SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



(Mark One)

xQUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended
March 31, 2013



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 000-54427



FIRST RATE STAFFING CORPORATION

(Exact name of registrant as specified in
its charter)



|Delaware                        |  | 46-0708635                          
|------------------------------- |  | ------------------------------------
|(State or other jurisdiction of |  | (I.R.S. Employer Identification No.)
|incorporation or organization)  |  |                                     



2775 West Thomas Road

Suite 107

Phoenix, Arizona 85018

(Address of principal executive offices)
(zip code)



602-442-5277

(Registrant's telephone number, including
area code)



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.

xYes  ̈ 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 the definitions
of "large accelerated filer", "accelerated filer", "non-accelerated filer", and "smaller reporting
company" in Rule 12b-2 of the Exchange Act.



|Large Accelerated filer   ̈                  | Accelerated filer         |  ̈
|------------------------------------------- | ------------------------- | -
|Non-accelerated filer     ̈                  | Smaller reporting company | x
|(do not check if 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 x No



Indicate the number of shares outstanding
of each of the registrant's classes of common stock as of the latest practicable date.



|Class                           |  | Outstanding at May 1, 2013
|------------------------------- |  | --------------------------
|Common Stock, par value $0.0001 |  | 7,000,000 shares          



Documents incorporated by reference:



On November 13, 2012,
the Registrant filed, pursuant to the Securities Act of 1933, a registration statement on Form S-1 (file no. 333-184910) and an
amendment on April 11, 2013, to such registration statement for the sale of up to 1,600,000 shares of its common stock by the holders
thereof. The Registrant also filed, pursuant to the Securities Exchange Act of 1934, a Report on Form 8-K and amendments to such
report in February, 2013 and its Annua Report on Form 10-K on April 11, 2013. Information contained in those filings may contain
additional information and is incorporated by reference herein.











PART I



ITEM 1. FINANCIAL STATEMENTS



|Condensed Consolidated Balance Sheets as of March 31, 2013 (unaudited) and December 31, 2012                   |  | 2  
|-------------------------------------------------------------------------------------------------------------- |  | ---
|                                                                                                               |  |    
|Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2013 and 2012 (unaudited) |  | 3  
|                                                                                                               |  |    
|Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2013 and 2012 (unaudited) |  | 4  
|                                                                                                               |  |    
|Notes to Condensed Consolidated Financial Statements (unaudited)                                               |  | 5-9



1







|FIRST RATE STAFFING CORPORATION      
|-------------------------------------
|CONDENSED CONSOLIDATED BALANCE SHEETS
|                                     



|                                                                                                                                               |  | March 31,   |          |   | December 31, |  
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | -------- | - | ------------ | -
|                                                                                                                                               |  | 2013        |          |   | 2012         |  
|                                                                                                                                               |  | (Unaudited) |          |   |              |  
|Assets                                                                                                                                         |  |             |          |   |              |  
|                                                                                                                                               |  |             |          |   |              |  
|Current assets                                                                                                                                 |  |             |          |   |              |  
|Cash                                                                                                                                           |  | $           | 110,937  |   |              | $
|Accounts receivable, net                                                                                                                       |  |             | 70,441   |   |              |  
|Total current assets                                                                                                                           |  |             | 181,378  |   |              |  
|                                                                                                                                               |  |             |          |   |              |  
|Property and equipment, net                                                                                                                    |  |             | 31,154   |   |              |  
|Notes receivable - related party                                                                                                               |  |             | 8,388    |   |              |  
|Deposit and other assets                                                                                                                       |  |             | 80,517   |   |              |  
|Total assets                                                                                                                                   |  | $           | 301,437  |   |              | $
|                                                                                                                                               |  |             |          |   |              |  
|Liabilities and Stockholders' Deficit                                                                                                          |  |             |          |   |              |  
|                                                                                                                                               |  |             |          |   |              |  
|Current liabilities                                                                                                                            |  |             |          |   |              |  
|Accounts payable                                                                                                                               |  | $           | 18,351   |   |              | $
|Other current liabilities                                                                                                                      |  |             | 103,748  |   |              |  
|Total current liabilities                                                                                                                      |  |             | 122,099  |   |              |  
|Notes payable - related parties                                                                                                                |  |             | 230,128  |   |              |  
|Total liabilities                                                                                                                              |  |             | 352,227  |   |              |  
|                                                                                                                                               |  |             |          |   |              |  
|Commitments                                                                                                                                    |  |             |          |   |              |  
|                                                                                                                                               |  |             |          |   |              |  
|Stockholders' deficit                                                                                                                          |  |             |          |   |              |  
|Preferred stock, $0.0001 par value, 20,000,000 shares authorized, zero shares issued and outstanding                                           |  |             | -        |   |              |  
|Common stock, $0.0001 par value, 100,000,000 shares authorized, 7,000,000 shares issued and authorized at March 31, 2013 and December 31, 2012 |  |             | 700      |   |              |  
|Additional paid-in capital                                                                                                                     |  |             | 61,352   |   |              |  
|Accumulated deficit                                                                                                                            |  |             | (112,842 | ) |              |  
|Total stockholders' deficit                                                                                                                    |  |             | (50,790  | ) |              |  
|Total liabilities and stockholders' deficit                                                                                                    |  | $           | 301,437  |   |              | $



