UNITED STATES

Securities and Exchange Commission

Washington, D.C. 20549



Form 10-QSB

(Mark One)



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



For the quarterly period ended September 30, 2006



OR



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

EXCHANGE ACT OF 1934



For the transition period from _______ to ________.



Commission File Number 000-29895



SMART-TEK SOLUTIONS, INC.

(Formerly ROYCE BIOMEDICAL, INC.)

Nevada                                           98-0206542

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

State or other jurisdiction                 (I.R.S.) Employer Identification No.

of incorporation



Smart-tek Solutions, Inc.

3702 South Virginia St.

Suite G12-401

Reno, NV 89502

Address of principal executive offices



(604) 628-8161

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

Registrant's telephone number, including area code



433 Town Center, Suite 316

Corte Madera, CA, 94925

Former address of principal executive offices



Indicate by check mark whether the Registrant (1) has files 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) had been  subject to such  filing requirements for the past 90 days.



1



---







Yes   X                  No    _____





As of October 30, 2006 the Company had 73,253,016 shares of common stock outstanding.



Transitional Small Business Disclosure Format (Check one)    Yes ____   No  X





PART I -- FINANCIAL INFORMATION



Item 1. Financial Statements.









































































2



---































|         |                                 |                                                                         |      |   |  |  |      |  |  |  |  |  |  |  | 
|-------- | ------------------------------- | ----------------------------------------------------------------------- | ---- | - |  |  | ---- |  |  |  |  |  |  |  | 
|Contents |                                 |                                                                         |      |   |  |  |     
|         |                                 |                                                                         |      |   |  |  |     
|         |                                 |                                                                         |      |   |  |  |     
|         |                                 |                                                                         |      |   |  |  | Page
|         |                                 |                                                                         |      |   |  |  |     
|         |                                 |                                                                         |      |   |  |  |     
|         | Unaudited Financial Statements: |                                                                         |      |  
|         |                                 |                                                                         |      |   |  |  |     
|         |                                 | Condensed Consolidated Balance Sheets                                   |      | 4
|         |                                 |                                                                         |      |   |  |  |     
|         |                                 | Condensed Consolidated Statements of Operations                         | 5-6 
|         |                                 |                                                                         |      |   |  |  |     
|         |                                 | Condensed Consolidated Statement of Changes in Shareholders' Deficiency | 7   
|         |                                 |                                                                         |      |   |  |  |     
|         |                                 | Condensed Consolidated Statements of Cash Flows                         | 8   
|         |                                 |                                                                         |      |   |  |  |     
|         |                                 | Notes to the Condensed Consolidated Financial Statements                | 9-15
|         |                                 |                                                                         |      |   |  |  |     



3



---









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

Condensed Consolidated Balance Sheets

As at September 30, 2006 (Unaudited) and June 30, 2006

|                                                               | September 30 |             |       | June 30 |           
|-------------------------------------------------------------- | ------------ | ----------- | ----- | ------- | ----------
|                                                               |              |             | 2006  |         |           
|                                                               |              | (Unaudited) |       |         |           
|Assets                                                         |              |             |       |         |           
|Current assets                                                 |              |             |       |         |           
|Cash                                                           | $            | 47,399      |       | $       | 49,469    
|Accounts receivable                                            |              | 570,061     |       |         | 662,132   
|Contract retention receivable                                  |              | 149,036     |       |         | 100,988   
|Cost of uncompleted contracts in excess of billings            |              | 13,856      |       |         | 6,906     
|Prepaid expenses and deposits                                  |              |             | 4,965 |         |           
|Total current assets                                           |              | 785,317     |       |         | 824,459   
|Equipment, net of accumulated depreciation                     |              | 13,579      |       |         | 15,610    
|Goodwill                                                       |              | 451,311     |       |         | 451,311   
|                                                               | $            | 1,250,207   |       | $       | 1,291,380 
|Liabilities                                                    |              |             |       |         |           
|Current liabilities                                            |              |             |       |         |           
|Bank overdraft                                                 | $            | 169,348     |       | $       | 212,583   
|Accounts payable and accrued liabilities                       |              | 429,016     |       |         | 445,631   
|Bonus payable                                                  |              | 251,060     |       |         | 251,060   
|Billings on uncompleted contracts                              |              |             |       |         |           
|in excess of costs and estimated revenues                      |              | 379,077     |       |         | 432,558   
|Deferred revenue                                               |              | 17,341      |       |         | 16,401    
|Shareholder loans                                              |              | 375,458     |       |         | 281,061   
|Amounts due to officers and directors                          |              | 431,833     |       |         | 401,833   
|Related party debt                                             |              | 227,619     |       |         | 209,924   
|Total current liabilities                                      |              | 2,280,752   |       |         | 2,251,051 
|Shareholders 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, 2006 and June 30, 2006 | -            |             |       | -       |           
|Common stock: $0.001 par value, 500,000,000, shares            |              |             |       |         |           
|authorized, 73,253,016 issued                                  |              |             |       |         |           
|and outstanding at September 30, 2006 and June 30, 2006        |              |             |       |         |           
|respectively                                                   |              | 73,253      |       |         | 73,253    
|Additional paid in capital                                     |              | 2,812,811   |       |         | 2,796,561 
|Accumulated other comprehensive loss                           |              | (64,703     | )     |         | (65,430   
|Accumulated deficit                                            |              | (3,851,906  | )     |         | (3,764,055
|Total shareholders deficiency                                 |              | (1,030,545  | )     |         | (959,671  
|                                                               | $            | 1,250,207   |       | $       | 1,291,380 



