |  |   | 9,317    | 
|Leasehold improvements        |   | 15,617  |  |   | 15,617       |  |   | -            |  |   | 15,617 |  |   | 15,617       |  |   | -        | 
|Computer equipment under      |   |         |  |   |              |  |   |              |  |   |        |  |   |              |  |   |          | 
|capital lease                 |   | 2,140   |  |   | 1,817        |  |   | 323          |  |   | 2,140  |  |   | 1,791        |  |   | 349      | 
|Automobile                    |   | 49,226  |  |   | 2,810        |  |   | 46,416       |  |   | 6,158  |  |   | 839          |  |   | 5,319    | 
|                              |   |         |  |   |              |  |   |              |  |   |        |  |   |              |  |   |          | 
|                              | $ | 100,069 |  | $ | 25,712       |  | $ | 74,357       |  | $ | 38,016 |  | $ | 22,894       |  | $ | 15,122   | 

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

At September 30, 2009, bank overdrafts covered by a revolving
  line of credit were $Nil. The revolving line of credit agreement is between SCI,
  the Companys wholly owned subsidiary, and HSBC Bank of Canada. The revolving
  line of credit facility bears interest at the rate of prime plus 4.50% per
  annum, allows authorized bank overdrafts of up to $116,750 ($125,000 CDN) and is
  secured by a shareholder guarantee and $49,272 ($52,754 CDN) in the form of a
  term deposit. As of September 30, 2009, the Company had written checks of $Nil
  in excess of the operating line of credit.

Pursuant to the banking facility, the Companys wholly owned
  subsidiary is required to maintain minimum equity of $93,400 (CDN$100,000). The
  Companys wholly owned subsidiary is not in compliance with this condition at
  September 30, 2009.

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

At September 30, 2009 the Company is indebted to a company
  controlled by the Companys president in the amount of $821,756. The loan is
  unsecured, bears 7.5% interest and has no fixed terms of repayment.

|7. | Loans payable
|-- | -------------

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

|8. | Income taxes
|-- | ------------

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

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

F-12

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|September 30, 2009                            
|                                              

|8. | Income taxes, continued
|-- | -----------------------

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

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

|                                                                         |   | September 30, |   |   | June 30,   |  
|------------------------------------------------------------------------ | - | ------------- | - | - | ---------- | -
|                                                                         |   | 2009          |   |   | 2009       |  
|                                                                         |   |               |   |   |            |  
|Deferred tax asset, beginning                                            | $ | 2,402,420     |   | $ | 2,409,732  |  
|Benefit (provision )of current years operating loss carry
      forward |   |               |   |   |            |  
|(gain)                                                                   |   | 57,610        |   |   | (7,312     | )
|Deferred tax asset, ending                                               | $ | 2,460,030     |   | $ | 2,402,420  |  
|                                                                         |   |               |   |   |            |  
|Valuation allowance, beginning                                           | $ | (2,402,420    | ) | $ | (2,409,732 | )
|Current years loss carry forward
      (provision)                      |   | (57,610       | ) |   | (7,312     | )
|Valuation allowance, ending                                              | $ | (2,460,030    | ) | $ | (2,402,420 | )
|                                                                         |   |               |   |   |            |  
|Deferred tax asset, net                                                  | $ | -             |   | $ | -          |  
|                                                                         |   |               |   |   |            |  
|Tax at blended U.S./Canadian statutory rates                             |   | (35%          | ) |   | (35%       | )
|Loss carryover                                                           |   | 35%           |   |   | 35%        |  
|                                                                         |   |               |   |   |            |  
|Tax expense                                                              | $ | -             |   | $ | -          |  

|9. | Common Stock
|-- | ------------

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

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

At September 30, 2009, there are 45,447,589 shares of common
  stock outstanding.

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

F-13

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|September 30, 2009                            
|                                              

|9. | Common Stockcontinued
|-- | ---------------------

Preferred Stock

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

2005 Stock Incentive Plan

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

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

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

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

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

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

F-14

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|September 30, 2009                            
|                                              

|9. | Common Stock, continued
|-- | -----------------------

2005 Stock Incentive Plan,continued

At September 30, 2009, options outstanding are as follows:

AverageShares
      
      Exercise PriceBalance at July 1, 2009
      
      1,300,000
      
      $0.15Granted
      
      -
      
      -Exercised
      
      -
      
      -Cancelled
      
      -
      
      -Balance at September 30, 2009
      
      1,300,000
      
      $0.15


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

Options outstanding
      
      
      Options exercisableWeighted average
      
      Weighted
      
      
      