The accompanying notes are an integral part
of these condensed consolidated financial statements



2







|                                               
|-----------------------------------------------
|FIRST RATE STAFFING CORPORATION                
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|                                               



|                                     |  | Three Months Ended |          
|------------------------------------ |  | ------------------ | ---------
|                                     |  | March 31,          |          
|                                     |  | 2013               |          
|                                     |  |                    |          
|Revenues                             |  | $                  | 1,915,064
|Cost of revenues                     |  |                    | 1,717,539
|Gross profit                         |  |                    | 197,525  
|Operating expenses                   |  |                    | 205,759  
|Loss from operations                 |  |                    | (8,234   
|Interest and other expense, net      |  |                    | 5,153    
|Loss before income tax               |  |                    | (13,387  
|Income tax expense                   |  |                    | -        
|Net loss                             |  | $                  | (13,387  
|                                     |  |                    |          
|Net loss per share:                  |  |                    |          
|Basic and diluted                    |  | $                  | -        
|                                     |  |                    |          
|Weighted average shares outstanding: |  |                    |          
|Basic and diluted                    |  |                    | 7,000,000



The accompanying notes are an integral part
of these condensed consolidated financial statements



3







|                                               
|-----------------------------------------------
|FIRST RATE STAFFING CORPORATION                
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|                                               





|                                                                              |  | Three Months Ended |        
|----------------------------------------------------------------------------- |  | ------------------ | -------
|                                                                              |  | March 31,          |        
|                                                                              |  | 2013               |        
|                                                                              |  |                    |        
|Cash flows from operating activities                                          |  |                    |        
|Net loss                                                                      |  | $                  | (13,387
|Adjustments to reconcile net income to net cash used by operating activities: |  |                    |        
|Provision for doubtful accounts receivable                                    |  |                    | -      
|Depreciation expense                                                          |  |                    | 1,456  
|Changes in operating assets and liabilities:                                  |  |                    |        
|Accounts receivable                                                           |  |                    | (16,863
|Accounts payable                                                              |  |                    | (12,307
|Other current liabilities                                                     |  |                    | 28,240 
|                                                                              |  |                    |        
|Net cash used in operating activities                                         |  |                    | (12,861
|                                                                              |  |                    |        
|Cash flows from investing activities                                          |  |                    |        
|Borrowings on notes receivable - related party                                |  |                    | (8,388 
|Payments from acquisition of property and equipment                           |  |                    | (28,401
|                                                                              |  |                    |        
|Net cash provided by investing activities                                     |  |                    | (36,789
|                                                                              |  |                    |        
|Cash flows from financing activities                                          |  |                    |        
|Change in bank overdraft                                                      |  |                    | -      
|Proceeds from note payable - related party                                    |  |                    | -      
|Payments on note payable - related party                                      |  |                    | (25,000
|Proceeds from shareholder contributions                                       |  |                    | -      
|Distributions to members                                                      |  |                    | -      
|                                                                              |  |                    |        
|Net cash provided by financing activities                                     |  |                    | (25,000
|                                                                              |  |                    |        
|Net change in cash                                                            |  |                    | (74,650
|Cash, beginning of the year                                                   |  |                    | 185,587
|Cash, end of the year                                                         |  | $                  | 110,937
|                                                                              |  |                    |        
|Supplemental disclosure of cash flow information:                             |  |                    |        
|Interest paid                                                                 |  | $                  | -      



The accompanying notes are an integral part
of these condensed consolidated financial statements





4











|                                                        
|--------------------------------------------------------
|FIRST
    RATE STAFFING CORPORATION                     
|NOTES
    TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                                                        



1. ORGANIZATION
AND BUSINESS



First Rate
Staffing Corporation ("First Rate" or "the Company"), formerly known as Moosewood Acquisition Corporation
("Moosewood") was incorporated on April 20, 2011 under the laws of the State of Delaware to engage in any lawful corporate
undertaking, including, but not limited to, selected mergers and acquisitions.



On May 22,
2012, the shareholders of the corporation and the Board of Directors unanimously approved the change of the Registrant's name
to First Rate Staffing Corporation and filed such change with the State of Delaware. On May 22, 2012, new officers and directors
were appointed and elected and the prior officers and directors resigned.