See accompanying notes to the condensed consolidated financial statements.



4



---







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

Condensed Consolidated Statements of Operations and Comprehensive Loss-Unaudited

For the three months ended September 30, 2006 and 2005



|                                             |   | 2006       |   |   | 2005        |  
|-------------------------------------------- | - | ---------- | - | - | ----------- | -
|Revenue                                      |   |            |   |   |             |  
|Contract revenue                             | $ | 647,656    |   | $ | 529,335     |  
|Services revenue                             |   | 42,225     |   |   | 46,804      |  
|Other revenue                                |   | 194        |   |   | 494         |  
|Total revenue                                |   | 690,075    |   |   | 576,633     |  
|Cost of revenue and service delivery         |   | 592,520    |   |   | 404,233     |  
|Gross profit                                 |   | 97,555     |   |   | 172,400     |  
|Selling, general and administrative expenses |   | 182,721    |   |   | 258,151     |  
|Operating loss                               |   | (85,166    | ) |   | (85,751     | )
|Other expense                                |   |            |   |   |             |  
|Interest                                     |   | (2,685     | ) |   | (5,205      | )
|Net loss                                     |   | (87,851    | ) |   | (90,956     | )
|Currency translation adjustment              |   | 727        |   |   | (26,610     | )
|Comprehensive loss                           | $ | (87,124    | ) | $ | (117,566    | )
|Loss per share, basic and diluted            | $ | ( 0.00     | ) | $ | (0.00       | )
|Weighted average shares outstanding,         |   |            |   |   |             |  
|basic and diluted                            |   | 73,253,016 |   |   | 106,239,248 |  





See accompanying notes to the condensed consolidated financial statements.



4







5



---









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

Condensed Consolidated Statement of Changes in Shareholders Deficiency-Unaudited

For the three months ended September 30, 2006



|                                |              |  |   |            |  |               |                 |   | Other       |   |   |            |   |   |            |  
|------------------------------- | ------------ |  | - | ---------- |  | ------------- | --------------- | - | ----------- | - | - | ---------- | - | - | ---------- | -
|                                | Common Stock |  |   | Additional |  | Comprehensive |                 |   | Accumulated |   |   |            |  
|                                | Shares       |  |   | Amount     |  |               | Paid in capital |   | loss        |   |   | Deficit    |   |   | Total      |  
|Balance  July 1, 2006          | 73,253,016   |  | $ | 73,253     |  | $             | 2,796,561       | $ | (65,430     | ) | $ | (3,764,055 | ) | $ | (959,671   | )
|Fair value of options           |              |  |   |            |  |               |                 |   |             |   |   |            |   |   |            |  
|issued to employees             | -            |  |   | -          |  |               | 16,250          |   | -           |   |   | -          |   |   | 16,250     |  
|Net loss                        | -            |  |   | -          |  |               | -               |   | -           |   |   | (87,851    | ) |   | (87,851    | )
|Currency translation adjustment | -            |  |   | -          |  |               | -               |   | 727         |   |   | -          |   |   | 727        |  
|Balance  September 30, 2006    | 73,253,016   |  | $ | 73,253     |  | $             | 2,812,811       | $ | (64,703     | ) | $ | (3,851,906 | ) | $ | (1,030,545 | )





See accompanying notes to the consolidated financial statements.