      
      Weightedremaining
      
      average
      
      
      
      
      averageExercise
      
      Number
      
      
      contractual life
      
      exercise
      
      
      
      
      exerciseprice
      
      outstanding
      
      
      (years)
      
      price
      
      
      Number
      
      price$ 0.15
      
      1,300,000
      
      
      8.00
      
      $ 0.15
      
      
      1,300,000
      
      $ 0.15


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

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

|10. | Costs and Estimated Earnings on Uncompleted
      Contracts
|--- | -----------------------------------------------------------

September 30,
      
      
      June 30,2009
      
      
      2009Costs incurred on uncompleted contracts
      $
      1,659,536
      
      $
      1,225,215Estimated earnings
      
      1,484,078
      
      
      746,0963,143,614
      
      
      1,971,311Less: Billings to Date
      
      (3,218,025
      )
      
      ( 2,231,814
      )$
      (74,411
      )
      $
      (260,503
      )Included in accompanying balance
        sheets under the following captions:Costs of uncompleted contracts in excess of billings
      
      50,257
      
      
      37,097Billings on uncompleted contracts in excess
        of costs and
      $
      (124,668
      )
      $
      (297,600
      )estimated revenues$
      (74,411
      )
      $
      (260,503
      )


F-15

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|September 30, 2009                            
|                                              

|11. | Related Party Transactions
|--- | --------------------------

During the quarter ended September 30, 2009, the Companys
  wholly owned subsidiary paid $481,444 in management salaries to its President
  and Vice president which included bonuses of $448,320 and consulting fees of
  $25,619. Such costs have been reflected in the accompanying statement of
  operations.

Amounts due to officers and directors were $435,790 as of
  September 30, 2009.

|12. | Commitments
|--- | -----------

Operating leases

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

Year endingJune
        302010
      
      26,0232011
      
      23,7632012
      
      18,7142013
      
      8,9412014
      
      7,078


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 $136,677 (CDN$150,000) along
  with annual car allowances of $13,668 (CDN$15,000).

Marketing partner agreement

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

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

F-16

---

|Smart-tek Solutions Inc.                      
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|September 30, 2009                            
|                                              

|13. | Concentrations of risk
|--- | ----------------------

At September 30, 2009, three customers accounted for 40% (2008
   two significant customers accounted for 37%) of trade accounts receivable.

For the quarter ended September 30, 2009, two significant
  customers accounted for 18% (2008  two significant customers accounted for 28%)
  of revenue and one of the customers individually accounted for more than 10%
  (2008  both customers accounted for more than 10%) of revenue.

For the quarter ended September 30, 2009, three significant
  suppliers accounted for 36% (2008  three significant suppliers accounted for
  38%) of purchases.

For the quarter ended September 30, 2009, 100% of the Companys
  sales and accounts receivable arose from sales to Canadian customers.

|14. | Subsequent events
|--- | -----------------

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

F-17

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- 4 -

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.

Our Current 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. While the operations of our wholly-owned subsidiary are profitable, we
still do not operate profitably as a consolidated entity. Managements plans to
improve our financial condition are as follows:

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- 5 -

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

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

RESULTS OF OPERATIONS

Three Month Summary

|                                    |   |                    |   |   |            |   |  | Percentage |  
|----------------------------------- | - | ------------------ | - | - | ---------- | - |  | ---------- | -
|                                    |   | Three Months Ended |   |   | Increase/  |  
|                                    |   | September 30,      |   |   | (Decrease) |  
|                                    |   | 2009               |   |   | 2008       |   |  |            |  
|Revenue                             | $ | 1,822,640          |   | $ | 898,421    |   |  | 102.9%     |  
|Selling, General and Administrative |   | 788,023            |   |   | 153,720    |   |  | 412.7%     |  
|Expenses                            |   |                    |   |   |            |   |  |            |  
|Interest expense                    |   | (1,936             | ) |   | (1,689     | ) |  | (14.6%     | )
|Net Loss                            | $ | (164,600           | ) | $ | (35,503    | ) |  | (362%      | )

Revenue

We generated $1,822,640 in revenue for the quarter ended
September 30, 2009, of which approximately $1.35 million was attributable to our
security and technology business operations through our subsidiary Smart-Tek
Solutions Inc. and $484,000 was attributable to our integrated management
solutions and human resources business through our subsidiary Smart-Tek
Automated Services, Inc. The increase in revenues for the three months ended
June 30, 2009 is primarily attributable to the increase in revenues produced by
our new line of business through Smart-Tek Automated Services, Inc. For the
quarter ended September 30, 2009, two significant customers accounted for 18%
(2008  two significant customers accounted for 28%) of revenue and one of the
customers individually accounted for more than 10% (2008  both customers
accounted for more than 10%) of revenue. For the quarter ended September 30,
2009, three significant suppliers accounted for 36% (2008  three significant
suppliers accounted for 38%) of purchases.