On November
9, 2012, First Rate, entered into merger agreements with each of First Rate Staffing, LLC, a California limited liability company
(“First Rate California”), and First Rate Staffing, Inc., a Nevada corporation (“First Rate Nevada”),
in separate mergers (collectively, and together, the “Mergers”) that were concurrently completed on November 13, 2012.
The purpose of the Mergers was to facilitate and prepare the Company for a registration statement and/or public offering of securities.
Prior to the Mergers, First Rate California and First Rate Nevada were under common control by the same group of shareholders.



The Mergers
were affected by the Company through the exchange of (i) all of the outstanding membership interests of First Rate California
for 2,000,000 shares of common stock of the Company, and (ii) all of the outstanding shares of First Rate Nevada for 2,000,000
shares of common stock of the Company. Accordingly, a total of 4,000,000 shares were issued in the Mergers.



First Rate
California was formed in April 2010 in the State of California. Since its inception, First Rate California has provided recruiting
and staffing services for temporary positions in light industrial, distribution center, assembly, and clerical businesses to clients
in California.



First Rate
Nevada was formed in March 2010 in the State of Nevada and is registered to do conduct business in the State of Arizona. Since
its inception, First Rate Nevada has provided recruiting and staffing services for temporary positions in light industrial, distribution
center, assembly, and clerical businesses to clients in Arizona.



As a result
of the Mergers, each of First Rate California and First Rate Nevada has merged into and become a part of the Company. The Company,
as the surviving entity from the Mergers, has taken over the respective operations and business plans of each of both First Rate
California and First Rate Nevada.



The Company
provides recruiting and staffing services for temporary positions in the light industrial, distribution center, assembly, and
clerical areas to its clients in Arizona, with an option for the clients and candidates to choose the most beneficial working
arrangements.



2. BASIS
OF PRESENTATION



The accompanying
condensed consolidated balance sheet as of December 31, 2012, which has been derived from the Company's audited financial statements
as of that date, and the unaudited condensed consolidated financial information of the Company as of March 31, 2013 and for the
three months ended March 31, 2013 and 2012, has been prepared in accordance with accounting principles generally accepted in the
United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and
Article 8-03 of Regulation S-X. In the opinion of management, such financial information includes all adjustments considered necessary
for a fair presentation of the Company's financial position at such date and the operating results and cash flows for such periods.
Operating results for the interim period ended March 31, 2013 are not necessarily indicative of the results that may be expected
for the entire year.



Certain information
and footnote disclosure normally included in financial statements in accordance with generally accepted accounting principles
have been omitted pursuant to the rules of the United States Securities and Exchange Commission ("SEC"). These unaudited
financial statements should be read in conjunction with our audited financial statements and accompanying notes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2012 filed on April 11, 2013.



3. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES



The summary
of significant accounting policies presented below is designed to assist in understanding the Company’s consolidated financial
statements. Such consolidated financial statements and accompanying notes are the representations of the Company’s management,
who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally
accepted in the United States of America in all material respects, and have been consistently applied in preparing the accompanying
consolidated financial statements.



5







Use of
Estimates



In preparing
these consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements
and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.



Reclassifications



Certain prior
year amounts have been reclassified to conform with the current year presentation.  The reclassifications have not impacted
the previously reported results of operations or total assets, liabilities or stockholders’ deficit.



Cash



The Company
considers all highly-liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company
had no cash equivalents as of March 31, 2013 or December 31, 2012.



Accounts
Receivable and Factoring



Accounts receivable
are carried at the original amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on
a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables
and considering each customer's financial condition and credit history, as well as current economic conditions. Accounts receivable
are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received.
The allowance for doubtful accounts as of March 31, 2013 and December 31, 2012 were $0.



During 2012,
the Company entered into a new accounts receivable factoring arrangement with a non-related third party financial institution
(the "Factor"). Pursuant to the terms of the arrangement, the Company, from time to time, shall sell to the Factor certain
of its accounts receivable balances on a non-recourse basis for credit approved accounts. The Factor remits 90% of the accounts
receivable balance to the Company, with the remaining balance, less fees, to be forwarded to the Company once the Factor collects
the full accounts receivable balance from the customer. An administrative fee of 0.015% per diem is charged on the gross amount
of accounts receivables assigned to Factor, plus interest to be calculated at 0.011806% per day. The total amount of accounts
receivables factored was $708,779 and $586,867 at March 31, 2013 and December 31, 2012, respectively.



Fair
Value of Financial Instruments



Fair value
is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, based on the Company’s principal or, in the absence of a principal, most advantageous
market for the specific asset or liability.