.



6



---





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

Condensed Consolidated Statements of Cash Flows-Unaudited

For the three months ended September 30, 2006 and 2005

|                                                                            |   | 2006    |   |   | 2005    |  
|--------------------------------------------------------------------------- | - | ------- | - | - | ------- | -
|Operating activities                                                        |   |         |   |   |         |  
|Net loss                                                                    | $ | (87,851 | ) | $ | (90,956 | )
|Adjustments to reconcile net loss to net cash used in                       |   |         |   |   |         |  
|operating activities                                                        |   |         |   |   |         |  
|Depreciation and amortization                                               |   | 2,034   |   |   | 1,895   |  
|Amortization of deferred compensation                                       |   | 16,250  |   |   | 16,250  |  
|Changes in operating assets and liabilities                                 |   |         |   |   |         |  
|Accounts receivable                                                         |   | 92,664  |   |   | 27,504  |  
|Contract retention receivable                                               |   | (47,958 | ) |   | (36,702 | )
|Costs of uncompleted contracts in excess of billings                        |   | (6,944  | ) |   | (7,819  | )
|Prepaid expenses and deposits                                               |   | -       |   |   | 6,485   |  
|Accounts payable and accrued liabilities                                    |   | (22,602 | ) |   | 87,448  |  
|Amounts due to officers and directors                                       |   | 30,000  |   |   | 69,229  |  
|Bonus payable                                                               |   | -       |   |   | (30,045 | )
|Deferred income                                                             |   | 925     |   |   | -       |  
|Billings on uncompleted contracts in excess of costs and estimated revenues |   | (53,869 | ) |   | (74,569 | )
|Net cash used in operating activities                                       |   | (77,351 | ) |   | (31,280 | )
|Financing activities                                                        |   |         |   |   |         |  
|(Decrease) increase in bank overdraft, net                                  |   | (36,928 | ) |   | 18,533  |  
|Proceeds from shareholders loan                                             |   | 94,397  |   |   | -       |  
|Proceeds from officer loan                                                  |   | -       |   |   | 18,229  |  
|Proceeds from (repayment) of related party debt                             |   | 17,470  |   |   | (6,141  | )
|Net cash provided by financing activities                                   |   | 74,939  |   |   | 30,621  |  
|Effects of exchange rates on cash                                           |   | 342     |   |   | 659     |  
|Net increase (decrease) in cash and cash equivalents                        |   | (2,070  | ) |   | -       |  
|Cash and cash equivalents, beginning of period                              |   | 49,469  |   |   | -       |  
|Cash and cash equivalents, end of period                                    | $ | 47,399  |   | $ | -       |  
|Supplemental cash flow information                                          |   |         |   |   |         |  
|Interest paid                                                               | $ | 2,685   |   | $ | 5,205   |  



See accompanying notes to the condensed consolidated financial statements.



7





---





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

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Three Months Ended September 30, 2006 and 2005





1.

Summary of significant accounting policies



Nature of operations, basis of financial statement presentation



Royce Biomedical Inc. was incorporated in Nevada on March 22, 1995.

Between August 1995 and June 1998, the Company manufactured and sold diagnostic test kits used to detect pregnancy, thyroid disorders and other medical conditions. The Company assembled its diagnostic testing kits at its laboratory in 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 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 September 30, 2006, Xili USA, Inc. owns approximately 3% 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.



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

In 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.

The accompanying unaudited condensed interim consolidated financial statements, have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America and, in our opinion, reflects all adjustments, including normal recurring adjustments, necessary to make the financial position and results of operations for the interim periods a fair presentation of our operations and cash flows.  The financial information has not been audited and should not be relied on to the same extent as audited financial statements.











8





---







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

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Three Months Ended September 30, 2006 and 2005





Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission.  These interim financial statements should be read in conjunction with the Companys audited financial statements, as well as other financial information, as contained in Form 10-KSB for the year ended June 30, 2006.  The results of operations for the three months ended September 30, 2006 are not necessarily indicative of results of operations to be expected for the full year.



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 judgement 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.