Expenses

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

|                                                   |   |                    |   |   |            |   |  | Percentage |  
|-------------------------------------------------- | - | ------------------ | - | - | ---------- | - |  | ---------- | -
|                                                   |   | Three Months Ended |   |   | Increase/  |  
|                                                   |   | September 30,      |   |   | (Decrease) |  
|                                                   |   | 2009               |   |   | 2008       |   |  |            |  
|Selling, general and administrative
      expenses | $ | 788,023            |   | $ | 153,720    |   |  | 412.7%     |  
|Cost of revenue and service delivery               |   | 1,197,281          |   |   | 776,515    |   |  | 54.2%      |  
|Interest expense                                   |   | (1,936             | ) |   | (1,689     | ) |  | (14.6%     | )
|Total Expenses                                     | $ | 1,983,368          |   | $ | 928,546    |   |  | 203%       |  

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- 6 -

General and Administrative

The 413% increase in our general and administrative expenses
for the three month period ended September 30, 2009 from the comparative period
in 2008 was primarily due to: (i) increased management and consulting fees
relating to the development of our subsidiaries business; and (ii) increased
professional fees associated with preparing and filing our periodic reports
under the Securities Exchange Act of 1934 and litigation costs.

Liquidity and Capital Resources

Working Capital

Three Months Ended
      September 30, 2009
    
    Year Ended June 30,
      2009
    
    Percentage Increase/
      (Decrease)Current Assets
    $
    1,400,723
    $
    986,225
    
    42%Current
      Liabilities
    
    2,919,217
    
    2,137,669
    
    36.6%Working Capital
      Deficiency
    $
    (1,518,494 )
    $
    (1,151,444 )
    
    (32%
      )


Cash Flows

Three Months Ended September
      30, 2009
    
    Three Months Ended September
      30, 2008Cash used in
      Operating Activities
    $
    57,678
    $
    64,848Cash used by
      Investing Activities
    
    (62,506 )
    
    (6,158 )Cash provided by (used in) Financing
    
    231,982
    
    (71,084 )ActivitiesNet Increase in
      Cash
    $
    196,197
    $
    (1,944 )


We had cash on hand of $269,469 and a working capital deficit
of $1,518,494 as of September 30, 2009 compared to cash on hand of $73,272 and
working capital of $(1,151,444) for the year ended June 30, 2009. We anticipate
that we will incur approximately $300,000 for operating expenses, including
professional, legal and accounting expenses associated with our reporting
requirements under the Exchange Act during the next twelve months. Accordingly,
we will need to obtain additional financing in order to complete our full
business plan.

Cash Used In Operating Activities

We used cash in operating activities in the amount of $57,678
during the three months ended September 30, 2009. Cash used in operating
activities was funded by cash from financing activities.

Cash From Investing Activities

We used cash of $62,506 in investing activities during the
three months ended September 30, 2009.

Cash from Financing Activities

Cash of $231,982 was provided by financing activities during the three
  months ended September 30, 2009.

Current Capitalization

As at the date of this quarterly report, there are 69,314,124
shares of common stock and 5,000,000 shares of Class A preferred stock issued
and outstanding.

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- 7 -

As at November 23, 2009, our outstanding stock options and
warrants are as follows:

|                                |  | Shares    |  |   | Average        | 
|------------------------------- |  | --------- |  | - | -------------- | 
|                                |  |           |  |   | Exercise Price | 
|Balance as at July 1, 2009      |  | 1,300,000 |  | $ | 0.15           | 
|Granted                         |  | -         |  |   | -              | 
|Exercised                       |  | -         |  |   | -              | 
|Cancelled                       |  | -         |  |   | -              | 
|Balance as at November 23, 2009 |  | 1,300,000 |  | $ | 0.15           | 

The Company had two partially vested stock options outstanding
at December 31, 2005 pursuant to employment agreements entered into between the
Companys and its president and vice-president. Under these agreements, the
Company issued options to purchase up to 650,000 shares of its common stock at a
purchase price of $0.15 per share that vest in equal quarterly installments over
a three (3) year period.