GAAP provides
for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows:



| | • | Level
                                                                                                    1 — Inputs that are
                                                                                                    quoted prices (unadjusted)
                                                                                                    for identical assets or liabilities
                                                                                                    in active markets that the
                                                                                                    entity can access.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Level
                                                                                                    2 — Inputs other than
                                                                                                    quoted prices included within
                                                                                                    Level 1 that are observable
                                                                                                    for the asset or liability,
                                                                                                    either directly or indirectly,
                                                                                                    for substantially the full
                                                                                                    term of the asset or liability,
                                                                                                    including:
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | – | Quoted
                                                                                                          prices for similar assets
                                                                                                          or liabilities in active
                                                                                                          markets
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



6







| | – | Quoted
                                                                                                          prices for identical
                                                                                                          or similar assets or
                                                                                                          liabilities in markets
                                                                                                          that are not active
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | – | Inputs
                                                                                                          other than quoted prices
                                                                                                          that are observable
                                                                                                          for the asset or liability
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | – | Inputs
                                                                                                          that are derived principally
                                                                                                          from or corroborated
                                                                                                          by observable market
                                                                                                          data by correlation
                                                                                                          or other means
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Level
                                                                                                    3 — Inputs that are
                                                                                                    unobservable and reflect the
                                                                                                    Company’s own assumptions
                                                                                                    about the assumptions market
                                                                                                    participants would use in
                                                                                                    pricing the asset or liability
                                                                                                    based on the best information
                                                                                                    available in the circumstances
                                                                                                    (e.g., internally derived
                                                                                                    assumptions surrounding the
                                                                                                    timing and amount of expected
                                                                                                    cash flows). The Company did
                                                                                                    not measure any financial
                                                                                                    instruments presented on the
                                                                                                    Consolidated Balance Sheets
                                                                                                    at fair value on a recurring
                                                                                                    basis using significantly
                                                                                                    unobservable inputs (Level
                                                                                                    3) during the three months
                                                                                                    ended March 31, 2013 and 2012.
                                                                                                    Although, the disclosed fair
                                                                                                    value of accounts receivables
                                                                                                    that are not carried at fair
                                                                                                    value are classified within
                                                                                                    Level 3 including $70,441
                                                                                                    and $53,578 as of March 31,
                                                                                                    2013 and December 31, 2012,
                                                                                                    respectively.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Concentration
of Credit Risk



Financial instruments
that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The
Company places its cash with high quality banking institutions. From time to time, the Company may maintain cash balances at certain
institutions in excess of the Federal Deposit Insurance Corporation limit. Historically, the Company has not experienced any losses
on deposits.



The Company’s
policy is to maintain an allowance for doubtful accounts, if any, for estimated losses resulting from the inability of its customer
to pay. However, if the financial condition of the Company’s customers were to deteriorate rapidly, resulting in nonpayment,
the Company could be required to provide for additional allowances, which would decrease operating results in the period that
such determination was made.



Property
and Equipment



Property and
equipment is presented at cost less accumulated depreciation and amortization. Depreciation and amortization are provided using
the straight-line method over the estimated useful lives of the assets. Betterments, renewals, and extraordinary repairs that
extend the life of the assets are capitalized; other repairs and maintenance charges are expensed as incurred. The cost and related
accumulated depreciation and amortization applicable to retired assets are removed from the Company's accounts, and the gain or
loss on dispositions, if any, is recognized in the consolidated statements of operations.



Property and
equipment are recorded at cost and depreciated using the straight-line method over an estimated useful life of 5 years.



Revenue
Recognition



The Company’s
revenue is derived from providing temporary staffing services to its clients. The Company recognizes revenue in accordance with
Financial Accounting Standards Board Accounting Standards Codification (“ASC”) No. 605, Revenue Recognition.
In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists,
the service is performed and collectability of the resulting receivable is reasonably assured.



Cost
of Revenue



Cost of revenue
consists of wages, related payroll taxes, workers compensation, and employee benefits of the Company’s employees while they
work on contract assignment as temporary staff of the Company’s customers.



7







Net Income
(Loss) Per Share



Basic net income
(loss) per share is computed by using the weighted-average number of common shares outstanding during the period. Diluted net
income per share is computed giving effect to all dilutive potential common shares that were outstanding during the period. The
Company had no dilutive common shares during the three months ended March 31, 2013 or 2012.



Income
Taxes



Income taxes
are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases as well as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. The likelihood of realizing the tax benefits related to a potential deferred tax asset is evaluated,
and a valuation allowance is recognized to reduce that deferred tax asset if it is more likely than not that all or some portion
of the deferred tax asset will not be realized. Deferred tax assets and liabilities are calculated at the beginning and end of
the year; the change in the sum of the deferred tax asset, valuation allowance and deferred tax liability during the year generally
is recognized as a deferred tax expense or benefit. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in operations in the period that includes the enactment date.