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



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 the difference, if any, between the fair value of the Company's stock and the exercise price on the measurement date. The Company accounted for stock issued to non-employees in accordance with SFAS No. 123, which required entities to recognize as expense over the service period the fair value of all stock-based awards on the date of grant and EITF No. 96-18, "Accounting for Equity Investments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services", which addressed the measurement date and recognition approach for such transactions.



On January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment" ("SFAS No. 123R"), a revision to 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 No. 95, "Statement of Cash Flows". SFAS No. 123R requires that the Company measure the cost of employee services received in exchange for equity



9





---





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

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Three Months Ended September 30, 2006 and 2005





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 has two partially vested stock options outstanding at September 30, 2006 pursuant to employment agreements entered into between the Company's and its president and vice-president. Under these agreements, the Company issued options to each 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 in April 2005, the grant date, using an option pricing model, of which $16,250 was recognized as expense during the three months ended September 30, 2006.



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, 2006, the value of the unvested options was $98,750 which will be amortized in future periods as the options vest.



Loss per share



Statement of Financial Accounting Standards No.128 Earnings Per Share, requires presentation of basic earnings per share (Basic EPS) and diluted earnings per share (Diluted EPS).  Basic income (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period.  Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period.  These potential dilutive securities were not included in the calculation of loss per share for the three months ended September 30, 2006 or 2005 because the Company incurred a loss during such periods and thus their effect would have been anti-dilutive.  Accordingly, basic and diluted loss per share is the same for the three months ended September 30, 2006 and 2005.  At September 30, 2006, potentially dilutive securities consisted of 1,300,000 outstanding common stock purchase options.



Recent accounting pronouncements



FASB Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements, establishes a formal framework for measuring fair value under GAAP.  It defines and codifies the many definitions of fair value included among various other authoritative literature, clarifies and, in some instances, expands on the guidance for implementing fair value measurements, and increases the level of disclosure required for  fair value measurements.  Although SFAS no. 157 applies to and amends the provisions of existing FASB and AICPA pronouncements, it does not, of itself, require any new fair value measurements, nor does it establish valuation standards.  SFAS No. 157 applies to all other accounting pronouncements requiring or permitting fair value measurements, except for; SFAS no. 123 (R), share-based payment and related pronouncements, the practicability exceptions to fair value determinations allowed by various other authoritative pronouncements, and AICPA Statements of Position 97-2 and 98-9 that deal with software revenue recognition.  This statement is



10





---





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

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Three Months Ended September 30, 2006 and 2005





effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.



Going Concern



The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  The Company incurred a net loss of $87,851 and a negative cash flow from operations of $77,351 during the three months ended September 30, 2006, and had a working capital deficiency of $1,495,435 and a shareholders deficiency of $1,030,545 at September 30, 2006.  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 December 31, 2007 and beyond primarily as a result of our contract backlog at September 30, 2006 of $5,490,726 and contracts in the aggregate of $271,066 entered into subsequent to September 30, 2006.  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 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.  There is no assurance that the Company will be able to secure additional financing orthat it can be secured at rates acceptable to the Company.  In addition, should the Company be required to either issue stock for services or to secure equity funding, due to the lack of liquidity in the market for the Companys stock such financing would result in significant dilution to its existing shareholders.





2.

Concentrations of risk



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



During the three months ended September 30, 2006, five significant customers accounted for more than 61% of revenue and each of these five customers accounted for more than 10% of revenue.



During the three months ended September 30, 2006, 100% of the Companys sales and accounts receivables arose from sales to Canadian customers.



During the three months ended September 30, 2006, five significant suppliers accounted for 84% of purchases.





















11





---





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

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Three Months Ended September 30, 2006 and 2005





3.

Bank Overdraft



At September 30, 2006, bank overdrafts were $169,348, of which $112,088 ($125,000 CDN) was covered by a revolving line of credit.  The revolving line of credit agreement is between SCI, the Companys wholly owned subsidiary, and HSBC Bank 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 $112,088 ($125,000 CDN) and is secured by a shareholder guarantee and $44,835 ($50,000 CDN) in the form of a term deposit.  As of September 30, 2006, the Company has written checks in excess of the operating line of credit in the amount of $57,260.



4.