Going Concern

The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. The Company
incurred a net loss of $164,600 during the three months ended September 30,
2009, and had a working capital deficiency of $1,151,444 and a shareholders
deficiency of $992,826. These matters raise substantial doubt about its ability
to continue as a going concern. Management believes that actions are presently
being taken to revise the Companys operating results. Management believes that
the Company will have adequate cash to fund anticipated needs through September
30, 2010 and beyond primarily as a result of our contract backlog. The
accompanying consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

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

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

Future Financings

The Company does not have any significant available credit,
bank financing or other external sources of liquidity. Due to historical
operating losses and other issues as described in the Companys going concern
footnote included in its interim financial statements as at and for the period
ended September 30, 2009, the Companys operations have not been a source of
liquidity and the Company had satisfied its cash requirements through
shareholder loans and private placements. In order to obtain necessary capital,
the Company may need to sell additional shares of its common stock or borrow
funds from private lenders. There is no assurance that the Company will be able
to secure additional financing or that it can be secured at rates acceptable to
the Company. In addition, should the Company be required to either issue stock
for services or to secure equity funding, due to the lack of liquidity in the
market for the Companys stock such financing would result in significant
dilution to its existing shareholders.

The Companys short term plan is to continue to ask its
officers to defer payment of salaries, utilize its common stock where possible
to pay for services and to seek further shareholder loans. In the longer term,
the Company is actively seeking additional merger, acquisition or venture
relationships with operating enterprises in order to generate long-term growth
opportunities for the Company, permit the Company to meet its financial
obligations and

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- 8 -

to provide increased value to the Companys shareholders. We
have obtained our required cash resources principally through loans from
shareholders and our executive officers. While the operations of our
wholly-owned subsidiary are profitable, we still do not operate profitably as a
consolidated entity.

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

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

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

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

Revenue Recognition

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

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

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

When calculating the amount of total profit or loss on a
long-term contract, unapproved claims are recorded as revenue when collection is
deemed probable based upon the four criteria for recognizing unapproved claims
under the AICPA Statement of Position 81-1 (SOP 81-1) Accounting for
Performance of Construction Type and Certain Production Type Contracts. The
Company is actively engaged in claims negotiations with customers and the
success of the claims negotiations have a direct impact on the profit or loss
recorded for any long-term contract. On a quarterly basis, significant contracts
are reviewed. However, there are many factors that impact future costs,
including but not limited to, weather, inflation, labor and community
disruptions, timely availability of materials,

---

- 9 -

productivity and other factors. These factors can affect the
accuracy of our estimates and materially impact our future earnings. The Company
also provides various other services to customers not covered under construction
contracts such as equipment repairs. The revenue from the provision of these
types of services is recorded once the specific job is complete.

Goodwill and Intangible Assets

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

Stock-based Compensation

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

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

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

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

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

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

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- 10 -

Risks and Uncertainties

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

We have incurred losses for the last four fiscal years. Our net
losses and negative cash flow may continue for the foreseeable future. As of
September 30, 2009, our accumulated deficit was $7,506,059. We believe that our
planned growth and profitability will depend in large part on our ability to
market our businesses and gain clients and to expand our relationships with
existing clients. Accordingly, we intend to invest heavily in marketing,
strategic partnerships and development of our client base. If we are not
successful in expanding our client base, it will have a material adverse effect
on our financial condition and our ability to continue to operate our business.
Furthermore, we will continue to market our RFID based system developed for the
Agriculture Industry. We believe that at the conclusion of the beta site testing
phase of development, that we will be able to successfully obtain customers for
the system. However, there is no guarantee that the system will be able to
successfully exit from its beta stage.

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

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

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

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

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

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

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

---

- 11 -

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

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

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

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

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

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

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

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

We may have difficulty managing growth.

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

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

We may not be able to retain our key personnel or attract other
qualified personnel in the future. Our success will depend upon the continued
service of key management personnel. The loss of services of any of the key
members of our management team or our failure to attract and retain other key
personnel could disrupt operations and have a

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- 12 -

negative effect on employee productivity and morale and harm
our financial results. We operate in a market that is intensely and increasingly
competitive, and if we are unable to compete successfully, our revenue could
decline and we may be unable to gain market share.