The Company
evaluates the accounting for uncertainty in income tax recognized in its financial statements and determines whether it is more
likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of
the benefit is recorded in its financial statements. For those tax positions where it is "not more likely than not"
that a tax benefit will be sustained, no tax benefit is recognized. Where applicable, associated interest and penalties are also
recorded. The Company has not accrued for any such uncertain tax positions as of March 31, 2013 or December 31, 2012.



Recent
Accounting Pronouncements



There are no
recently issued accounting pronouncements that the Company has yet to adopt that are expected to have a material effect on its
financial position, results of operations, or cash flows.



4. GOING
CONCERN



The Company
has sustained operating losses of $112,842 since inception. These losses are primarily the result of increased operating expenses
during 2012 associated with professional fees necessary to complete the merger transaction in November 2012, as described in Note
1. During 2012, the Company incurred audit related fees of approximately $62,000, as well as $65,000 relating to the acquisition
of the public shell. Going forward, the Company expects these annual expenses to be lower. In addition, in September of 2012,
the Company entered into a new factoring agreement with TAB Bank which reduced financing costs from an average APR of 24% to 12%.
We expect this will generate an annual savings of approximately $40,000 to $70,000.



The Company’s
continuation as a going concern is dependent on management’s ability to develop profitable operations, and / or obtain additional
financing from its shareholders and / or other third parties. In order to address the need to satisfy its continuing obligations
and realize its long term strategy, management’s plans include continuing to fund operations with cash received from financing
activities.



The accompanying
consolidated financial statements have been prepared assuming that the Company will continue as a going concern; however, the
above conditions raise substantial doubt about the Company’s ability to do so. The consolidated financial statements do
not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts
and classifications of liabilities that may result should the Company be unable to continue as a going concern.



8







5. PROPERTY
AND EQUIPMENT



Property and
equipment consisted of the following as of March 31, 2013 and December 31, 2012.



|                               |  | March 31, |        |  | December 31, |  
|------------------------------ |  | --------- | ------ |  | ------------ | -
|                               |  | 2013      |        |  | 2012         |  
|                               |  |           |        |  |              |  
|Equipment                      |  | $         | 5,346  |  |              | $
|                               |  |           | 28,000 |  |              |  
|                               |  |           | 33,346 |  |              |  
|                               |  |           |        |  |              |  
|Less: accumulated depreciation |  |           | 2,192  |  |              |  
|                               |  |           |        |  |              |  
|                               |  | $         | 31,154 |  |              | $



Depreciation
expense for the three months ended March 31, 2013 and 2012 amounted to $1,456 and $0, respectively.



6. NOTES
RECEIVABLE – RELATED PARTY



In March 2013,
the Company issued a series of unsecured notes receivables to an officer of the Company. The borrowings are due in one lump payment
in March 2015 and earn interest at a rate of 15% per annum.



7. NOTES
PAYABLE - RELATED PARTIES



During 2012,
the Company obtained unsecured promissory notes payables from one of its shareholders on various dates between March 2012 and
December 2012. The total aggregate amounts outstanding as of March 31, 31, 2013 and December 31, 2012 amounted to $230,128 and
$255,128, respectively. The notes bear interest at a rate of 6% per annum and are due in full in one lump payment 3 years from
the issuance dates. All notes are payable at various dates ranging from March through December 2015. During the reporting period,
there were no financial covenant requirements under the notes.



8. CONTINGENCIES



Litigation



During the
ordinary course of the Company’s business, it is subject to various claims and litigation. As of December 31, 2012, the
Company has an open claim involving a former employee, which is in the discovering phase. The estimate of potential loss cannot
currently be made as of the date when the consolidated financial statement were issued.



9







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



The Company was incorporated
in the State of Delaware in April 2011. Each of First Rate Staffing, LLC, a California limited liability company (“First
Rate California”), and First Rate Staffing, Inc., a Nevada corporation (“First Rate Nevada”), merged into the
Company in separate mergers (collectively, and together, the “Mergers”) that were concurrently completed in November
2012.



The Company’s
independent auditors have expressed substantial doubt as to the ability of the Company to continue as a going concern. Unless the
Company is able to generate sufficient cash flow from operations and/or obtain additional financing, there is a substantial doubt
as to the ability of the company to continue as a going concern.



Revenues and Losses



The Company has posted
revenues from operations based on its billings to, and services for, customers. Based its consolidated financial statements, the
Company had revenues of $1,915,064 for the period ended March 31, 2013.



The Company has a mixed
record of net losses and profits. Based on its consolidated financial statements, the Company experienced a net loss of $13,387
for the period ended March 31, 2013.