Related Party Debt





|                                                      | September 30 |         | June 30
|----------------------------------------------------- | ------------ | ------- | -------
|                                                      |              | 2006    |        
|                                                      | (Unaudited)  |         |        
|Unsecured loan from related party, (father of Company |              |        
|President) non-interest bearing, due on demand with   |              |        
|no fixed repayment terms.                             | $            | 181,852 | $      
|Various related party loans, unsecured, non-interest  |              |        
|Bearing advances due on demand with no fixed terms    |              |        
|of repayment.                                         |              | 45,767  |        
|                                                      | $            | 227,619 | $      





5.

Shareholder loans



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



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



During the three months ended September 30, 2006, the Company borrowed $94,397 from a company controlled by the Companys President.  The loan is unsecured, and bears interest of 7.5% beginning on January 1, 2007.  The loan has no fixed repayment terms.



At September 30, 2006 and June 30, 2006, the above shareholder loans aggregated $ 375,458 and $281,061 respectively.













12





---





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

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Three Months Ended September 30, 2006 and 2005





6.

Income Taxes



The Company has provided a 100% valuation allowance
on
its
potentialdeferred tax asset as it cannot determine that it is more likely than not that it will realize the deferred tax asset.  As of September 30, 2006 for Federal income tax purposes, the Company has approximately $3,549,374 in net operating loss carryforwards expiring through 2020.



At September 30, 2006, STS had available federal net operating loss (NOL) carry-forwards of approximately $3,549,374. Under Section 382 of the Internal Revenue Code of 1986, as amended, the use of prior losses, including NOLs, is limited if a corporation undergoes an ownership change. Future issuances of equity interests by us for acquisitions or the exercise of outstanding options to purchase our capital stock, may result in an ownership change that is large enough for this 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.



The income tax effect of temporary differences between financial and tax reporting gives rise to the deferred tax asset at September 30, 2006 and June 30, 2006 as follows:



|                                                      |    | September 30 |    |    | June 30   |   
|----------------------------------------------------- | -- | ------------ | -- | -- | --------- | --
|                                                      |    | 2006         |    |    | 2006      |   
|                                                      |    | (Unaudited)  |    |    |           |   
|Deferred tax asset, beginning                         | $  | 1,205,369    |    | $  | 1,038,000 |   
|Benefit of current years operating loss carryforward |    | 20,248       |    |    | 167,369   |   
|Deferred tax asset, ending                            | $  | 1,225,617    |    | $  | 1,205,369 |   
|Valuation allowance, beginning                        | ($ | 1,205,369    | )  | ($ | 1,038,000 | ) 
|Current years provision                              |    | (20,248      | )  |    | (167,369  | ) 
|Valuation allowance, ending                           | ($ | 1,225,617    | )  | ($ | 1,205,369 | ) 
|Deferred tax asset, net                               | $  | -            |    |    | $ -       |   
|                                                      |    | September 30 |    |    | June 30   |   
|                                                      |    | 2006         |    |    | 2006      |   
|Tax at blended U.S. / Canadian statutory rates        |    | (35          | %) |    | (35       | %)
|Loss carryover                                        |    | 35           | %  |    | 35        | % 
|Tax recovery (expense)                                |    | -            |    |    | -         |   











13





---





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

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Three Months Ended September 30, 2006 and 2005



7.

Costs and Estimated Earnings on Uncompleted Contracts



|                                        |   | 2006      |  
|--------------------------------------- | - | --------- | -
|Costs incurred on uncompleted contracts | $ | 375,672   |  
|Estimated earnings                      |   | 189,876   |  
|                                        |   | 565,548   |  
|Less: Billings to date                  |   | 930,769   |  
|                                        | $ | ( 365,221 | )



Included in accompanying balance sheets under the following captions:



|Costs of uncompleted contracts in excess of billings | $ | 13,856    |  
|---------------------------------------------------- | - | --------- | -
|Billings on uncompleted contracts in excess of costs |   |           |  
|and estimated revenues                               |   | ( 379,077 | )
|                                                     | $ | ( 365,221 | )





8.

Related Party Transactions



Management fees include $26,750 and $24,925 for the three months ended September 30, 2006 and 2005, respectively, of management fees paid to the president of the Companys wholly owned subsidiary.