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

At September 30, 2009, we had available federal net operating
loss (NOL) carry-forwards of approximately $6,981,146. Under Section 382 of the
Internal Revenue Code of 1986, as amended, the use of prior losses, including
NOLs is limited if a corporation undergoes an ownership change. Future
issuances of equity interests by us for acquisitions or the exercise of
outstanding options to purchase our capital stock may result in an ownership
change that is large enough for this limitation to apply. If the limitation
applies, we may be unable to use a material portion of its available NOL
carry-forwards to reduce future taxable income.

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

Our stock is a penny stock. The Securities and Exchange
Commission has adopted Rule 15g-9 which generally defines penny stock to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and accredited investors. The term
accredited investor refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the SEC which provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customers account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customers
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchasers written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock
that is subject to these penny stock rules. Consequently, these penny stock
rules may affect the ability of broker-dealers to trade our securities. We
believe that the penny stock rules discourage investor interest in, and limit
the marketability of, our common stock.

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

Item 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, 2009, which is the end of the period
covered

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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, 2009 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.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS.

Not Applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.

During the fiscal quarter ended September 30, 2009, we completed the following sales of our equity securities that were not registered:

|1. | On September 14, 2009 Smart-Tek issued 45,000,000 restricted shares of its common stock to Brian Bonar, a director of the Company pursuant to Section 4(2) of the Securities Act of 1933. Mr. Bonar was issued the shares based on Mr. Bonar achieving certain milestone targets for annualized sales as set out in the Marketing Partner Agreement dated June 17, 2009 between the Company and Mr. Bonar.                                                                                                                                                                                             
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2. | On September 30, 2009 Smart-Tek entered into debt settlement agreements with seven subscribers pursuant to which it agreed to settle $310,265 of debt in consideration of the issuance of 23,866,535 shares of its common stock.  The shares for debt transaction closed effective October 1, 2009 and 23,866,535 were issued to the subscribers. Each of the subscribers represented to Smart-Tek that they were an “accredited investor” as such term is defined in Canadian National Instrument 45- 106 and not a “US person” as such term is defined in Regulation S of the Securities Act of 1933.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM 5. OTHER INFORMATION.

None.

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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 Solutions Inc. dated March 8, 2005 (3)                                                                          
|10.2    | Share Exchange Agreement
      between Registrant and Smart-Tek Communication, Inc dated April 15, 2005
      (4)                                                                     
|10.3    | Employment Agreement with Perry Law dated April
      23, 2005 (5)                                                                                                                    
|10.4    | Employment Agreement with
      Stephen Platt dated April 23, 2005 (5)                                                                                                                
|10.5    | Stock Option Grant to Perry Law dated April 23,
      2005 (6)                                                                                                                        
|10.6    | Stock Option Grant to Stephen
      Platt dated April 23, 2005 (6)                                                                                                                    
|10.7    | Form of Debt Settlement and Subscription
      Agreement dated June 23, 2008 among Smart-Tek Solutions Inc., Perry Law,
  P5 Holdings Ltd., Joe Law, Denis Gallant and Gev 2000 KFT(7)
|10.8    | Lease Agreement between
      Smart-Tek Communications, Inc. and Protec Installations Group dated March
      1, 2008(8)                                                              
|10.9    | Marketing Partner Agreement dated June 17, 2009
      among Smart-Tek Solutions Inc., Smart-Tek Automated Systems Inc. and Brian
      Bonar.(9)                                      
|10.10   | Settlement Agreement and
      General Release made as of July 10, 2009 between Smart-Tek Solutions Inc.
      and Richardson Patel LLP (11)                                          
|10.11   | Amendment to Employment Agreement between
      Smart-Tek Communications Inc. and Perry Law dated July 31, 2009
      (11)                                                            
|10.12   | Strategic Marketing Partner
      Agreement between Smart-Tek Automated Services Inc. and ACEO Inc. dated
      August 1, 2009 (11)                                                   
|10.13   | Form of Debt Settlement and Subscription
      Agreement dated September 30, 2009 (11)                                                                                                
|14.1    | Amended and Restated Code of
      Ethics(10)                                                                                                                                         
|21.1    | Subsidiaries(11)                                                                                                                                                                      
|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.              

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|(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.                          

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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/ Perry Law                                                    | 
|----- | ---------------------------------------------------------------- | 
|      |                                                                  | 
|      | Perry Law                                                        | 
|      | Chief Executive Officer, Chief
      Financial Officer           | 
|      | and Director                                                     | 
|      | (Principal Executive Officer,
      Principal Accounting Officer | 
|      | and Principal Financial Officer)                                 | 
|      |                                                                  | 
|Date: | November 23, 2009                                                | 

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