Promissory Notes



The Company has promissory
notes outstanding of $255,128. These notes consist of monies advanced by Cliff Blake, an officer and director of the Company, to
the Company, as listed. Each of these promissory notes consists of a single payment at the end of the term.





|Origination   |  | Principal |         |  | Interest       |           |  |          |              
|------------- |  | --------- | ------- |  | -------------- | --------- |  | -------- | -------------
|Date          |  | Amount    |         |  | Rate per annum |           |  | Due Date |              
|March  2012   |  | $         | 50,000  |  |                | 6% simple |  |          | April 2015   
|April 2012    |  |           | 45,000  |  |                | 6% simple |  |          | April 2015   
|April 2012    |  |           | 15,600  |  |                | 6% simple |  |          | April 2015   
|June 2012     |  |           | 109,826 |  |                | 6% simple |  |          | June 2015    
|June 2012     |  |           | 15,600  |  |                | 6% simple |  |          | June 2015    
|December 2012 |  |           | 19,102  |  |                | 6% simple |  |          | December 2015





The Company does not
anticipate that it will borrow monies from related parties in the future. Such earlier loans were required to fund certain non-recurring
expenses, such as costs associated with filing its registration statement. In addition, as the Company obtained a new factoring/financing
facility in 2012 which lowered its costs of capital, the Company expects to realize significant cost savings (and corresponding
improvement to cash flow) from obtaining this new facility.



10







Factoring Facilities



The Company uses factoring
of accounts receivables in its business, and in conjunction with such factoring facilities, the Company pledges assets as collateral.
Currently, the Company has factoring credit facilities with TAB Bank under multi-year agreements entered into by First Rate California
and First Rate Nevada, respectively. Previously, the Company worked with another lender; however, as the Company’s business
has grown and its operations have expanded, the Company established the new credit facilities with TAB Bank in August 2012.





Factoring is based
only on the accounts receivables that are selected by the Company for sale to the lender. The lender purchases the selected accounts
receivable and owns those receivables. The lender charges interest at about 9% per annum until the receivables are collected. The
lender typically advances 90% of the amount of the receivable at the time of sale to the lender and then holds the other 10% in
reserve pending collection of the receivable (i.e. as the lender collects the receivables, the lenders return the 10% reserve amount
to the Company). If the lender cannot collect all or part of the receivable, the lender will charge the reserve account of the
Company.



The collateral pledged
to the lender is the actual accounts receivables. As part of its factoring arrangements, the Company has granted a continuing first
position perfected priority security interest in collateral which includes all of the Company’s accounts receivables, inventory,
equipment and investment property. The lenders can collect proceeds against this collateral and liquidate the collateral under
certain circumstances. In the event of a default by the Company under the factoring/lending arrangement, all outstanding obligations
of the Company could be accelerated, resulting in significant damage to the Company’s business, operations and relationship
with key clients.



Capital Resources



As of March 31, 2013,
the Company had cash of $110,937 and accounts receivable of $70,441.



The Company’s
proposed expansion plans and business process improvements over the next two years will necessitate additional capital and financing.
Accordingly, the Company plans to raise between $2 million and $4 million of outside funding in the next one year, for the purposes
of funding its own accounts receivable factoring company, establishing and operating its own worker’s compensation captive
unit, and acquiring competitors and complementary service providers in its sector. Of this amount, the Company expects that it
will need funding of $1.0 million to $1.5 million to achieve its expanded growth and profit objectives in its existing core business
over the next two years.



The Company anticipates
that it will require approximately $700,000 to $1.0 million to establish and fund its factory facility. These amounts would be
used to fund payroll and taxes up to the point that these amounts are collect from the client. Factoring internally would mean
self-financing, resulting in a savings to the Company. No additional material or regulatory costs would be incurred at this point.
If the Company were to offer factoring to other entities (i.e. outside of the Company) then Company would be subject to all the
rules and regulations surrounding the operations of a finance company. Once the factoring entity is successfully set-up, the Company
expects to realize ongoing savings from the reduced factoring costs.



The Company expects
that establishing and funding its workers’ compensation captive will separately require funding of approximately $500,000
to $1.0 million, which will include a substantial deposit to establish the captive as a self-insured funding unit. The costs include
a deposit needed of $500,000 or more, set-up costs of $50,000 to $60,000, and administrative fees of approximately $15,000 to $20,000
per year. Legal requirements for the formation of a captive vary by state. Currently, Hawaii and Nevada offer the most favorable
requirements for establishing a captive for the Company. Any captive would still require catastrophic coverage beyond the normal
coverage provided by the captive. There are numerous companies which provide direction and assistance for establishing a captive,
and the Company would plan to engage such an advisory company. These companies are primarily responsible for ensuring that the
captive meets the regulatory requirements initially and annually in the applicable state of formation. These advisors also assist
in risk assessment, legal deposit requirements and claims administration. An impact on the Company’s current business from
the captive would be the ability to retain the large deposit amounts required by insurance providers to remain in the control of
the Company. As with the factoring entity, once the workers’ compensation captive is successfully set-up, the Company expects
to realize ongoing savings from the reduced workers’ compensation costs.