Amounts due to officers and directors were $431,833 and $401,833 as of September 30, 2006 and June 30, 2006, respectively.  This amount includes $332,532 and $302,532 as of September 30, 2006 and June 30, 2006, respectively, of accrued salaries owed to the Company's former chief executive officer and chief financial officer.  In addition, the Company's former Chief Executive Officer paid certain of the Company's expenses.  The amount due him as of September 30, 2006 and June 30, 2006 was $99,301 of unsecured, short term, non interest bearing advances relating to payment of certain Company's expenses.











14





---





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

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Three Months Ended September 30, 2006 and 2005





9.      Legal proceedings



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



On May 9, 2006, the Company filed a Complaint in the District Court of Clark County, Nevada against the owners and operators of Stocklemon.com (Stocklemon).  The Complaint alleges causes of action for (1) Defamation; (2) Intentional Interference with Contractual Relations; (3) Intentional Interference with Prospective Economic Advantage and (4) Violation of State Securities Laws.  The Complaint alleges that Stocklemon made a series of provably false assertions of fact and other misleading statements concerning Smart-tek Solutions, Inc.s financial affairs and business activities.  The Complaint further alleges that Stocklemon intentionally sought to damage Plaintiffs value, contractual relationships and expectancies via the misrepresentations and misleading statements contained in a Stocklemon report issued on or about April 4, 2006.  The Complaint further alleges that Stocklemon utilized the Report and the untrue statements of material fact contained therein to deliberately manipulate the market for personal gain.  The Complaint filed by Smart-tek Solutions, Inc. seeks compensatory and punitive damages in excess of $100 million and equitable relief against Stocklemon.





















































15





---







ITEM 2                    MANAGEMENT'S DISCUSSION AND ANALYSIS OR





PLAN OF OPERATION





Special Note Regarding Forward-Looking Statements



The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company.  The Company and its representatives may, from time to time, make written or verbal forward-looking statements, including statements contained in the Company's filings with the United States Securities and Exchange Commission, its press releases and in its reports to shareholders. Generally, the inclusion of the words "believe", "expect", "intend", "estimate", "anticipate", "will", and similar expressions or the converse thereof, identify statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements include, without limitation, our expectations regarding sales, earnings or other future financial performance and liquidity, entry into new geographic regions, and future operations or operating results. Although we believe that our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations, actual results may differ materially from our expectations. Factors that could cause actual results to differ from expectations include, without limitation:



These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements as a result of a number of risks and uncertainties including: (a) those risks and uncertainties related to general economic conditions, (b) whether we are able to manage our planned growth efficiently and operate profitable operations, (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations, (d) whether we are able to successfully fulfill our primary requirements for cash which are explained below under Liquidity and Capital Resources.





OVERVIEW

Smart-tek Solutions, Inc. (STS or the "Company") was incorporated in Nevada on March 22, l995 and was formerly known as Royce Biomedical, Inc.

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 test kits to Xili, the Company had provided clinical data and training to Xili personnel.

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 ceased all ongoing business relationships with Xili and will direct its efforts to effectively operate and expand in the security sector.





16





---







CRITICAL ACCOUNTING POLICIES



We have identified the policies below as critical to our understanding of our financial statements.  The application of these policies requires management to make estimates and assumptions that affect the valuation of assets and expenses during the reporting period.  There can be no assurances that actual results will not differ from these estimates.  The impact and any associated risks related to these policies on our business operations are discussed below.



(1)

Income Taxes

Significant judgment is required in determining our income tax provision.  Although we believe that our estimates are reasonable, no assurance can be given that the final outcome will not be different that that which is reflected in our historical income tax provisions and accruals.  Such differences could have a material effect on our income tax provision and net income in the period in which such determination is made.  We apply an asset and liability approach to accounting for income taxes.  Deferred tax liabilities and assets are recognized for the expected future tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  The recoverability of deferred tax assets is dependent upon our assessment of whether it is more likely than not that sufficient future taxable income will be generated to utilize the deferred tax asset.  In the event we determine that the future taxable income will not be sufficient to utilize the deferred tax asset, a valuation allowance is recorded.



(2)

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 predictions of future outcomes, which include:



·

Estimates of total cost to complete the contract;

·

Estimates of contract schedule and completion date;

·

Estimates of the percentage the contract is complete; and

·

Amounts of any probable unapproved claims and change orders included in 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 revenue, 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 complete 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 American Institute of Certified Public Accountants Statement of Position 81-1 (SOP 81-1), Accounting for Performance of Construction Type and Certain Production Type Contracts.  Including probable unapproved claims in this calculation increases operating income (or reduces the operating loss) that would otherwise be recorded without consideration of the probable unapproved claims.  Probable unapproved claims are recorded to the extent of costs incurred and include no profit element.  In all cases, the probable unapproved claims included in determining



17





---





contract profit or loss are less than the actual claim that will be or has been presented to the customer.  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.  Unsuccessful claims negotiations could result in decreases in estimated contract profits or additional contact losses, and successful claims negotiations could result in increases in estimated contract profits or recovery of previously recorded contract losses.  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.



Furthermore, the Company has marketed over the past year, a monitoring system that has been focused on helping with the containment and monitoring of the deadly H5N1 virus, commonly called the Avian Influenza or Bird Flu. There are currently no vaccines available to help eradicate this deadly disease and world health officials continually press for containment solutions as the only means to currently control the spread of the bird flu.  Smart-teks RTAC-PM system has been designed to be a part of a comprehensive containment and monitoring solution.  Thus far, the Company has focused its marketing initiatives in the South-East Asian region in the world along with Romania, regions that have suffered the largest number of outbreaks.   The Company and/or its agent have introduced the RTAC-PM to various organizations in Vietnam, Romania, China, Singapore and Hong-Kong.



The system uses already available hardware that is complemented with the software developed by the Company.



The following schedule shows a reconciliation of backlog representing the amount of revenue the Company expects to realize from work to be performed on uncompleted contracts in progress at September 30, 2006 and from contractual agreements on which work has not yet begun.



|Balance at June 30, 2006                    | $ | 5,908,333 |  
|------------------------------------------- | - | --------- | -
|New contracts, July 1 to September 30, 2006 |   | 230,049   |  
|Less: Contract revenue earned from July 1   |   |           |  
|to September 30, 2006                       |   | (647,656  | )
|Balance, September 30, 2006                 | $ | 5,490,726 |  



In addition, between October 1, 2006 and October 30, 2006, the Company entered into additional contracts with anticipated revenues of approximately $271,066.





RESULTS OF OPERATIONS



Three months ended September 30, 2006 and 2005

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



18





---





For the three months ended September 30, 2006, revenues increased to $690,075 from $576,633 for the same period ended in 2005, an increase of $113,442 or 20%.

Cost of services increased by $188,287 for the three months ended September 30, 2006 as compared with the same period ending in 2005.  Cost of services for the three months ended September 30, 2006 was $592,520 as compared to $404,233 for the same period ended in 2005, an increase of 47%.

Total operating expenses decreased by $75,430 or 29% from $258,151 for the three months ended September 30, 2005 to $182,721 for the same period ending in 2006.  The decrease in operating expenses was principally attributable to a decrease in personnel related costs for the three months ended September 30, 2006 as compared to the same period ended in 2005.

Total other expenses, including interest expense and financing costs, decreased $2,520 from $5,205 for the three months ended September 30, 2005 to $2,685 in the same period ended in 2006.

Net loss remained stable from a net loss of $90,956 for the three months ended September 30, 2005 to a net loss of $87,851 for the three months ended September 30, 2006.



The Company has fully reserved its potential deferred tax asset in each period presented by the recording of a valuation reserve in that period.  Therefore, the Company has not reported an income tax benefit during the three months ended September 30, 2006 and 2005, respectively.





LIQUIDITY AND CAPITAL RESOURCES



For the three months ended September 30, 2006, net cash used in operating activities was $77,351 and net cash provided by financing activities was $74,939. There was no cash provided by or used in investing activities.  The Company did not have any cash and cash equivalents at September 30, 2005.



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, 2006, 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.  There is no assurance that the Company will be able to secure additional financing or that it can be secured at rates acceptable to the Company.  In addition, should the Company be required to either issue stock for services or to secure equity funding, due to the lack of liquidity in the market for the Companys stock such financing would result in significant dilution to its existing shareholders.