11







There can be no assurance
that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital, or
if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company. Accordingly,
given the Company’s limited cash and cash equivalents on hand, the Company will be unable to implement its contemplated business
plans and operations (including its goals of establishing a factoring entity and workers’ compensation captive) unless it
obtains additional financing or otherwise is able to generate sufficient revenues and profits. The Company may raise additional
capital through sales of debt or equity, obtain loan financing or develop and consummate other alternative financial plans.



The Company anticipates
it will develop a budget for marketing activities during 2012 and 2013 consisting of two levels of marketing: client marketing
and acquisition marketing. Client marketing costs are associated with sales staff with the single purpose to market to current
and potential clients. Acquisition marketing costs are those incurred for investor relations, traveling, expenses for client acquisitions,
and case by case joint marketing material for specific acquisitions as they occur.



Liquidity



To date, the Company
has not suffered from a liquidity issue. The main liquidity issue was addressed when the Company entered into new factoring agreements
that went into effect September 1, 2012. The Company expects to save approximately $100,000 annually from this new arrangement
(the difference resulting mainly from the lower interest rate charged by the new factor of approximately 9% versus approximately
24% from the previous factoring company). The Company entered into a new agreement with TAB Bank, effective September 1, 2012,
with a $1,000,000 factor commitment. In addition, the Company may borrow from time to time as available, sources of funds from
its officers and/or directors as needed



As the Company grows
in size, the savings from this new factoring arrangement will continue to accrue and enhance the Company’s profitability
and cash flow. The Company anticipates a marketing and ongoing public company reporting budget of approximately $40,000 to $50,000
per year (consisting of corporate governance associated expenses, professional legal and accounting fees). Based on this budget
and the projected operations of the Company, there are no currently anticipated liquidity issues which would pose a threat to the
current business and operations (as-is) of the Company.



Critical Accounting Policies



The financial statements
of the Company have been prepared in accordance with accounting principles generally accepted in the United States. The preparation
of these financial statements requires making estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and liabilities. The estimates are based on historical experience
and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis
of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or conditions.



Pursuant to the JOBS
Act of 2012, as an emerging growth company the Company can elect to opt out of the extended transition period for any new or revised
accounting standards that may be issued by the PCAOB or the SEC. The Company has elected not to opt out of such extended transition
period which means that when a standard is issued or revised and it has different application dates for public or private companies,
the Company, as an emerging growth company, can adopt the standard for the private company. This may make comparison of the Company's
financial statements with any other public company which is not either an emerging growth company nor an emerging growth company
which has opted out of using the extended transition period difficult or impossible as possible different or revised standards
may be used.



12







Although the Company
is still evaluating the JOBS Act, it currently intends to take advantage of some or all of the reduced regulatory and reporting
requirements that will be available to it so long as it qualifies as an “emerging growth company”. The Company has
elected not to opt out of the extension of time to comply with new or revised financial accounting standards available under Section
102(b) of the JOBS Act. Among other things, this means that the Company's independent registered public accounting firm will not
be required to provide an attestation report on the effectiveness of the Company's internal control over financial reporting so
long as it qualifies as an emerging growth company, which may increase the risk that weaknesses or deficiencies in the internal
control over financial reporting go undetected. Likewise, so long as it qualifies as an emerging growth company, the Company may
elect not to provide certain information, including certain financial information and certain information regarding compensation
of executive officers that would otherwise have been required to provide in filings with the SEC, which may make it more difficult
for investors and securities analysts to evaluate the Company. As a result, investor confidence in the Company and the market price
of its common stock may be adversely affected.



Equipment Financing



The Company has no
existing equipment financing arrangements.



Discussion of Period Ended March 31,
2013 compared to the Period Ended March 31, 2012



The Company generated
revenues during the period ended March 31, 2013 of $1,915,064 as compared to revenues for the period ended March 31, 2012 of $1,488,491.
The Company attributes such growth in revenue to the addition of new clients, consisting primarily of eight new customers.



The Company expects
the primary trend of increasing revenues to continue. As a result, payroll costs will increase, and the addition of sales personnel
will impact future sale increases. Continued improvement in the economy should also have a positive impact via existing clients
doing more business with the Company. In addition, the Company expects to lower workers’ compensation costs based on lower
rates.



For the period ended
March 31, 2013, the Company had loss from operations of $8,234 compared to a similar loss from operations for the period ended
March 31, 2012 of $4,345. The Company had a decrease in net loss for the period ended March 31, 2013 of $13,387 compared to the
period ended March 31, 2012 of $19,719.



For the period ended
March 31, 2013, the Company used cash of $12,861 in its operations compared to $17,299 for the same period in 2012.



ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.



Information not required
to be filed by Smaller Reporting Companies.



ITEM 4. CONTROLS AND PROCEDURES.



Evaluation of Disclosure Controls and
Procedures.



Pursuant to
Rules adopted by the Securities and Exchange Commission. the Company carried out an evaluation of the effectiveness of the
design and operation of its disclosure controls and procedures pursuant to Exchange Act Rules. This evaluation was done as of
March 31, 2013, the end of the period covered by this Quarterly Report on Form 10-Q under the supervision and with the
participation of the Company's principal executive officer and principal financial and accounting officer. There have been no
significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to
the date of the evaluation. Based upon that evaluation, they believe that the Company's disclosure controls and procedures
are effective in gathering, analyzing and disclosing information needed to ensure that the information required to be
disclosed by the Company in its periodic reports is recorded, summarized and processed timely. Both officers are directly
involved in the day-to-day operations of the Company.



13







The Company is responsible
for establishing and maintaining adequate internal control over financial reporting in accordance with the Rule 13a-15 of the Securities
Exchange Act of 1934. The Company's president and its principal financial and accounting officer conducted an evaluation of the
effectiveness of the Company's internal control over financial reporting as of December 31, 2012, based on the criteria establish
in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treaedway Commission. Based
on this evaluation, management concluded that the Company's internal control over financial reporting was effective as of December
31, 2012, based on those criteria. A control system can provide only reasonably, not absolute, assurance that the objectives of
the control system are met and no evaluation of controls can provide absolute assurance that all control issues have

been detected.



Anton & Chia the
independent registered public accounting firm, has not issued an attestation report on the effectiveness of the internal control
over financial reporting.



Changes in Internal Control Over Financial
Reporting



The Company effected
a change in control on May, 2012, resulting in the resignation of the then officers and directors. New officers and directors are
now in charge of the Company's internal controls over financial reporting but have not made any changes during its fiscal quarter
that materially affect, or are reasonably likely to materially affect, its internal control over financial reporting.



PART II



ITEM 1. LEGAL PROCEEDINGS



There are no pending,
threatened or actual legal proceedings in which the Company or any subsidiary is a party.



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



All shares of common
stock issued by the Company have been issued pursuant to an exemption from registration under Section 4(2) of the Securities Act
of 1933, as amended, as transactions by an issuer not involving any public offering.



The Company is authorized
to issue 100,000,000 shares of common stock and 20,000,000 shares of preferred stock. As of March 31, 2013, 7,000,000 shares of
common stock and no preferred stock were issued and outstanding.



During the past three
years, the Company has issued the following common shares:



On April 20, 2011,
the Company issued, 10,000,000 shares of common stock to Tiber Creek Corporation for $1,000 of which 9,750,000 were redeemed in
May 2012, for the redemption price of $975.



On April 20, 2011,
the Company issued, 10,000,000 shares of common stock to MB Americus, LLC for $1,000 of which 9,750,000 were redeemed in May 2012,
for the redemption price of $975.



On May 23, 2012, the
Company issued, 1,000,000 shares of common stock to Cliff Blake pursuant to a change of control in the Company for $100.



From July 1, 2012 through
October 31, 2012, the Company issued, 500,000 shares of common stock to multiple shareholders pursuant to executed subscription
agreements. The aggregate consideration paid for these shares was $50.



On November 13, 2012,
the Company issued, 4,000,000 shares of common stock each to Devon Galpin, Julie Galpin, Joy Mautz and Michael Mautz, four management
personnel, in connection with the mergers.



14







On November 13, 2012,
the Company issued, 1,000,000 shares of common stock to Terry Blake, the wife of Cliff Blake, the chief financial officer and sole
director of the Company.



ITEM 3. DEFAULTS UPON SENIOR SECURITIES



Not applicable.



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



There were no matters
submitted to a vote of the security holders during the quarter covered by this report.





ITEM 5. OTHER INFORMATION



(a) Not applicable.

(b) Item 407(c)(3) of Regulation S-K:



During the quarter
covered by this Report, there have not been any material changes to the procedures by which security holders may recommend nominees
to the Board of Directors.



ITEM 6. EXHIBITS



(a) Exhibits



31.1      Certification
of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002



32.1      Certification
of the Chief Executive Officer and Chief Financial Officer \pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



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.





| | FIRST RATE STAFFING CORPORATION          
| | -----------------------------------------
| |                                          
| | By:   /s/ Cliff Blake                    
| | President and Principal executive officer
| | Principal financial officer              



Dated: May 21, 2103



15