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



NEW ACCOUNTING PRONOUNCEMENTS





19





---





FASB Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements, establishes a formal framework for measuring fair value under GAAP.  It defines and codifies the many definitions of fair value included among various other authoritative literature, clarifies and, in some instances, expands on the guidance for implementing fair value measurements, and increases the level of disclosure required for  fair value measurements.  Although SFAS no. 157 applies to and amends the provisions of existing FASB and AICPA pronouncements, it does not, of itself, require any new fair value measurements, nor does it establish valuation standards.  SFAS No. 157 applies to all other accounting pronouncements requiring or permitting fair value measurements, except for; SFAS no. 123 (R), share-based payment and related pronouncements, the practicability exceptions to fair value determinations allowed by various other authoritative pronouncements, and AICPA Statements of Position 97-2 and 98-9 that deal with software revenue recognition.  This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.







ITEM 3 - CONTROLS AND PROCEDURES



(a) Evaluation of Disclosure Controls and Procedures



Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission. Our Chief Executive Officer and the Chief Financial Officer have reviewed the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c)) within the last ninety days and have concluded that the disclosure controls and procedures are effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported in a timely manner. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the last day they were evaluated by our Chief Executive Officer and Chief Financial Officer.







b) Changes in Internal Controls over Financial Reporting



There have been no changes in the Company's internal control over financial reporting during the last quarterly period covered by this Quarterly Report on Form 10-QSB that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.







PART II.      OTHER INFORMATION



Item 1. Legal Proceedings



On April 28, 2006, the Company has filed a complaint in the Superior Court for the State of California, against RFID, Ltd., a publicly traded company on the Pink Sheets.  The Complaint alleges causes of action against RFID, Ltd., for 1) Defamation Per Se; 2) Intentional Interference with Contractual Relations; 3) Intentional Interference with Prospective Economic Advantage and 4) Unfair



20





---





Competition (Violation of the California Business & Professions Code section 17200).  The Complaint alleges that RFID, Ltd., who described itself as a competitor of Smart-tek Solutions, Inc., made a series of false and misleading representations about Smart-tek Solutions, Inc. and its development of its RTAC-PM system.  The Complaint filed by Smart-tek Solutions, Inc. seeks monetary damages in excess of $10 million and equitable relief as a result of RFID, Ltd.s conduct.



On May 9, 2006, the Company filed a Complaint in the District Court of Clark County, Nevada against the owners and operators of Stocklemon.com (Stocklemon).  The Complaint alleges causes of action for (1) Defamation; (2) Intentional Interference with Contractual Relations; (3) Intentional Interference with Prospective Economic Advantage and (4) Violation of State Securities Laws.  The Complaint alleges that Stocklemon made a series of provably false assertions of fact and other misleading statements concerning Smart-tek Solutions, Inc.s financial affairs and business activities.  The Complaint further alleges that Stocklemon intentionally sought to damage Plaintiffs value, contractual relationships and expectancies via the misrepresentations and misleading statements contained in a Stocklemon report issued on or about April 4, 2006.  The Complaint further alleges that Stocklemon utilized the Report and the untrue statements of material fact contained therein to deliberately manipulate the market for personal gain.  The Complaint filed by Smart-tek Solutions, Inc. seeks compensatory and punitive damages in excess of $100 million and equitable relief against Stocklemon.



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds





None.







Item 3. Defaults upon Senior Securities



None









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



None





Item 5. Other Information



None.



Item 6. Exhibits and Reports on Form 8-K



(a)   Exhibits



31.1   Certification of Chief Executive Officer of Periodic ReportPursuant to Rule 13a-14(a) and Rule 15d-14(a).



31.2   Certification of Chief Financial Officer of Periodic ReportPursuant to Rule 13a-14(a) and Rule 15d-14(a).



21





---









32.1   Certification of Chief Executive Officer Pursuant to 18U.S.C. Section 1350.





32.2   Certification of Chief Financial Officer Pursuant to 18U.S.C. Section 1350.









(b)   Reports on Form 8-K/A



Registrant filed the following reports on Form 8-K during the quarter covered by this Report:



Date of Report

Item Number                   Events Reported

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

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

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



August 22, 2006

Item 5.02 & 8.01 Departure of directors and Other Events

September 25, 2006

Item 8.01

Other Events

October 13, 2006

Item 8.01

Other Events

October 13, 2006

Item 8.01

Other Events

October 16, 2006

Item 8.01

Other Events

October 16, 2006

Item 8.01

Other Events











SIGNATURES



Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.









SMART-TEK SOLUTIONS INC.







Date:  November __, 2006

By:



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



Perry Law



Chief Executive Officer













22